December 9, 2010
Despite rising interest rates in late 2010, the new year may be a great time to buy a home, according to some mortgage experts. After a turbulent year, Australian Property Monitors (APM) is predicting the property market for 2011 to be slightly quieter and buyers are expected to take their time considering their housing and mortgage options.
Property prices stabilise
According to APM, property prices are expected to remain stable or fall slightly, despite an increase in median house prices from $499,750 in September 2009 to $557,095 in September 2010.
Their prediction is based on a number of factors, including an undersupply of new housing, solid population growth, low unemployment and strong income growth. There is also some good news for investors as rents are also predicted to rise, encouraging a return of investors into the property market.
Property research company, BIS Shrapnel, envisage more activity in new house and land developments from 2011-12, as a result of “a rising undersupply in most markets, more stable interest rates and strengthening economic conditions”.
Angie Zigomanis, senior project manager for BIS Shrapnel says demand will return to normal levels throughout 2011.
“Pent-up demand and rising employment and income growth from recovering economic conditions should help confidence return after the recent interest rate rises,” Zigomanis says.
“This will stimulate activity in housing markets and consequently land markets. Nevertheless, the upturn will vary nationally, depending on overall affordability in each market, and the level of pent-up demand.”
Good time for first home buyers
First home buyer activity is also expected to improve, Ian Graham, CEO of QBE LMI says.
“The decline in first home buyer demand in the first half of 2010 is primarily due to first home buyer activity being pulled forward into 2009 because of the FHOGBS,” Graham says. “First home buyer demand is forecast to return to normal levels, believed to be around 130,000 to 140,000 loans approved in 2011.”
Government incentives, such as the $7000 First Home Owners Grant and reductions in stamp duty fees will still be available for first home buyers to take advantage of in 2011. So if you have been waiting for the right time to get in on the action, 2011 may be a good time to consider taking the plunge and becoming a home owner.
But before you make the leap, compare home loans for the best rates and features, and find one that will help you save thousands per year.