As we head towards the end of 2024, it’s safe to say that there’s so much in the way of news, rumours and opinions when it comes to the property market here in Australia.
And it can be enough to impact your decision making, and make things quite overwhelming, no matter how much you want to take that next step.
If you’ve been keeping up to date with the housing market in Australia over the past couple of years, you’d well and truly know that housing affordability (more like un-affordability) has been very much a growing concern.
Yes, prices have looked to settle down for now, but the question still remains; will owning a home ever become more accessible for regular, everyday Australians? And what’s going to happen when interest rates inevitably drop?
Well, we’re going to break it down for you. We’ll explore what it all looks like right now, and what it means for future buyers and investors like yourself…
First up: The current state of housing (un)affordability in Australia
To truly understand the reality of the situation, let’s first look at some stats:
– The median-income household in Australia can afford a home valued at around $513K
– However, the median property price is sitting at $815K – a gap of around $300K
What we’ve got here is a pretty clear picture – housing affordability for everyday Australians and the dream of home ownership is getting harder and harder to reach. In fact, data from Core Logic also shows that in 2024, mortgage repayments were consuming 50.6% of household income, which is far, far above the 20-year average of 36.6%. It’s hard to break into the market and it’s understandable if the stats don’t fill you with confidence.
And what about when interest rates drop?
See, this is another tricky piece to the puzzle.
For now at least, prices seem to have settled a bit – which doesn’t help with the affordability piece, but it does give us all a chance to catch our breath a little. But when interest rates drop – which looks to be the case in 2025, the property market may feel the blow.
When rates drop like this, more buyers feel ready to jump in, which brings a heap of competition into the market. And with more buyers, we see more demand – and what we know about increased demand and more competition is that inevitably house prices will rise again.
So, what can you do NOW?
The reality of the situation is that things are constantly changing, and sometimes waiting for the right opportunity doesn’t put you ahead of the curve at all. Our advice? Waiting for interest rates to drop may not necessarily be the best strategy. If you’re looking to purchase a home or break into the market, here are some of our tips:
- Get your finances in order:
Check in on your borrowing capacity, make sure your credit score is strong, and get grinding on that deposit. If the right opportunity comes knocking you want to be ready – and a strong financial position is where it all starts.
- Start looking for opportunities in the current market:
Competition is pretty low right now and looking in the right places may see you finding properties that you can secure at a better price – before the market starts heating up again.
- Explore different locations:
Maybe major cities are out of reach at the moment, but there are definitely high-growth areas with a lot of potential if you’re willing to look regionally. Prices are likely to be more affordable here and it could be a great start in a market that’s pretty tricky to get into right now.
- Speak to an expert:
Things like this are often easier when you have a plan in place, so speaking with a team of experts (like ourselves here at InvestHer), or a mortgage broker can help you develop a strategy that makes sense for you – considering all aspects of your financial position and the current state of the market.
Sure, the stats don’t lie and affordability isn’t looking great right now. But we’re not going to be all doom and gloom over here, because the reality of the situation is that one thing always has, and always will remain the same – people who are willing to take a strategic approach are ALWAYS going to place themselves in the best position to succeed.
Which means, despite the market and the housing affordability crisis we as Australians have found ourselves in, understanding your finances and the changing market conditions, working with the right people and being open to opportunities that may arise at any given moment are clear and definite ways you can get in and make your dream of owning a home come true.
If you want to chat further about how we may be able to help, contact us and let’s talk about making your dream come true – together. tep into the market.
A big problem here centres around the fact that a LOT of the info out there centres around some key misconceptions.
So, let’s break them down so you can feel more confident and knowledgeable when it comes to looking after your financial future.
Misconception 1: You must be super wealthy to invest.
With all of the talk about cost of living and interest rates, it can be easy to count yourself out as a buyer.
But, rather than cancelling yourself out of the property investment equation altogether by saying ‘There’s no way I could invest in property – I don’t make 600K per year’…
Instead, it might just be the perfect opportunity to get into the market before prices skyrocket again. Here’s our checklist to help you really understand if you can invest in property.
- Can you afford a Deposit?
We often say that the smaller the deposit, the better – and even 5 or 10% can work. This is because it leaves you more equity to continue growing your portfolio and work towards those long term financial goals.
- Can you service the Loan?
Paying off the mortgage of the property is typically assisted by your income, as well as rental income.
- Do you have a Cash Buffer?
We typically recommend $20-$30K as a liquid buffer of cash, just to ensure safety should a family or financial emergency arise.
It’s as simple as this – you don’t have to be making unreasonable amounts of money to be able to enter the property market!
Misconception 2: You can only buy property where you know.
We tend to trust the things that we know – and our town, city or region is no different. After all, we’re all human.
But the thing is, it’s a form of bias that can have a major impact on your decision making as a property investor.
Looking at the property market as a whole is SO important. Working to find property to suit your unique goals and circumstances is far more important than buying a place across the street.
So, when it comes to building your tailored property investment plan, looking far and wide might be your best option to ensure you’re meeting the criteria that actually suits your circumstances.
It might just be that your ideal property is situated outside your home state or city. In fact, we’re working with more and more clients in this exact situation, for example, Brisbane or Gold Coast based couples purchasing on the NSW North Coast, or Sydney locals investing in South-East Queensland.
Misconception 3: You need to wait for interest rates to drop.
You know what they say…
The best time to invest was yesterday!
We’re seeing The ANZ-Roy Morgan Consumer Confidence figure continue to grow upon 18 month highs, as well as inflation slow, and indications by the big banks that interest rates are predicted to be at, or near their maximum level.
What are these indications? Well, banks have already lowered their variable rates!
To be more specific, back at the end of August, CommBank announced that any loan with more than a 20% deposit would see a 0.25% decrease to their interest rate, and any 3 year variable loan would see a decrease of 0.7 percentage points.
And it’s not just CommBank that’s making this change – NAB and Westpac have also shaved at least 0.6% off variable rates.
And, what’s more, if you’ve been hanging out with us at InvestHer for a while, you’ll know how much we love talking about supply and demand. Despite it being a relatively simple economic concept, it provides a huge amount of insight into how the markets will react – especially our favourite, the property market.
What does all of this mean?
Well simply, demand for property will continue to increase off the back of these inflation and confidence numbers. And with a dire supply situation that we’re currently facing in Australia – this can only bring price growth.
So by waiting for the RBA’s rates to go down, you might just be passing up a great opportunity to make the most of the market – before it rises on the back of this supply and demand landscape.
If you have any questions about these misconceptions, or would like to chat more about how we can help you achieve your financial goals through property investment…
We’d love to help!
Give us a call on 0455 223 865, or get in contact HERE!
