What to expect in 2016
2016 marks the start of a new year, with new opportunities for home ownership and investment. But what does this mean for those who are looking to enter the market, looking at moving onto a new home, or looking to expand their investment portfolio? Don Crellin, Managing Director of Resolve Finance shares his thoughts and insights into what 2016 holds for home owners.
The good news is, his outlook is a positive one.
“There has been a lot of negative sentiment in the market for the past 12-18 months. I believe that 2016 is the year that these sentiments will begin to change. Interest rates are the lowest that they have ever been, and I do expect that they will continue to remain low throughout the year, with the possibility of one further RBA rate reduction being issued.”
These factors indicate a relatively stable year, and while we have seen some minor price corrections a more 'normal' market is expected in the year ahead. This creates a fantastic opportunity to buy.
“Another example of an increase in consumer confidence comes from the type of properties being purchased. We saw towards the end of 2015 that higher end clients are more willing to commit than they have been for a number of years. This is a sign that people are comfortable that they have been 'holding off' for long enough. High end consumers are often discretionary purchasers and generally they are in no rush to make this kind of commitment. A common insight is that with interest rates so low, the ability to not only upgrade but to also make a sizeable reduction in their home loan has never been better.”
For those who are still concerned about the current value of their home in comparison to a year or two ago, Don shares this handy hint:
“When buying and selling property in the same market it's possible to take advantage of a more normal market, particularly for those looking to upgrade. Whilst you may need to accept a more realistic price on your own home to secure a purchaser the same can be said for the home you are looking to acquire. If upgrading to a home of greater value, the savings on the purchase price of your new home may well exceed the adjustment that you had to make to sell your existing home. ”
This should come as welcome news for those looking to escape paying off someone else's mortgage.
“If you are a first home buyer who is currently in a rental, this is a fantastic opportunity to jump into the market. If you are looking at building, the opportunity to purchase quality blocks in new and upcoming estates is fantastic, and if you are looking at purchasing established, the movements throughout the market will create the opportunity to pick up some fantastic value homes. The ability to fix interest rates and set future plans based on this steady market, are able to provide a solid foundation to base your first home choices. ”
This is not to say that there are not still factors in the market that are affecting the decision to move into or within the property market.
“In WA in particular, I expect the associated challenges with the resources slowdown will still continue to play out next year. However what we have seen Australia wide, is really strong growth in Melbourne and Sydney. Those markets are now levelling, and the growth is now moving towards Queensland due to the competitive price points within the market there. Given this cyclical movement, it won’t be too long before investors both Australia wide and overseas start to see the benefits of investing in WA.”
This insight correlates with an increase in the number of consumers who are now making their first home purchase as an investment, as opposed to owner-occupied.
Another issue that still surrounds the first homebuyer market is deposit gap.
“Whilst affordability has been improving in recent times, deposit gap continues to be an issue for the foreseeable future. However, we are continually seeing our consumers turning to more innovative ways in sourcing their deposit, such as gifts from parents and guarantor loans, to even taking out a loan to fund the deposit where possible. At Resolve Finance, we will continue to investigate and introduce products into the market that are specifically aimed at bridging this deposit gap and assisting first homebuyers into their own home wherever we can.”
So whatever your plans are within the property market for 2016, make sure you consult with a Finance Professional to ensure you are receiving the best advice for your current situation.