What Rising Interest Rates Mean For QLD Property
Earlier this month, Australia’s Reserve Bank raised interest rates for the first time in over a decade. Cash rates are expected to continue increasing throughout 2022 and will reach more than 2.5 per cent by the end of the year.
The RBA’s increase in interest rates will undoubtedly affect housing prices, but that’s not to say Aussies have been caught unprepared. The results of one survey revealed that 31 per cent of Queenslanders have a savings account buffer of over $20,000 to help them weather the increased interest rates.
Will that be enough? Only time will tell. Until then let’s take a look at some of the other changes buyers and sellers should look out for as a result of rising interest rates.
Higher Mortgage Rates
Let’s say the cash rate does increase to over 2.5 per cent by the end of the year and mortgage rates follow suit. If this happens, the average interest rate on new mortgage loans could more than double.
At first, this might sound a bit scary to potential buyers. However, you don’t need to worry if you work with a skilled mortgage broker who can help you get the best loan for your specific situation. They will have connections with the top lenders in your area and can get you the best rates possible, as well as help you plan your next couple of moves.\
Lower Home Prices
In general, when mortgage interest rates rise, housing prices drop, and Australia is no exception. This year, some experts are predicting a drop in prices of up to 15 per cent.
And while that might not be good news for home owners, this is great news for potential buyers. Thanks to declining housing prices, those who might have a hard time buying a home in the last couple of years will potentially be able to finally become homeowners.
If you’re a seller, you can still get above-market results if you work with the right real estate agent who knows how to perform regardless of the current landscape. By carefully combining the perfect mixture of strategy, presentation, marketing and buyer management, they can help you get the best price possible.
If you’re thinking about selling and want the best result, chat to our team for a free appraisal.
Less Competition Among Buyers
Some of those who have been considering buying a house may decide to hold off this year and wait until interest rates go back down.
A decrease in the number of potential buyers is not necessarily a bad thing. With fewer people looking to invest, this can decrease buyers’ chances of ending up in a bidding war and overpaying.
It’s important to note, too, that Cairns is the 5th most populous city in Queensland, and thousands of people move here each year. So even if competition decreases, there is still going to be strong levels of interest for potential sellers.
Changes in the real estate market may lead to a slight decrease in the number of people shopping for houses in Cairns. However, we firmly believe our market will see some incredible results.
People still want to live here, that hasn’t changed. Which means sellers will still get good prices and get their houses off the market quickly.
Fewer New Listings
Some potential sellers may hesitate to list their homes in 2022. They may worry that, with higher interest rates, they won’t be able to sell for a high enough price to upgrade to a better property. This can be good news for the sellers who do choose to list, as with less listings on the market, any properties being listed will likely see greater interest.
Before sellers decide not to put their homes on the market, it is definitely helpful to meet with a real estate agent.
If a popular area like Cairns, sellers will likely find that they can still get a fair price for their house even with ongoing changes in the market, especially with an experienced agent on their side. A good agent can help sellers price their homes properly and offer guidance to ensure they get the greatest amount possible.
Increased Focus on Affordable Housing Options
Rather than investing in large, single-family homes, some buyers in 2022 may opt for less expensive properties. This is particularly likely for first-time home buyers.
By investing in a smaller, more affordable home, new buyers will have a chance to build equity and experience the benefits of homeownership, even with higher interest rates.
Seasoned real estate agents will also be able to help buyers find properties that — despite potentially being smaller — still meet their needs and align with their tastes.
This could then lead to an increase in prices for units and townhouses, a segment of the market that felt a bit neglected during the COVID property growth. So it is advised to make a move sooner, rather than later.
Thinking About Selling?
Have you been confused about the recent changes in interest rates and the Australian housing market? We’re here to help.
Working with trustworthy, qualified Cairns real estate agents can help you better understand what’s happening and feel confident in your decisions.
It doesn’t matter if you’re looking for information on buying, selling, leasing, or property management. Our experts at Champions in Real Estate can offer expert guidance and ensure you can achieve the best outcome regardless of your situation or goal.
Contact us today and we’ll show you what is possble.
