The latest interest rate cut by the Reserve Bank of Australia (RBA) will undoubtedly help reignite momentum in the property market after a relatively solid but slow start to the year.
With owners feeling more confident they’ll achieve their desired price, finding a bargain is going to get a little tougher.
Strategies exist to overcome this challenge so long as you have your finances organised, and you’re willing to act quickly when an opportunity arises.
If you’re looking to buy in the current market, it’s important to understand a couple of the key dynamics influencing the behaviour of sellers and buyers.
The industry researcher Cotality (formerly CoreLogic) has reported that values in April rose 0.3% compared with March.
Prices in every capital city are edging higher, although when it comes to all-time high values, the bellwethers of Sydney (-1.1%), Melbourne (-5.4%) and Canberra (-6.4%) are a little short. However, Perth, Adelaide and Brisbane have never been more expensive.
The average price of an Australian home has never been higher, too, and that situation is likely to continue following the RBA’s decision to cut the cash rate by 0.25% to 3.85%.
For 14 months, we had a rate of 4.65%, which kept retail mortgages at around 7-8%. History suggests it takes a full 1% reduction to change a market’s mood, and we are getting seriously close to that point.
So, the next few months are going to be critical if you want to find a bargain. Here are seven tips to help you:
30-Day rule – If a home remains on the market for 30 days or more, then the seller may be ready to cut a deal. Reach out to the agent, and make it clear you’re ready to buy if the price is right, and the home passes building and pest inspections.
Fixer-Uppers – Homes that need a little bit of TLC will offer good buying. However, don’t leap at homes that require triage. Renovation costs have skyrocketed since Covid, and labour skills are in short supply. You’re unlikely to find a bargain with these types of homes unless you are a tradesperson.
Be flexible – The Australian dream is the detached home with a quarter-acre block, but you might find better opportunities by looking at townhouses and semi-detached properties. These styles do not command the same premium.
Apartment shopping – Most discounts for apartments reflect an oversupply in the local area, so do your research on suburbs where there have been multiple, large-scale releases of units in the past 12 months. Be aware that apartments in smaller buildings tend to command a premium.
Too old school – Many buyers are turned off by dated architecture, such as split-level homes that were super-cool in the swinging 60s. If you’re ready to explore this option, you’ll buy a piece of history that may not always be uncool.
Location dilemma – The oldest cliche in property is to buy the worst house in the best street. Unfortunately, the “best street” is expensive no matter what you buy. So, think about your preferred location and whether it might help to widen your search. Your willingness to make a compromise, such as being one railway station further from work than you’d like, can make a big difference.
Engage with agents – In today’s market, good agents are working the suburbs, trying to find owners who might be willing to sell their home at the right price. Often agents do what are called “off-market” deals. Which means they’re selling homes you never knew were for sale. So, talk to agents and make sure you don’t miss out on a potential bargain.