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How to catch the bottom of a housing crash

By Andrew Bell

Australia’s housing market continues to slide inexorably towards a certain bottom – the only question is whether or not the end will be a hard crash or a soft landing. How do you catch the bottom of a housing crash, and how do you turn it to your advantage?

What’s happening in the market

Rises in pricing for housing and simultaneous failure of wages to rise as well often leads to homes being put up for sale, due to the inability for many investment buyers to keep pace with their mortgage payments. First-time homebuyers and new investors may be able to leverage the market to their own ends.

The spring selling season is typically the peak of the housing market, but 2019 has been slow to reach its height. The state of Australia’s economy could be affecting willingness on the part of sellers to put houses on the market, hoping that things will turn around. Buyers also hold back, expecting the seller market to worsen before it finally starts to rise again, debating whether or not to make offers on the scanty number of homes available.

Household debt remains at historically high levels.

Household debt remains at historically high levels, and the weak economy may make many prospective home buyers wary of committing. However, policy changes regarding lending rules are now in effect, allowing banks to use their own assessment thresholds for loans, making it easier for homebuyers to access larger sums. The RBA slashed interest rates nearly to the bone, opening up doors for even more access to funding for homebuyers ready to take the plunge. Cheap loans can make all of the difference when buying a house in a crashing market.

If you have a home, you can also benefit from the housing crash and lowered interest rates; now is the time to call your financial institution and ask for a reduction in your current interest rate. If they refuse, seek refinancing. You can feed that extra cash into the economy and help aid recovery.

Taking the plunge

Are you planning a first home buy, or are interested in investing? It could be possible to take advantage of the looming market crash – but you need to be prepared. Waiting until the crash hits to make your move will put you amid a mob of hungry buyers, so look into financing now to ensure you have a clear path to purchase when the time is right.

Buying homes fit for the rental market can help defray costs associated with home loans and give you the freedom to wait out the plateau before prices start to rise again and your investment can be recouped.

Buying homes fit for the rental market can help defray costs associated with home loans.

Although October and November were light on the usual home sales numbers, the summer months may tell a new tale. Properties do exist, but they are overwhelmingly the “wrong kind”; high rise apartments that have tenants shying away due to changes in building codes. Steer clear and aim for the more desirable single-family home in high demand, particularly in areas with rapid population growth.

Due to the low number of houses currently on the market, prices are enjoying a small inflation due to buyer competition. However, when the floodgates finally do open prices can be expected to drop at least for a short time until the market resettles. Expectations are that 2020 will be a strong year for home value appreciation.

If you are looking to take advantage of the coming housing influx and want assistance catching the bottom of the housing crash, contact Ray White Surfer’s Paradise and we can help you find and purchase the home of your dreams or your next investment property.

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