New (Financial) Year, Same High Demand From Brisbane Buyers

Happy New Financial Year!!!

It’s all very well to set health and lifestyle goals on the 1st of January but I’ve never understood why there isn’t a big thing for making New Years Resolutions around our finances on the 1st of July. After all, courtesy of putting our tax return together, isn’t it the time that we finally set laser focus on what we earnt for the last 12 months and what we spent it on.

Let’s face it though, every mortgage holder in Australia is very clear that a large proportion of their income over the last 12 months went on the mortgage (home owners with average mortgages are now paying more than $21,000 more in annual repayments since rates starting to increase in April 2022). And if you are fortunate that it didn’t constitute a large proportion, it certainly was bigger than it has been for a while.

Interest Rate Strategy

Whilst the RBA was kind enough to leave interest rates where they are again, there is no doubt that for many Australians the inflated mortgage repayments paired with cost-of-living increases are starting to seriously bite. Recent surveys such as one from Finder show that many homeowners have employed self-preservation strategies such as extending the term of their loan to reduce their repayments (the Finder report suggests as many as 1 in 8) or worse still have missed repayments (their research suggests around 1 in 10). From our perspective we are increasingly speaking to homeowners who are considering downsizing from homes that they otherwise love simply to take the financial pressure off and improve their lifestyle.

Whilst economic experts are now predicting that interest rates may not drop for another 12 months or could even potentially rise on the back of stubbornly sticky inflation, personally I would caution against any such major strategy. I’m a real estate agent and I will happily sell your home but in my opinion home ownership and profiting from it should be a long-range activity. Prices for all real estate in Brisbane is decidedly on the rise and the cost of selling and buying can set you back somewhere in the order of $70k to $100k on average and the only people that benefit from those transactions are the likes of me and the state government.

The same applies to extending your loan, make sure you clearly understand the impact of your activities in terms of increased interest costs over the term of the loan. The cost can genuinely be eyewatering … yes, it will really make you want to cry. Whilst most people are not presently in a position to do this, if you can increase your repayments or dump your tax return onto your mortgage, it is equally remarkable how much you can save in the long term … check out this mortgage repayment calculator - try just adding an extra $100 per month, the saving of money and time will truly make your head spin! And if nothing else, asking your broker to regularly review whether you are getting the best deal (even monthly if you can remember) can definitely be saving you $$$ … rather the money if small savings in your pocket than the banks.

Brisbane Prices Continue To Rise

Prices across the country definitely continue to rise and none more so than in Brisbane where median prices rose by another 1.2% in June, 3.7% for the quarter and a whopping 15.8% for the year making it the 2nd highest rate of growth for the country behind Perth. Unlike markets like Melbourne where conditions are decidedly different, our market continues to be strongly impacted particularly by low listing numbers (total listings are some 34% below the 5 year average and it’s now been some 18 months that many an agent and a buyer alike have been lamenting this fact) and plenty of motivated buyers including those coming via interstate and overseas migration.

Whilst homeowners may be struggling with mortgage repayments and the borrowing capacity for buyers may also be somewhat compromised at present, the motivation of buyers to just get into the market is unwavering. Preliminary findings from InfoTrack’s 2024 State of Real Estate Report show that over one third of buyers say interest rates don’t impact their decision to get on the property ladder. The much stronger sentiment we are seeing is often simply motivated by a fear that prices will get out of reach if they don’t get in quickly … and on the basis of that 15.8% median price increase you absolutely can’t blame them for that opinion! Or how about this statistic, there are now more than 4 times the number of $1 million+ suburbs in Australia than there were 10 years ago and Queensland is just a cat’s whisker away from being 2nd on the national leader board for having the most $1 million+ median price suburbs in Australia and is certainly the fastest growing in that category. (For the full article CLICK HERE or review the new Ray White Luxury Market Report further below).

FOMO Is Back

The sentiment of FOMO (Fear Of Missing Out) which became so strong during Covid is starting to creep back in among buyers with multiple properties going for record prices, media predictions of expected hefty price increases over the coming year and days on market ever shortening. This weekend we presented 2 new homes to the market and saw a whopping 63 groups (refreshed 4 bed / 2 bath with pool) and 37 groups (single level 3 bed / 1 bath renovator) through each open house. With many of these buyers disheartened by missing out on other properties multiple times and seeing the market rising without increased borrowing capacity to match, the frustration and exhaustion is very real. All we can say is that we genuinely feel your pain and definitely don’t give up.

Spring (Selling) Is In The Air

The unofficial start to the Spring Selling Season is less than one month away (September is of course the official start to Spring but we traditionally see the warmer weather and uptick in listings start in August) and I for one can attest to the fact that there are some fantastic homes on the horizon … assuming that you don’t fancy the ones we have on the market now because they are genuine crackers!

The Ray White Perspective

As always, don’t just take my word for it. As the biggest real estate brand in Australia by far, we have access to an exceptional range of information. Check out the monthly Ray White Now report (linked below) about real estate nationally, the Competition Creators report about all things auction nationally and a few really interesting reports from our chief economist Nerida Conisbee.

Happy New Financial Year!