Whilst interest rates have remained historically low over the last several years, the recent increase in interest rates has seen household income and borrowing conditions tighten, and housing prices begin to fall. Whilst the later may appeal to prospective buyers, it is more important than ever that buyers carefully consider their financial circumstances and loan serviceability before purchasing property.
Impact on The ACT Property Market
In 2019, we saw the average house price increase rapidly with low interest rates driving demand from first-home buyers and investors. The figures from the Australian Bureau of Statistics in September 2021 indicated that the ACT’s property market had seen the highest growth of all states and territories with an increase of 8.2%.
With several interest rates increases over the last few months, we are now seeing demand slow and the borrowing capacity of prospective buyers becoming increasing tighter, slowing the growth of property prices. The August 2022 statistics indicate ACT property prices have since fallen by 1.7%.
So what does it mean for you?
Whilst the slowing of the property market gives prospective buyers greater bargaining power in the residential housing market, it also means there will be a reduction in the potential borrowing capacity or accessibility for buyers of potential purchase funds.
For prospective buyers, it is important to seek financial advice before buying to ensure that not only can the loan can be serviced but that future interest rates increases can be accommodated. If you have any queries in relation to this insight, please do not hesitate to contact the BAL Lawyers Property Team on 02 6274 0999.