Last Updated: 22nd November, 2022

Is Now The Best Time To Buy A House?

Published by Otto Dargan on October 11, 2022

The Reserve Bank of Australia (RBA) has increased the cash rate for the sixth month in a row, taking it from 0.10 per cent in April to 2.60 per cent with October’s 25-basis-point increase. With rates rising, repayment pain for borrowers has increased. The impact of the higher interest rates is also seen in property values, as house prices have been falling at a faster pace each month. Expectations that the trend will continue have smashed consumer confidence.

How Does The Cash Rate Hike Affect My Monthly Repayment?

The following chart compares monthly repayments before and after the most recent cash rate hike. (These example loan repayments were determined using our repayment calculator, based on the lowest variable rate we can offer over a 30-year term, as of 4 October 2022. Rates are subject to change from this date.)

Loan Amount Before Increase (3.64%) After Increase (3.89%) Difference
$500,000 $2,284 $2,355 $71
$600,000 $2,741 $2,827 $86
$700,000 $3,198 $3,298 $100
$800,000 $3,655 $3,769 $114
$900,000 $4,112 $4,240 $128
$1 million $4,569 $4,711 $142

The Rate Of Decline In Housing Values Eases Slightly In September

The following chart compares the rate of housing value decline in August and September. There was a slight reduction in the rate of decline in September, which flags that the housing market may be starting to recover from the downturn.
Change in dwelling values
August September
Sydney -2.3% -1.8%
Melbourne -1.2% -1.1%
Brisbane -1.8% -1.7%
Adelaide -0.1% -0.2%
Perth -0.2% -0.4%
Hobart -1.7% -1.4%
Darwin 0.9% 0.9%
Canberra -1.7% -1.6%
National -1.6% -1.4%
Source: CoreLogic

Rate Hikes Could Lower Repayments In The Long Run

The RBA’s head of domestic markets, Jonathan Kearns, told the Australian Financial Review Property Summit 2022 that the impact of a 200-basis-point increase in interest rates would lower real house prices by around 15 per cent over two years. National Australia Bank predicts that national home prices will drop 20 per cent next year. This can leave first-home buyers with an opportunity to buy for less and save. The RBA is expected to lower the cash rate once inflation is on track. Once this happens, your monthly repayment will also shrink. If you can meet the monthly repayments now, you will benefit from a lower price and lower interest rates.

Expensive Properties Are Now More Affordable

The RBA’s Kearns says Premium properties are the most sensitive to interest rate changes. CoreLogic states that house and apartment prices in the most expensive quartile of suburbs have fallen 6.2 per cent nationally from their April peak. The top quartile of Sydney dwelling prices have fallen 10.3 per cent from their peak. The luxury homes and larger properties of the high-end suburbs are dominating the auction market. This could be an opportunity for potential buyers who could not afford expensive properties earlier. You can turn your dream of buying a premium property in high-end suburbs into a reality when the prices are falling. If you are a high income earner and can afford to meet the monthly repayments now, it’s best to start looking.

Should I Buy The Property Now?

If you keep waiting for the right time to buy, you could:
  • Lose the opportunity of buying your dream house
  • Miss taking advantage of the falling property market
  • Be priced out of properties in the near future that you can afford now
  • Are you still not sure whether to buy the property now or wait until rates start to cool? Home Loan Experts’ mortgage brokers will help you make the right decisions. Call us on 1300 889 743 or enquire online today.

labelCategory: Property Market