Unfortunately, it seems we should anticipate that the Reserve Bank’s twelfth cash rate hike will not be its last. 

The RBA has hinted at the possibility of implementing further measures to tighten monetary policy in order to achieve its inflation target of 2-3% within a reasonable timeframe, but we need to consider the full picture before jumping to any conclusions on what this might mean for homeowners.

There are some observations I’m making this quarter, and I’m here to tell you that while we’re living in a time of great uncertainty, one thing is for certain: with the help of an Australian buyers agency like ours, there’s still hope for you yet. 

Whether you’re a homeowner trying to keep on top of mortgage repayments, or a homebuying hopeful, it’s important you get a basic understanding of what’s likely to occur in the property market in the coming months. 

My predictions

• Allowing the recent rate increases to saturate the economy is advisable for the RBA, especially as more homeowners transition from fixed-rate mortgages in the upcoming months.
  
• Postponing the increase of interest rates to coincide with the start of the 2023/24 financial year will provide relief to small businesses currently facing financial burdens.
  
• With the unemployment rate projected to continue rising in the coming months, potential buyers are likely to become more cautious as their job security becomes a little less certain. They will still be buying, however, just more financially conservative in their approach.
  
• I’m expecting the current rapid pace of price growth to taper off a little at the start of the new financial year as the Winter property market, school holiday period and imminent mortgage cliff converge.
  
• We could see interest rates stabilise, improving buyer concerns. 

What else do we know?

Now that the majority of interest rate tightening is behind us, buyers who were hesitant with regards to their borrowing capacity and mortgage servicing costs are subsiding, providing a clearer understanding of their financial limits.

We also know that ANZ has predicted a cash rate peak of 4.35%. It is likely the RBA will need to make more than just one additional adjustment here.

Considering the insights into productivity outlook, unit labor costs, and persistence of service inflation  I’d suggest another 25 basis points increase from the RBA, most likely in August 2023.

Unfortunately, I can see that mortgage repayments are set to reach record highs. Also, a significant number of ultra-low fixed-rate home loans will expire throughout the year, which brings opportunity to those looking to buy, but trepidation to those currently paying off a home loan. 

I’m seeing the first-hand effects mortgage holders who are confronting the worst housing affordability situation since September 2008, with the proportion of income required to meet average loan repayments across Australia rising to 44.9%, this is going to be a difficult time for homeowners across the country. 

To put all of this information into perspective for you, the national average loan repayment surged to $4,537 in the March quarter, representing a staggering 35% increase over the past 12 months. This isn’t ideal for anyone looking to buy a home or nab an investment property right now, but at Kitty and Miles, we can make this work for you.

Who’s benefitting right now?

The property market is favorable to sellers right now. Driven by elevated auction clearance rates, rising prices, and higher attendance at open homes, the Winter season has a positive outlook for people trying to sell their property this year.

So remember, it’s not all doom and gloom! Especially for buyers. Homebuyers can decide to ‘strike while the iron is hot’ (as they say) and buy before prices increase any more, or take the risk and watch prices (potentially) inflate further. 

If your dream home is going up for auction, our talented property agents will teach you all the tips and tricks you need to know to have the best chance at winning your dream home at auction. And if you’d prefer one of our auction sharks to take the lead, we can make it happen! Give us a call on (02) 8916 6172 or shoot us an email at support@kittyandmiles.com.au.