Both rising interest rates and the federal election have created some doubt and uncertainty within the housing market. This has been seen across the board amongst our residential, property management and commercial clients. We hope to summarise below some of the changes and their impact. Please note these are our opinion only.

How has the interest rate rise effected the market so far?

The recent rate rise has effected the borrowing capacity for some buyers. We encourage all buyers to reassess their current pre-approval and reach out to their brokers for a second assessment. For an example, a client we were working closely with had pr-approval up to $700,000. After re-application with the same bank there borrowing capacity had significantly changed to $550,000. This means buyers may have complications during the offer process or are readjusting what they can afford in terms of location and property features.

Townhouses & Units are currently the star performer, this is contributed by an affordability level and a need for housing. Strong interest, multiple offers, and competitive pricing this marketplace is remaining strong. We believe townhouses & units will continue to stay strong as buyers remain steadfast on wanting to enter the property market and buying anything that fits their budget.

What are the potential changes with the new Federal government?

Below is a summary of some of the policies to be implemented by the new government (please do your own research to confirm details):

• A new “Help to Buy” scheme, involving an equity contribution from the Federal Government of up to a maximum of 40 per cent of the purchase price of a new home (and up to a maximum of 30 per cent of the purchase price for an existing home) for 10,000 Australians each financial year.
• ARegional First Home Buyer Support Scheme, which will provide a government guarantee of up to 15 per cent for eligible first home buyers, so that locals with a 5 per cent deposit can avoid paying mortgage insurance.
• A $10 billion Housing Australia Future Fund, which will build 30,000 new social and affordable housing properties in its first five years.
• The provision of $200 million from the Housing Australia Future Fund for repair, maintenance, and improvement of remote housing in Western Australia, South Australia, Queensland and the Northern Territory.
• The establishment of a National Housing Supply and Affordability Council that will set targets for land supply (in consultation with State and Territory Governments) and advise on ways to improve land use, planning and supply for housing, This Council will also collect “nationally consistent data” on housing supply, demand and affordability, report on rental affordability, social housing, and homelessness and advise on ways to boost the construction of social and affordable housing.

Choosing your agent in a changing market

Over the past 18 months, while the housing market was the hottest that we have seen in multiple decades, we have seen a significant increase of new agents enter the industry. The truth is that in the recent market conditions, any agent can sell a property due to the rate of the rising market.  Even when a more experienced or a “gun” agent might be getting higher results, it is harder for potential sellers to see the difference and they often make their decision based on the least amount of apparent costs (i.e., commission and marketing) and in many cases, with the agent that promised them the highest price. However, as the market cools and is evolving, having the right agent with the best ability to negotiate is the key in ensuring you are getting the best results. Here are some tips when it comes to choosing the agent that will deliver the best result:

• When are you interviewing the agent ask them questions like: how long have they been in the industry? How many properties have they sold in the past 12 months? How many properties have they recently sold in the same suburb as your home?
• Use websites like www.ratemyagent.com.au to research the agent. Rate My Agent is an independent 3^rd party site that tracks how many properties an agent has sold in the past 12 months, how many properties they have sold in any specific suburb, as well as some of the agent’s latest client reviews.
• Consider how fast and effective has their communication been up to the point of meeting.
• Do not focus only on costs (commission and advertising), but focus on who will most likely get you the best result. For example, for a $800,000 home the difference between 0.5% in commission is $4000, but the difference when it comes to negotiation is often the different in multiples of $10,000. Go with your gut on who will get you the most in your pocket after all costs.
• In some cases, neighbours or friends may have been watching the market over a number of years and may actually be able to tell you a few pros and cons with many of the agents you’re considering…things that if you’ve only just started looking, you may not have seen…yet.

What’s your property worth?