The latest changes to potentially affect the housing market could be the new federal government and the recent interest rate rise. You must be wondering how exactly these changes could affect the housing market.
How has the interest rate rise effected the market so far?
Since the rate rise, some of our current buyers’ maximum borrowing capacity has been reduced. For example, we have a client who, prior to the rate rise, had a pre-approval for a purchase up to $700,000. However, when they re-applied with the same bank after the rate rise, they were told they could only spend up to $550,000. This is one of many stories that we have heard over the past month. Many buyers are now having to either look further away from the city to be able to purchase or look at cheaper options, such as townhouses or units to maintain the lifestyle or location they’ve become accustomed to.
We are finding that prices are still strong and holding. There has been no sign of any major drops, in fact, many houses that we are selling are still achieving higher prices compared to the start of the year. What we are now finding is that homes are taking longer to sell and buyers are in less of a hurry to make an offer.
Townhouses are currently the star performers due to the price point and affordability level. We are getting incredible interest, with multiple offers on all townhouses we have recently sold and in fact, they are selling at prices significantly above many other recent sales. We believe townhouses and even units will continue to stay strong as buyers remain steadfast on wanting to enter the property market and buying anything that fits their budget.
What are the potential changes with the new Federal government?
Below is a summary of some of the policies to be implemented by the new government (please do your own research to confirm details):
- A new “Help to Buy” scheme, involving an equity contribution from the Federal Government of up to a maximum of 40 per cent of the purchase price of a new home (and up to a maximum of 30 per cent of the purchase price for an existing home) for 10,000 Australians each financial year.
- A Regional First Home Buyer Support Scheme, which will provide a government guarantee of up to 15 per cent for eligible first home buyers, so that locals with a 5 per cent deposit can avoid paying mortgage insurance.
- A $10 billion Housing Australia Future Fund, which will build 30,000 new social and affordable housing properties in its first five years.
- The provision of $200 million from the Housing Australia Future Fund for repair, maintenance, and improvement of remote housing in Western Australia, South Australia, Queensland and the Northern Territory.
- The establishment of a National Housing Supply and Affordability Council that will set targets for land supply (in consultation with State and Territory Governments) and advise on ways to improve land use, planning and supply for housing, This Council will also collect “nationally consistent data” on housing supply, demand and affordability, report on rental affordability, social housing, and homelessness and advise on ways to boost the construction of social and affordable housing.
Choosing your agent in a changing market
Over the past 18 months, while the housing market was the hottest that we have seen in multiple decades, we have seen a significant increase of new agents enter the industry. The truth is that in the recent market conditions, any agent can sell a property due to the rate of the rising market. Even when a more experienced or a “gun” agent might be getting higher results, it is harder for potential sellers to see the difference and they often make their decision based on the least amount of apparent costs (i.e. commission and marketing) and in many cases, with the agent that promised them the highest price. However, as the market slows and is changing into a more “normal” market, having the right agent with the best ability to negotiate is the key in ensuring you are getting the best results. Here are some tips when it comes to choosing the agent that will deliver the best result:
- When are you interviewing the agent ask them questions like: how long have they been in the industry? How many properties have they sold in the past 12 months? How many properties have they recently sold in the same suburb as your home?
- Use websites like www.ratemyagent.com.au to research the agent. Rate My Agent is an independent 3rd party site that tracks how many properties an agent has sold in the past 12 months, how many properties they have sold in any specific suburb, as well as the agent’s latest client reviews.
- Consider how fast and effective has their communication been up to the point of meeting. For example, our team prides ourselves on replying to 95% of email within 30min regardless of whether it’s a Sunday or Public Holiday and all calls are to be returned as soon as you are out of meeting if we do miss a call.
- Do not focus only on commission, but focus on who will get you the best result. For example, for a $800,000 home the difference between 0.5% in commission is $4000, but the difference when it comes to negotiation is often the different in multiples of $10,000. Go with your gut on who will get you the most in your pocket after all costs.
- In some cases, neighbours or friends may have been watching the market over a number of years and may actually be able to tell you a few pros and cons with many of the agents you’re considering…things that if you’ve only just started looking, you may not have seen…yet.