With house prices falling all around Australia, the big question facing prospective buyers is whether the balance of power has shifted away from vendors and now is the time to buy.
Research house CoreLogic’s national Home Value Index (HVI) is showing six months of consistent declines, with values falling another 1.2% in October. Every capital city and region – with the exception of South Australia – recorded a drop in housing values last month.
Already there is anecdotal evidence that vendors are facing up to the new reality and lowering their expectations, and are increasingly willing to negotiate with vendors.
Weekly auction results are still slowing lower clearance levels and a higher percentage of homes being passed in at auction or selling for less than expected.
The ideal situation with real estate, as with any asset, is to buy low and sell high. And just like there was the ‘fear of missing out’ when prices were on the way up and interest rates were low, now there is FIFO around missing the “bargains’ as the market falls.
If you sold at the top of the market last year and have been sitting out, living in a rental while you plan your next move, then you are truly sitting pretty right now.
Or if you are a first homebuyer who has been scrambling to get a deposit together, only to see prices go stratospheric last year, then at least you might have some hope particularly if you can get onto the Government’s new Help to Buy Scheme where they’ll contribute 30 or 40%.
Picking the bottom of the market is a tricky challenge and everyone wants to buy when it is at rock bottom, but not even the most experienced real estate pundit can tell you when that might be.
However, it is clear that interest rates will continue to rise in 2023 and this will continue to exert downward pressure on house prices.
Personally, if I was sitting and watching the market with a big enough deposit and was ready to make a move, I would wait until late 2023.
By then you would expect inflation and interest rates to have peaked and for the downturn in housing prices to have evened out.
That is just one opinion of many but I’m putting it out there.
Regardless of how it plays out the fact is that prices are on their way down and the market is full of motivated sellers.
For the first time in a couple of years, there is value to be had in the market.
It will all come down to how a buyer’s numbers add up in terms of deposits and repayments, and also if they have found the right property.
The good news for buyers is that the momentum is going their way, and there is more of a chance for them to find the property which stacks up not only as a home, but as an affordable asset and ultimately an investment.