While an increasing number of Australians think now is a good time to buy property, economists appear to be less convinced.
Finder has revealed that only 17 per cent of economists think property is currently affordable in Australia, falling from April’s high of 59 per cent.
According to KVB Kunlun chairman Peter Boehm, the rate cuts are doing more harm than good for the housing market.
“House prices have been increasing (making it harder for first-time buyers to get into the market), existing mortgage holders are maintaining repayments at current levels to help reduce their debt quicker, and therefore not spending this ‘freed up’ cash,” he said.
Insights manager at Finder Graham Cooke believes economist have not been persuaded by rate cuts when it comes to affordability.
“Housing affordability cuts both ways,” he indicated.
“When it is high or economists feel positive, property prices can be relatively low, meaning more Aussies have a chance to buy. The flipside of course is home values might be trending in the wrong direction, and no one wants to catch a falling knife,” Mr Cooke said.
Despite economists believing it’s a bad time to buy, consumer sentiment would indicate the reverse.
In October, 59 per cent of consumers said it was a good time to buy property, up from 54 per cent in May.
Mr Cooke said consumers are likely responding to the positive news they are seeing about house prices in Australia.
“Buying property is still considered ‘safe as houses’ in Australia, but it’s taken with a grain of salt in many countries since the global financial crisis.”
“House prices don’t always rise, and the economy doesn’t always perform well,” Mr Cooke warned.
So is it a good time to buy or not?
While nobody knows if the property market has turned a corner, or if the current price boost is simply a dead cat bounce, Mr Cooke believes it’s more likely price growth will continue to be seen.
He also commented that buyers looking to get into the market may never have a better time, with historically low interest rates making credit cheap.
“First-time buyers with a deposit saved may miss the good-value window if they don’t get into the market soon.”
“If we keep seeing prices increase as dramatically as they’re doing now, the market will have fully recovered within a year,” Mr Cooke said.
He also advised that anyone looking to save for a deposit for a home is better off moving to a smaller bank that offers a better rate on their savings.
“You’ll find better ongoing rates with smaller banks such as UBank and ING and neobanks such as 86 400 and Up than you will with the bigger banks,” he offered.
According to Mr Cooke, “a little bit of homework can go a long way to boosting your deposit”.
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