Property buyers seemed to be stuck in the “wait-and-see” mode, still anticipating for prices to fall as interest rates rise.
However, Aus Property Professionals founder Lloyd Edge said it might not be wise to wait for a price crash before getting into the market as bargains would be rare given how the rate hikes have affected property prices so far.
“We are seeing the current property market showing resilience much more than economists predicted as they had forecasted a 20% plunge,” he said.
“This is because it is really the high value houses that are being hit the hardest with the lower end of the market not seeing too much change — in this way, the higher value properties are absorbing the hit to the market.”
In fact, monthly figures from CoreLogic showed that the bigger markets of Sydney, Melbourne, and Brisbane posted declines of up to 1.8%.
Meanwhile, smaller markets like Adelaide and Perth recorded slower monthly declines.
On an annual basis, most markets still have median dwelling values that are significantly higher, except for Sydney and Melbourne that posted yearly falls of 6% and 3.9%.
“The reason for this being that the lower end of the market is still in high demand for first-home buyers who are competing with investors for these lower value properties,” Mr Edge said.
The impact of rate hikes on borrowing capacities could be key to understanding this phenomenon: Mr Edge said the shrinking of borrowing capacity among buyers creates more demand for properties at the lower end of the market.
“An example of this is that year to September 2022, home prices at the top end of the market lost 3.8% of their value compared to properties in the cheapest 25% of the market which saw their prices 12.8% higher over the same comparable period,” he said.
When’s the best time to enter the market?
For Mr Edge, the best time to buy a property is when a buyer can afford it.
While many experts are predicting no relief for buyers with more rate hikes still in store, buyers still have the upper hand in the current market when it comes to negotiations.
“It will come to a point where some first home buyers can no longer afford to enter the market, and this will bring the demand down for properties in the lower end of the market and this should bring some relief to those prices,” he said.
“Until then, we aren’t expecting a huge decline in prices at the lower end of the market.”
Buyers Agency Australia founder Dragan Dimovski said despite the moderation in property prices, declines have been limited.
“Extreme discounts well beyond the usual price reductions in this market can be found for those who have the time to do the legwork,” he said.
Still, there are some ways on how potential buyers can increase their chances of getting discounts and bargains.
Mr Dimovski said reaching out to local estate agents is one way to have access to off-market listings.
“Don’t get frustrated if you don’t find a bargain immediately – it can take some time but eventually you will spot one,” he said.
“Engaging an experienced buyers’ agent puts all the work and stress into someone’s else’s hands, someone who looks at property every day and is able to identify bargains when they see them.”
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Photo by 89Stocker on Canva.
