Despite a rise in the number of first home buyers entering the market this year, vendors are still doing it tough; property is taking longer to sell in all capital cities than 12 months ago.
New research from Australian Property Monitors reveals that homes are lingering on the market for up to 60 percent longer than last year, with some owners waiting more than five months on average to secure a sale.
On top of this, SQM Research shows that house prices are falling right across the country as the market digests more than 360,000 properties up for sale.
Louis Christopher, managing director of SQM Research, said there is always a buyer in the market for every property.
“If a property doesn’t sell, it’s because it hasn’t been priced correctly,” he said.
His advice for vendors struggling to sell a listed property is to take it down and re-list it another time.
It all paints a bleak picture for home owners wanting to sell up and move on.
Just last month RateCity released data showing that falling prices have eroded or even wiped out the equity needed to move on to a bigger house or unit. As a result thousands of Australian homeowners risk being stuck in their existing home.
Damian Smith, chief executive of RateCity, said those most at risk will have bought in the booming property market of 2009 and 2010. But a significant portion of recent property buyers looking to sell up and move on, or refinance, could be in for a nasty shock.
“Few lenders will be willing to lend you 100 percent of the value of any property, especially one where there’s still risk about further property value declines,” he said.
If you are at risk of a negative, or near-negative, equity situation Smith offers a few practical tips.
“The recent rate reduction for those of us on variable rates will help. As I’ve said before, keeping your repayments up at the previous level is generally the best answer,” he said.
“This is because the additional repayments will eat into your principal faster, and so you will have a higher percentage of equity in the home quicker. This is just like having a bigger deposit before you got to borrow in the first place.”
Finally, for anyone on an interest-only mortgage, switch to repayment where possible, he said.
“It will be more expensive in the short term but could save you thousands of dollars down the track.”