Buying property is a major decision. So it’s sensible to be sure you’re making the right move. However, there are compelling reasons to get into the market sooner rather than later.
We look at five key facts to dispel possible concerns that could see you sitting on the fence.
1. The political outlook has always been volatile
In mid-2019, it can seem as though there’s plenty to worry about. Trade wars are rattling the global economy, the UK is still muddling through Brexit, and there are tensions over shipping lanes in the Middle East.
How should home buyers handle these sort of issues?
The fact is, the world has always been volatile. At any given time in history, a number of nations have been at loggerheads. And it doesn’t take a long memory to realise there is always some sort of political scandal hitting the headlines.
What’s different today is that television, radio and the internet (especially social media), keep us continually updated on every crisis as they unfold. The key can be to block out the ‘noise’ and focus on your personal goals.
2. Australia’s economy is expected to strengthen
Perhaps you’re worried about the health of Australia’s economy. The reality is that our economy has grown by 1.8% over the past year. Yes, this is below long term average of 3.5%. But it’s certainly not a sign we’re in recession. Moreover, the job market remains strong, with unemployment at just 5.2%1.
In announcing rate cuts, the Reserve Bank of Australia (RBA) has said Australia’s economy is expected to strengthen, supported by low interest rates, a pick-up in household incomes, government spending on infrastructure and a brighter outlook for the resources sector2.
3. Our two largest property markets are on an upswing
Delaying plans to buy a home could see you miss out on valuable bargains.
Property values in our two biggest cities – Sydney and Melbourne, have dipped in the last two years. But figures from CoreLogic show both property markets recorded a rise in June, up 0.1% in Sydney and 0.2% in Melbourne3.
This upswing isn’t just due to lower interest rates. According to CoreLogic head of research Tim Lawless, “The improving conditions through to mid-May were largely ‘organic’, pre-dating the positive boost in sentiment following the federal election and interest rate cuts in early June.”
The main point is that buying today can let you take advantage of budget-friendly prices before values rise further.
4. Interest rates are at new record lows
Earlier in 2019 rates were expected to rise. That certainly hasn’t proven to be the case.
Right now, home buyers can take advantage of the lowest home loan rates in living memory. Plenty of lenders are offering rates below 3%, and combined with lower property values, it can make buying a home more affordable than it was 12 months ago.
5. Your borrowing power may have just enjoyed an uptick
You may have heard about lenders having very strict borrowing criteria. The good news is that bank regulator APRA recently relaxed lenders’ stress tests. This means you may be home loan-ready sooner than expected. It can also give your borrowing power an uptick.
As a guide, a family with a household income of around $110,000 may now be able to borrow up to $60,000 more4. It could let you buy in a better suburb, or afford a better quality home.
Adding it all up
Buying a home calls for careful consideration. That’s a no-brainer. But right now the market is ticking a lot of boxes for buyers.
Speaking to your Mortgage Choice broker is a great way to gain expert insights into the property and mortgage markets, and to find the home loan that can help you get off the fence and into your dream home.