Brisbane Real Estate Review

Suzana Wade, Principal of Locate Property says that the current batch of buyers is responding to interest rate hikes by purchasing Brisbane real estate at the lower end of the market.

There’s no denying that the increase in interest rates is working, but thus far it seems to be affecting only the higher end price range. As people consolidate or relocate to the properties that represent the best value on the market, the lower end of the spectrum has remained stable, and in certain circumstances a marginal increase in value has been witnessed.

It is now far more difficult for customers to be approved for high-end loans, and most lenders blame APRA for making banks more cautious than before. APRA has set the serviceability buffer at 3% for the time being.

Ms. Wade explains that rising interest rates have a knock-on effect in that “when the financing capability of a buyer declines, this will produce higher demand for residences at the lower end of the property market.”

The data show that, since the end of 2022, high-end housing prices have fallen 3.8% while low-end home prices have risen 12.8%.

According to data from CoreLogic’s national House Value Index, property values in Sydney and Brisbane fell the most among the nation’s capitals in September (HVI).
Tim Lawless, director of research at CoreLogic, says it’s too soon to say the housing market has fully recovered from the recession.

Mr. Lawless speculated that the market had recovered from the “initial shock” of a rapid rise in interest rates and that borrowers and prospective homebuyers had already “priced in” more rate hikes.
Nevertheless, if interest rates keep climbing as rapidly as they have since May, the rate at which property prices are falling could accelerate once more.

What does the near future hold for buyers?
Ms. Wade claims that additional interest rate increases are possible in the near future, so buyers may not have much wiggle room for a while.

There will come a day when the market is unaffordable to first-time purchasers. As a result, there should be less upward pressure on prices at the lower end of the market.
We don’t expect a major price decrease at the bottom of the market until then.

In order to make smart decisions in this market, first-time buyers need to know what they want and how flexible they can be with their offer.

If their demand is highly malleable, they can further navigate by weighing the cost-benefit of lesser borrowing power versus the purchase price.

Your borrowing power could decrease by 5% if interest rates were to rise in the future, but you’d still come out ahead if the median home price in the areas you’re interested in buying into dropped by 7% to 8%.

So to conclude, Brisbane Real Estate has been quite resilient. Owners with buffers that have budgeted well will remain relatively unaffected in the short to medium term, however, clients that took out mortgages in the high end or are coming off fixed interest rates later this year will continue to experience further pressures. Long story short, the competition remains feirce in the lower price point that are in blue chip suburbs or offer great rental yields.

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