In 2021, the fear of missing out (FOMO) sent thousands of Australians rushing into the property market. CoreLogic reports that 2021 saw 549,000 homes sold, driven by low interest rates and COVID-19-induced saving habits. However, buyers now struggle as mortgage rates climb in Australia.
Fast-forward to 2024, and those buyers are now feeling the financial pressure. Many who jumped into the market during the 2021 property boom are struggling to keep up with rising mortgage costs, as interest rates have surged and repayments have ballooned.
The Mortgage Repayment Strain
One of the most significant challenges facing 2021 buyers is the sharp increase in mortgage rates. CoreLogic’s data shows home values have increased by 7.6% since the end of 2021. While this might sound like good news, those who waited until 2022 to buy have seen an even bigger return on their Investment, with property values rising by 13.1%.
Unfortunately, for those who bought in 2021, the real pain comes from the rise in mortgage rates. Average rates for owner-occupiers have increased by 335 basis points, leading to an approximate 50% increase in mortgage repayments. This has left many buyers with a severe “sticker shock” as their financial situation becomes more challenging.
Market Differences Across Australia
While these national trends paint a broad picture, each city tells its own story. For example, Hobart stands out regarding homes being purchased earlier than in most other areas. The most common last sale date in Hobart was 2017, and since then, property values have jumped by an impressive 45.7%.
In contrast, Perth saw the highest rate of stock sold in 2024, with 3.2% of properties changing hands. Brisbane’s high transaction rate of 24.6% over five years shows faster turnover, defying the long-term property market view.
Looking Ahead-What’s in Store for 2024 and Beyond
CoreLogic’s outlook for 2024 predicts that around 4.9% of the housing stock will see new sales by the end of the year. However, buyers should prepare for a wait before they see strong returns on their investments. Eliza Owen, CoreLogic’s head of research, points out that while the situation will improve, particularly with a predicted drop in the cash rate in 2025, short-term capital growth might be limited.
There’s still uncertainty about whether turnover rates will increase in 2025. While easier borrowing conditions could boost confidence, affordability will remain a significant hurdle for many, especially with the ongoing cost of living pressures, such as high childcare and energy costs.
Nfinity Financials Advice for Buyers
At Nfinity Financials, we know how important timing is when buying property. The property market can be tricky, especially with fluctuating interest rates and economic conditions.
Whether you’re a First-Time Buyer or an experienced investor, our team is here to guide you through these changes and help you make decisions that align with your long-term financial goals.
The key lesson from 2021 is that while acting quickly can sometimes pay off, being well-prepared and patient is just as important.
The property market changes constantly; working with a trusted mortgage broker and staying informed helps buyers succeed during uncertainty.
If you’re considering refinancing, buying a property, or just exploring your options, Nfinity Financials is here to help you navigate the market and secure the best deal possible. After all, the property game is about making intelligent choices, and we’re committed to ensuring you make the right ones.
For more detailed information read our related Articles or CONTACT US. You can also book a consultation call with us at 1300 GET LOAN or 0456456267.
