Supply Is Still Not Meeting Demand: What This Means For Home Buyers
A report on Domain.com.au has highlighted an ongoing trend and challenge in Australia’s property market: despite being a normalising of property pricing, supply is still not meeting demand across most markets.
Generally speaking, property prices ease when supply and demand are in balance, or supply outstrips demand. However, Australia’s property market is undergoing a different set of forces – property prices are easing because of the recent interest rate hikes, but this has also had the effect of pulling people out of the market. The fundamental imbalance, where there is significantly more demand than there is supply, remains in place.
What does this mean for home buyers? It’s still tough to secure the ideal property. There might be fewer individual bidders on a property, but those that have remained in the market are generally the more serious bids, and are in a strong financial position such that further interest rate rises are not a concern for the property that they are bidding on.
What does this mean for the buying process?
Being Buyer Ready is even more important now than ever, and that’s for three particular reasons:
- You’ve got to be sure of your financial position. Remembering that the cost of living is also increasing due to inflation, you should make sure that any mortgage that you take out has been stress tested for an interest rate a couple of per cent higher than it is right now. Borrowing is still relatively accessible, even though banks do tests of their own, it's important to do your own due diligence when calculating the house that you can afford.
- You must have a better knowledge of the local market than your competitors. As we stress through our Get Buyer Ready course and our interactions with clients, the better you understand the area that you’re looking for a property in, the more prepared you will be for negotiations with the agent and/or seller. Because the price of property can fluctuate significantly in a short period of time, you need to develop a real-time understanding of the market prices, and understand the current and future dynamics of the area (in terms of amenities, construction, etc) that will affect the value of the property in the future. The more knowledge you have, the greater your competitive advantage will be against other bidders.
- Moving quickly is key. You don’t want to rush matters, but understand that the market is dynamic and in a state of flux right now, and the longer the search and negotiations drag on, the higher the risk that something might happen to drive you out of the opportunity. Another benefit to being buyer ready is that you’ll be equipped to move quickly and with confidence once you’ve identified the right opportunity.
The fundamentals of buying property haven’t changed, so with the right approach and knowledge, you’ll still be able to secure for yourself an ideal home and/or investment opportunity.
Is uncertainty really the right time to buy?
Consumer confidence is at its lowest since June/July 2020, when COVID-19 was new and at its most disruptive to our lifestyles. Does that mean that you should put your home purchase on hold?
As long as you can satisfy yourself that your financial situation can weather some further disruption, as well as another year of interest rate and cost of living increases, then no. After all, you have to live somewhere, and data also highlights that with an increase in investors, and the expected influx of migrants and students, rental prices are also going to increase by a premium.
As much as possible you want to insulate yourself from the broader market conditions, and that means securing your own property to occupy. If you can do that, then you’ll be in a much better position to weather the economic disruptions.
Need help with getting buyer ready and navigating the challenging and dynamic property market? Speak to the experts at Hello Haus today!