A course correction is not a crash; here’s why now is the ideal time to be buying property

It’s amazing how quickly sentiment can flip around in Australia’s property market. After years of unprecedented, runaway growth across much of the nation, the recent announcement of a small increase in interest rates (from historic and long-term lows), now has many talking about a looming “crash”.

Some degree of correction was inevitable because the growth over the last couple of years has been unsustainable. Housing is now unaffordable for many, (especially those under the age of 40), and the nation faces an unpleasant political, social, and economic reality: For housing to become affordable again, the price of property needs to decline, and that’s going to negatively affect the stored wealth of some homeowners.

This reality raises a number of questions: Firstly, are market forces and government – whichever side wins the looming election - prepared to wear the social dissatisfaction that would come from hurting home-owning Australians? Secondly, would the declines, if they occur, really be a “crash” as the more sensationalist headlines suggest?

Thirdly, and most importantly, does this mean you shouldn’t be getting into the property market?

The answer to question #3 feeds off #1 and #2, and it’s quite simple: no, you shouldn’t let what is occurring now dissuade you from buying property. The age-old truism that property is about holding assets for the long term rather than making short-term decisions is still the best advice, and even putting that aside, what is actually going to happen in the property markets in the short term is unlikely to be anywhere near as severe as some are predicting.

There will be some correction in housing prices, and we’re seeing that already. How much depends on a host of factors, and most significantly how high the RBA will be willing to lift interest rates. Given that the interest rate is being increased to reduce the inflation rate, and that inflation rate seems like it’s already easing, interest rates will be unlikely to lift to the worst-case scenario that some pundits have been throwing out in thought bubbles.

Beyond that, just about every economic indicator in Australia is positive for property. With particular relevance to the housing market, there is no sign of mortgage stress across the country, and indeed over the last few years, Australians have focused on their economic position so many of them have more assets and savings to cover increases to their mortgages through interest rates.

There will also be a new influx of buyers into the market. Renting has also become less desirable than ever, with higher rents and fewer vacancies to contend with. Those that can choose between renting and owning will increasingly opt for ownership, and that will ensure demand in the market.

Further driving up demand will be a return of immigration, which was largely put on hold through the pandemic. A new influx of people, particularly to the cities, will accelerate challenges with renting and encourage further buying behaviour.

Finally, there’s the reality that the housing supply is short across much of Australia. Any declines in property prices will be met with increased demand on the buy side, as more people are able to find the budget for a property. What isn’t going to happen is swathes of properties being left unsold over long periods of time.

Correcting a runaway market is not a market crash, and the long-term indicators of Australia’s property market are still strong. Furthermore, it does look like it’s going to become much more competitive for properties in the near future so, if you’ve been sitting on the fence, now is the best time to be stepping into property before the crowds start swelling.

If you are looking for property in this market, the key to success will be effectively reading the dynamics of the local area that you’re looking to buy in, and being able to cut through the noise from agents to arrive at the true price that you should be paying. For help with that, contact us at Hello Haus to make sure you’re not missing out on the opportunity.?