Why buyers have the upper hand in today’s property market

What a difference a few months can make! The property market has made a rapid turnaround from a seller’s market to one where buyers hold plenty of clout and it could be your chance to pick up a bargain. 

Couple joyfully running into their new home. They are both wearing casual clothes, very happy and smiling. The house is contemporary double brick with render, driveway and balcony. They are holding hands.

Big savings for today’s buyers
A string of rate hikes has sent property values south[1],  and it’s giving homebuyers and investors an opportunity to buy quality properties for considerably less than just a few months ago.

A cooler market is also giving buyers valuable leverage in price negotiations – and that spells opportunities to pocket a supersized discount.

As a guide to the savings, Melbourne’s median home value has fallen from $799,756 at the beginning of March 2022 [2] to $791,999 at the start of August [3]. That’s a price cut for buyers of $7,757.

In Sydney, the median price has dropped from $1,116,219 to $1,087,376 over the same period – a mammoth saving of close to $29,000.

It’s not just about bargain-buying
Today’s buyers are also spoilt for choice.

According to PropTrack, the research arm of REA Group, new listings in capital cities are up 8.7% compared to the same time last year[4].

Nationally, total listings are up 4.9% compared to a year ago – the largest year-on-year increase since 2010[5].

This is giving buyers a golden opportunity to find the property that ticks all the boxes for their needs, with the added sweetener of having fewer buyers to compete against.

Investors score a trifecta of benefits
For property investors, the current market offers a true bonanza of benefits.

Along with falling property prices, rental vacancy rates are being squeezed to record lows.

SQM Research reports the vacancy rate nationally is a tiny 1%. In Sydney and Melbourne, vacancies are at 1.5% and 1.6% respectively – well below the average[6].

Not surprisingly, this is pushing up rents at a dramatic pace.

Capital city asking rents have skyrocketed 17.4% over the 12 months to August. In Melbourne, apartment rents have soared 19.6%.

The upshot is that gross yields on property have climbed nationally, and in a super-tight rental market, investors can often expect a healthy cashflow from day one.

Fixed rates peak
On the other side of the property ledger, fixed home loan rates seem to have reached their peak.

While attention has been focused on rising variable rates, we’ve seen fixed rates drop across the Commonwealth Bank, Westpac, Macquarie Bank, and Suncorp among others.

It’s worth noting too that the current rate rising cycle may be short and sharp. Commonwealth Bank economists have pencilled in rate cuts from the second half of next year[7]. At this point we could easily see property values head north, especially as we begin to see increasing numbers of overseas arrivals.

Why now is the time to buy
There is no crystal ball that shows how the property market will move, and yes, prices may fall further. But property is a long-term investment, and we know that over time, it delivers robust capital growth even following significant downturns.

The catch is that no one rings a bell to indicate when we’ve reached the bottom of the market. And homebuyers and investors who hold out for prices to fall further run the risk of missing out.

Today’s market offers comparative value, and this is backed by falls in fixed rates that can shield borrowers from further rate hikes along with stable, very competitive variable rates.

It really does make now the time to speak with the Avant Financial Services team.

As specialists in home and commercial property loans for doctors, we can help you discover just how keen lenders are for your business – and how much you can save with a competitively priced loan.

Learn more

Talk to a finance specialist today. 1800 508 676

This information is general only and has not been prepared to suit your specific objectives, financial situation or needs. Please consider its appropriateness to your circumstances.

[1] https://www.theguardian.com/australia-news/2022/aug/02/it-made-us-nervous-rising-interest-rates-and-falling-property-prices-squeeze-household-budgets

[2] https://www.corelogic.com.au/__data/assets/pdf_file/0019/9811/corelogic-home-value-index-mar-2022.pdf

[3] https://www.corelogic.com.au/__data/assets/pdf_file/0013/11812/CoreLogic-home-value-index-August22-FINAL.pdf

[4] https://www.realestate.com.au/insights/proptrack-listings-report-july-2022/

[5] https://www.abc.net.au/news/2022-08-19/domain-boss-housing-market-downturn-mortgage-prison/101345602#:~:text=Compared%20to%20this%20time%20last,affected%20levels%20in%20July%202021.

[6] https://www.abc.net.au/news/2022-08-19/domain-boss-housing-market-downturn-mortgage-prison/101345602#:~:text=Compared%20to%20this%20time%20last,affected%20levels%20in%20July%202021.

[7] https://www.abc.net.au/news/2022-08-19/domain-boss-housing-market-downturn-mortgage-prison/101345602#:~:text=Compared%20to%20this%20time%20last,affected%20levels%20in%20July%202021.