Sometimes simply understanding the mood of the market can give you the upper hand when buying…
In Brisbane, the current market’s mood is strongly characterised by two, in my opinion, needless worries.
Worry 1: That rates are about to go up, making it difficult to afford a loan.
Worry 2: That Brisbane house prices have peaked and are about to fall, meaning that buyers will end up paying too much.
It would be safe to say that when purchasing a property, you the buyer want your offer to be accepted, while keeping your offer as low as possible. Worried buyers however, that are acting warily rather than decisively mean that the “average” Brisbane buyer is taking 6-12 months to buy and missing out on typically 4-5 properties in the meantime (by offering too low).
So why are these worries unfounded?
Worry 1, Rates: In the short term, markets analysts are predicting, as a near certainty, that the Reserve Bank will further cut the official cash rate as soon as next week.
In fact, there is a new “normal” in interest rates.
Around the world long term official interest rates are close to 0%. This will impact on keeping rates to borrowers low for YEARS to come. (http://www.bloomberg.com/quicktake/negative-interest-rates)
If you’d like to see your own numbers in the flesh, I have developed a loan calculator in my phone and tablet app Ask Alan (app store and google play). Input your loan amount, interest rate and loan term and it will calculate your payments now and also at 6% (which I predict to be a possible top of the next cycle). This way you can clearly see how any rate changes could affect your day to day costs, as well as helping you to plan for the future.
Worry 2, ‘falling’ House Price: A good way to look at Brisbane house price is in its relativity to Sydney house price.
Historically when Brisbane house price is 50% of Sydney’s it is considered ‘cheap’ and inevitable buying pressure sends it upwards. Brisbane is currently 51% of Sydney price.
It is only when Brisbane house price reaches 80% of Sydney’s that it is considered ‘over-valued’ and something has to give. Usually this is where we see Brisbane’s market pause, not fall! Which means the time now is to buy, and leave the ‘wait and see’ for another day.
Gain the upper hand and become a decisive buyer:
2. Take the estimated property value, and then confidently offer MORE than that – knowing that your opposition (other buyers) are generally offering low or thinking timidly out of two misplaced worries.
I believe I can say with confidence, that rates will stay low, and your property’s value is headed up. In a year’s time you will feel justifiably proud of yourself.
If you’ve enjoyed this blog and would like to read or watch more of my research and professional insights into all things Home Loans, Rates and Housing, I strongly recommend downloading my free, informative app: Ask Alan, which offers unlimited access to my library of blogs, articles, videos, trusted referral contacts, and of course my loan repayment calculator.
If you’ve already downloaded it- make sure you take a sneak peek- Ask Alan has a whole new fresh look!
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