The property market has had more plot twists than a daytime soap opera in recent years. So getting the skinny on current trends is helpful when you’re planning to buy. Here’s the lowdown on the latest surprising bit of data.
Despite all the media doom and gloom predicting that the Australian housing market would tank in 2023, national property prices actually rose ever-so-slightly in February.
So what the heck is going on?
Property price trends
You may have heard it’s been a bit of a buyer’s market in recent times. Over the past 12 months, property prices were down 7.2%, the biggest annual drop since May 2019.
With rising interest rates, buyer demand slowed. This saw properties sitting on the market for longer.
And to entice sales, vendor discounting rose to -4.3% in January 2023 from -2.9% in November 2021.
However, recent data shows things may be starting to turn.
A PropTrack analysis shows that Australian property prices actually rose by 0.18% in February 2023.
And here’s why …
Impact of housing supply
If you’ve been house hunting recently you may have noticed it is slim pickings. In fact, as of December 2022, new listings were 20.4% lower year-on-year.
Lower listing volumes for most states has created increased buyer competition, which has helped drive prices up slightly.
Now, this may just be a blip – listing volumes can experience seasonal fluctuations and if supply increases again prices may drop back down.
But it just goes to show how hard the market is to predict. And those who are holding out on buying until the market drops further might want to start preparing their finances sooner rather than later.
Impact of interest rates
Why were national property prices expected to drop in 2023? And why might they still fall?
Well, successive rate rises have seen the RBA’s official cash rate hit 3.35%, up from 0.10% in May 2022.
And in a recent statement, RBA governor, Philip Lowe announced the Board expects more rate hikes for 2023.
As interest rates rise, so too do mortgage repayments, which means buyers are unable to borrow as much – leading to downward pressure on property prices.
But as we’ve seen in February, other factors – such as the number of homes available to buy – can counteract that downward pressure.
Have a chat with us
Keeping your finger on the pulse of the property market is tough enough – let alone finding the right home loan, organising your finances and navigating the application process … buying a home can feel like a full-time job in itself!
But we’re here to help. We can use our network of lenders to find the right home loan for you, so you can focus on nabbing your new home.
Refinancing your home loan for debt consolidation
Another method people use for debt consolidation is rolling it into a refinanced home loan, because mortgages offer comparatively low-interest rates.
So if you’re really struggling with multiple debts right now – such as a car loan or a number of credit cards – consolidating your debts into your home loan will, in most cases, reduce your overall monthly repayments.
However, here’s a big word of warning.
While this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (like a personal loan) into a much longer-term debt.
As such, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise.
One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short term debts within a few years, rather than, for example, over a 25-year home loan period.
So if you’re in need of breathing space now, debt consolidation is an option to consider – especially with mortgage rates so low at present due to the RBA’s official cash rate being at record low levels.
Get in touch today
If you’d like to explore your debt consolidation or refinancing options, then get in touch with us today and we can help you look at ways to take some financial pressure off your shoulders.
It’s also worth noting that lenders are providing mortgage holders impacted by COVID with a range of hardship support measures, including loan deferrals on a month-by-month basis.
Whatever your circumstances, we’re here to support you however we can through these times.
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