Although welcome, falling property prices have left first homebuyers with a tough decision. Should they buy into the market now? Or wait until 2019, hoping prices continue to sink.
Anyone who follows the market will know it moves in cycles, making the latter option likely.
While it’s tempting to wait and see what happens, there’s another factor that poses a risk to the hip pockets of homeowners: interest rates.
In fact, financial experts are predicting the Royal Bank of Australia will lift the official cash rate sometime in late 2018 or early 2019. If this happens, cheaper property prices won’t be enough to help first home buyers into the market.
For example, if property prices fall three per cent but interest rates increase by 0.5 per cent, the below infographic demonstrates that it’s still better buying now rather than waiting until 2019.
Instead of waiting, Sydney Mortgage Broker, Scott Durrant, says first home buyers should act now as it’s impossible to know for sure whether values would rise or drop in the coming months.
‘If you’re a homebuyer with the intention of staying put for the next 10-20 years, I don’t see the point of putting your life on hold in the hope of saving a few dollars based on a possibility that the market may fall,’ he said. ‘By doing this, you could also risk interest rates going up and missing out on really low fixed rates’.
‘So if the market does flatten, it will pick up again. History has shown you will come out on top’ Scott reminds homebuyers.
For more advice on how much it costs to buy a home check out the extra expenses of buying a home, why first home buyers need to be wary of stamp duty incentives, the hidden costs of building a home and what to ask before signing a contract of sale.