HAPPY VALENTINE’S DAY

HAPPY VALENTINE’S DAY
It’s no secret that with interest rates going up that buyers’ borrowing capacity has come down.

So it shouldn’t be a surprise that people are looking for cheaper properties to buy.

Now, some buyers are offering lower prices on all properties, well below where they are still epic value to a buyer.

It’s not a bad thing, don’t get me wrong. As a buyer wouldn’t you want to have a crack at a property that doesn’t quite tick all your boxes, as long as you get it for an insane price? I’d rather be told no than find out someone else got it at a complete steal.

Now, I launched 60 Collings St, Geebung last week. It’s not a big house by any stretch of the imagination, it backs onto the train line, it shows in the flood maps (unnecessarily in my mind – it’s never flooded), but we had over 30 groups through it, mainly because we had it priced with a lot of interest expected below $700,000.

We had a lot of buyers miss out, some chose not to make offers as it just wasn’t for them. Others made offers but missed out.

After chatting with many of the buyers, their budget was generally under the $700,000 price point as expected, with many up to $650,000. This is where it gets interesting.

I believe the rising house prices caused many people to get their foot in the door with units and townhouses and pushed the prices of townhouses and units upwards. Combined with increased rent and hence rental yields, investors also became attracted to townhouses in small complexes with low body-corporates.

Now, with interest rates knocking buyers’ borrowing capacity to the floor, many of the buyers through Collings St would also consider townhouses. So I believe townhouses should begin to attract a lot of buyers once again, as the house prices aren’t coming down as fast as borrowing capacity with owners choosing not to accept low offers and simply hold onto their properties.

Whilst the inflation measure through the CPI was last measured in December when people were out spending money on Christmas shopping. I believe the 9 interest rate rises must have taken a toll on January and February numbers, and I believe that we’ll see the inflation curve take a real turn. I certainly know in our household we seem to spend more money at the end of the year as compared with the start and while there’s still talk of interest rate rises, there’s talk of a pause on rises, and there’s also talk of interest rate drops later in the year. I guess we’ll know soon enough and see what the RBA does in the following months.

One thing is for certain, people are still wanting to buy houses. People are still wanting to sell houses.

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