The news this week that the Reserve Bank had decided to raise official interest rates by further 50 basis points, setting the cash rate at 1.35%, was not unexpected. What it is likely to do, however, is to consolidate the uncertainty in some people’s minds, adding to the recent slowing of buyer activity in the Victorian property market.
Make no mistake, activity levels have definitely eased over the past few months, but nowhere near as much as some sections of the media might have you believe. Properties are still selling and, whilst the buyer pool is somewhat reduced, prices to date have only fallen by around 5% on average, with some areas experiencing a drop of much less than this.
Right now values are holding up quite well, due in part to the ongoing shortage of available properties for sale. In recent months we have been able to help a number of our clients to achieve sales prices that are not far short of those that were being set when prices were at their peak.
Whilst the current market is one where a slightly more conservative approach is advisable, it is an environment where upsizers are actually reaping real benefits. Keep in mind that when prices drop by 5%, the gap between what you sell your current home for and the price you pay for your next home may also be reduced by 5%. For example, if you were selling a property for $850,000 and buying one for $1,250,000, the gap would have been $400,000 last year. If all prices drop by 5%, your current home might sell now for $807,500, but the home you are buying might now be worth $1,187,500, reducing the gap to $380,000.
In fact, higher priced properties in some areas have experienced a larger drop in prices than those on more affordable properties, so upsizers have been enjoying more substantial savings than most. With the right guidance from one of our Buyers Advocates, there is scope to achieve even bigger savings than that, particularly when there is less competition from other buyers.
With stock levels so tight at the moment, and likely to remain so for the next six to eight weeks at a minimum, the current conditions are certainly assisting those who have made the decision to sell now. It seems highly likely that many of the current sellers will be able to look back at this decision in a few months, when the traditional Spring rush is likely to have flooded buyers with extra choices, and be extremely pleased with their foresight.
Understandably, the key to timing your sale in 2022 is to get the right advice from day one based on what your local market is doing, and how you can maximise your own result in that situation. So if you would like to chat with one of our team of specialist Advocates, don’t hesitate to give us a call on 9430 0000 to talk over your options.