Is now a good time to buy in NSW DiJones real estate

Is now a good time to buy a house or unit in NSW?

Aug 8, 2022 | by DiJones

In real estate, spring traditionally sees an upswing in the number of properties being listed for sale and can be an exciting time for potential buyers, as the higher volume of stock increases the likelihood of them finding the perfect property.

However, with interest rates rising and consumer confidence faltering, to say the least, many are wondering if spring 2022 is the best time to buy a house.

While it’s impossible to give a one-size-fits-all answer to this question, we’d like to explore a few important factors that could help you make the decision about when to buy a house, whether you are first-time buyer or a seasoned investor.

The property market cycle

After a few years of exceptionally strong growth in value, the property cycle has entered a natural downturn, and we are seeing a slowing in most markets across Sydney and NSW, with some suburbs recording drops of several percentage points in the past few months.

There are conflicting predictions about how far prices will drop in this current downturn stage of the cycle, but most experts tend to agree that there is not going to be a catastrophic crash, though we may see a few more percentage points being shaved off current prices in the coming months, with demand likely to trend lower than in recent times.

Demand is trending lower

Wider economic factors are also at play, and while there isn’t a direct correlation between higher interest rates and lower property prices, the current anti-inflationary rate hikes might have an effect on buyer demand as borrowers find it harder to commit to mortgages and banks become more cautious about who they will lend to.

High demand drives competition amongst buyers, and buyer competition drives high property prices. Naturally, as economic pressures and more restrictive lending policies slow demand, we are likely to see price growth start to slow, too.

Stock levels rising

CoreLogic’s Tim Lawless has noted that the traditional spring surge in listings may not be met with an equal surge in demand this year, which suggests that buyers will be faced with a far greater offering and a lot less competition that in recent times, meaning that the rampant seller’s market of the past two years may be tipping slightly in the buyers’ favour.

First-home buyer or investor?

Of course, why you are buying a property will also impact your decision about when to buy a property.

The government’s shared equity scheme is not set to start until early 2023, meaning that first-time home buyers who hope to take advantage of the scheme might prefer to hold off buying for the moment.

Interestingly, Professor Peter Swan from the UNSW Business School suggests that first-time buyers may also benefit from holding off, as he suspects that many current mortgage holders may be negatively impacted by rising interest rates as their fixed terms flip over into variable rates.

Such reticence from first-home buyers, who currently account for around 24% of owner-occupier mortgage demand, could effectively slow overall demand even further and open the door to savvy investors who will recognise the favourable conditions and snap up some great properties at realistic prices, taking full advantage of very tight rental markets and increasing rental yields.

Ok, so should I buy a house now?

Taking everything into consideration, and always remembering the importance of consulting with your financial advisor about your individual circumstances before making any major financial commitments, the next few months could be as good a time as any for buyers who have positioned themselves well financially.

Let’s quickly sum up why:

  • Supply is likely to equal or even outstrip demand, meaning that there will be less competition inflating prices unreasonably
  • Property prices are unlikely to crash, and although we will probably see growth rates normalising after the unsustainable boom of the past few years, values will generally continue to trend upwards, especially in the long term
  • Interest rates are expected to rise further in the coming months, but tighter lending criteria mean that if you are granted a mortgage, your lending institution almost certainly considers you able to weather that particular storm and service the loan
  • Realistic vendors are starting to realise that the property cycle has shifted into a downturn phase and may be willing to accept sensible prices from discerning buyers.

Other buying a house or apartment articles and resources 

Buying a house or apartment in NSW eBook

Guide to buying a house in NSW

Home loan deposits - a complete guide for home buyers

Using superannuation to buy a house or unit - can it be done? 

8 key steps to buying a house or apartment


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