So far, 2022 has been a year of change for real estate in Australia, and there’s more uncertainty up ahead in the form of a federal election, rising inflation and conflict in Europe.
It’s more important than ever for sellers to have a strong understanding of what factors are impacting the housing market. So what are the key takeaways from Tuesday night’s federal budget reveal?
We spoke with Pete Wargent, co-founder of BuyersBuyers and all-around Australian property expert, to find out what homeowners need to know.
What housing schemes were announced in the 2022 budget?
In a year where cost-of-living pressures are dominating headlines, short-term relief looks to have been front and centre for this year’s budget.
While property didn’t feature heavily in Josh Frydenberg’s address, some important changes to homeownership schemes were announced that will target affordability pressures and empower more buyers to purchase homes.
The government has expanded the home buyer guarantee out to 50,000 places per annum, so that’s big,” Mr Wargent explained.
The First Home Loan Deposit Scheme, which has been doubled for the next three years, is designed to help first home buyers get into the market with a smaller deposit.
Of the 50,000 places announced, 10,000 are specifically targeted at regional areas, suggesting there could be an injection of competition coming to Australia’s already-hot regional markets.
How will this budget affect sellers?
“From a seller’s perspective, there are some potential buyers coming into the market as a result of those places that have been opened up,” Mr Wargent said.
He explained that the main impact of the guarantee “will probably be supportive of regional housing markets rather than the capital cities because of the lower price points, but also because 10,000 places are earmarked for buyers outside the capital cities.
Even so, it looks unlikely to change the trajectory of the already-cooling regional markets, which Mr Wargent said were beginning to slow down as more people return to work in capital cities.
In terms of the major city markets, it looks like it’s going to be business as usual, with the strength of factors like poor housing affordability and the potential for interest rate hikes far outweighing any effects this budget will bring.
“There are some targeted impacts on reducing the cost of living pressures—things like petrol prices and the cash handout—but I don’t think there’s any one specific measure that’s going to have an impact on the property market.”
What should sellers be concerned with now?
While the extension of the First Home Loan Deposit Scheme is good news for first home buyers on lower incomes, ultimately it’s not expected to touch the sides when it comes to the price growth and the trajectory of the property market.
As a result of rising inflation, Mr Wargent said “we’ll probably see interest rates rising over the next year or two.”
He explained that futures markets are predicting the cash rate will rise from its current record-low of 0.1 per cent all the way up to 3.0 per cent by August 2023.
“I don’t believe we’ll get there, but that’s a very steep curve, and I think for sellers that probably suggests that there’s not going to be as many buyers around later in 2022 and 2023.”
For now, the Reserve Bank is exercising patience, but if rates do end up reaching 1.0 or 2.0 per cent, “that can actually really start to make a difference to mortgage repayments.”
With price growth expected to flatten throughout 2022 and banks forecasting a significant fall in 2023, it may be wise for potential sellers to strike while the market is still buoyant rather than wait for a time when buyers have less borrowing power and may become more hesitant.
Speaking to a top local agent is one of the best ways to get a strong understanding of how your market is behaving and when might be the right time to list.
Article Source: www.openagent.com.au