Interest rates – it’s the talk over dinner tables across the country, but what does it really mean for house prices? Will we see them fall, rise or stabilise? No one has a crystal ball when it comes to house prices (although many wish they did) so it is difficult to tell what will happen as interest rates start to increase, as well as being difficult to tell how far interest rates will rise. But what does this mean if you are looking to buy or sell in the Wyndham City area?
What we know
Rising interest rates increase the costs of borrowing, which often means fewer buyers in the market. For borrowers, higher interest rates mean a lower borrowing capacity, and for investment properties, higher interest rates do mean that many investors will be chasing higher rents to keep a decent return on their investment.
Incremental interest rate increases don’t mean that we will see huge drops in prices. What we are likely to see is a cooling off in the number of people looking to enter the market, and a slowing down on the increase in prices – they may stabilise, fall or grow a lot slower than they have been.
Should I still sell my house?
Spring is a good time to sell generally and you don’t need to spend a lot to get your home ready to put onto the market. Cleaning up the outside of your home, pulling out weeds, planting new gardens and cleaning the driveway all go a long way towards the curb appeal of your home. Internally, small things like repairing broken cupboards, doing a deep clean and decluttering make your home more welcoming.
If you are selling and buying in the same market, it’s all relative – the best advice, as always, is to sell when you need to.
Look at the long term situation, not the headlines
We know that the media is going to jump onto stories of higher interest rates, people having higher payments or perhaps even homeowners being forced to sell. This is the nature of the beast.
When it comes to stories in the media, we need to be able to filter what is sensational news and what is really happening. Banks tend to assess borrowers on a much higher interest rate level (often around 3 – 4 % more, sometimes higher) so essentially, homeowners should be able to absorb those interest rate increases for some time. The problem, of course, comes when homeowners lose their income, or change jobs, or something happens that affects their ability to pay. Banks generally tend to work with borrowers when it comes to this because it isn’t cheap, or easy, for them to sell a home.
When we buy a home, we buy and hold for the long term, and prices will go up and down. Interest rates have been at historically low levels for some time now, and they were never going to stay that way. Think about the big picture and try not to panic.
What can you do?
If you do need to sell, it’s essential to get the right advice before you do. Speak to your bank to find out your options (perhaps there are other steps you can take before selling), speak to a financial advisor, or take advantage of financial counseling offered in the community.
Look at your current repayments, and work out how much you can afford to pay above that will put you in a place where you can decide whether you can hold out longer, and really knuckling down on your budget will also help while we wait for interest rates to stabilise.
In the past it has taken interest rates being held steady for a period of three months to see the full effects of the increases, so it is likely going to be 2023 before we see any real effects.
Talk to us
As the area’s longest-established estate agents, we are the people to talk to if you are thinking of buying or selling a home in Point Cook, Sanctuary Lakes and the wider Wyndham region – so feel free to get in touch. No one knows the market here better than us, so give Established Property a call today.