One of the big real estate questions during the past two years has been how rising interest rates affect property values.
The impact of increasing mortgage costs is an influential factor in a homeowner’s decision to sell their existing property to either upgrade or downsize.
Interest rate rises have had a fundamental impact on sellers’ thinking. That’s hardly surprising given we have seen 12 increases in the past 14 months with the base rate now at 4.1%.
Sellers’ initial response was to withdraw from the market, reducing the amount of supply for buyers. In itself, that lack of choice increased competition and stabilised prices. Similar behaviours have been experienced in America, Canada and, to a lesser extent, the UK.
A recent article in Australian Property Investor unveiled fascinating data on this topic. Comparing the 15 periods in the past 25 years when the cash rate was more than 3%, it found:
- Values fell only twice (1% and 3%).
- Property increased in value by up to 10% six times.
- On seven occasions, it rose more than 10%.
Of course, issues such as Covid and the ensuing inflation spike make the recent trends slightly different. But you certainly cannot say higher rates always equal lower prices.
And now, sellers are getting back in the game. The latest data from industry researcher CoreLogic found values rose 0.7% in July, the fifth successive month of value increases.
If you’re considering selling now that we’re experiencing a turnaround in values, we’ve listed some ideas for preparing a property for sale within an eight-week deadline.
Organise your diary
Be flexible to accommodate buyers. Out-of-hours inspections can be inconvenient, but we must give every prospective buyer access to your home.
First impression
Focus on the front of your home to make a great impression. Ensure your front garden is well-kept and you’ve hidden away tools and toys. If you have a front driveway, consider parking down the street to enhance the impression of space.
Declutter and depersonalise
Remove personal items and excess clutter that can make your home feel small and insufficient. Organise your kitchen and bathroom cabinets, and make some space in the closets to demonstrate adequate storage.
Go deep
A deep clean is essential. If you don’t have time, hire a professional cleaning company. You want your home spotless when the buyers walk through.
Fix it
Small, annoying problems you’ve been happy to live with for months, if not years, must be fixed.
Show time
Consider asking a professional to stage your home so that it looks fantastic. They may rent suitable furniture and arrange it so there’s a flow through the living areas. Many of our agents say staging will shorten sales times and increase prices.