A common sentiment amongst buyers right now is that they want to wait 'for the market to crash’ before they make their purchase. What do our experts think? Read on to find out.
The first and most crucial factor to acknowledge, is that no one knows when prices will stop adjusting, making it near impossible to know when to wait for.
The main factor impacting property prices right now is interest rates. Housing values are likely to continue trending lower until interest rates find a ceiling. Forecasts for when this might be change frequently due to the various unknown variables at play, making it exceedingly difficult to know when to stop waiting, and get into buying mode.
With that in mind, here are the main risks in waiting to buy.
Mass Influx of Buyers
Though there are typically still multiple interested parties on properties hitting the market in Brisbane, the number has reduced since the high experienced in early 2022, indicating that many buyers that were actively looking to buy, are now choosing to wait.
This also means that they will re-enter back into the market at the same time, once interest rates settle, resulting in an influx of buyers. As we saw throughout 2021 and early 2022 when monetary policy was changed to encourage spending, competition is one of the key drivers that pushes property prices up.
If you want to avoid the risk of entering back into a crowded market, take advantage of the opportunities that exist now, with less competition and more negotiating power.
Borrowing Capacity is going to reduce
While waiting for prices to drop sounds like a great idea. In theory, there is much more to it than the sale price. As the interest rate rise, banks will begin to re-evaluate their lending capacity for home buyers as their repayments will increase.
So, while you may save a few thousand dollars in the sale price, you will very easily pay this within your increased mortgage repayments, or you may not get approved to purchase within the price bracket you were first looking at. If you are not careful, your wait will be too long.
Waiting not only means you will be re-entering in a crowded market but also with less money to offer. It is also important to consider historical trends and the time of year you are purchasing. Realistically, a successful property purchase can be created by being informed about all aspects of the market.
With less competition right now, buyers find themselves in a position of negotiating power. If you are buying a home that you intend to live in for the next 9 years – the average hold period in Brisbane - paying a fair price today is not going to matter eventually, if you can afford the loan, of course. Prices considered premium today will look like excellent value in 9 years’ time. When your outlook is that far ahead, you should feel more comfortable paying a fair price today.
There are a variety of things you can do to put yourself in the best possible position to buy in this market.
If you are considering putting your property purchase on hold, consider the following:
– If you are set on a particular suburb but houses are pushing your budget, why not consider a unit or townhouse? Demand is only going to become stronger as more people are forced to consider these as a purchase option as well as lack of new stock due to construction issues. Where there’s demand, there’s price increases, so the sooner you can secure one, the better.
- If location is not your highest priority, consider purchasing further away from the CBD where you can purchase larger, family homes for a more affordable price. With many now being able to work from home, the long-held priority of buying a home close to the CBD has lessened.
– Remember, if property price growth does continue to trend downwards, they are still going to be higher than pre-covid levels If you find the right property and it ticks most of your boxes (remember, no property ticks them all) then put your best foot forward and buy it!
While it is easy to buy into the media hype, we have agents on the ground every single day who can provide insights, feedback on market trends, and help you secure a property for a fair price.
This article first appeared in Place Insights - Brisbane Monthly Market Report. Click the link below to read the full report and be the first to receive our Annual Market Report, coming January 2023.
