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Property prices rise while interest rates stay low

Property

Property prices rise while interest rates stay low

High demand for Sunshine Coast property is pushing prices up, say our local property experts.

House prices are rising and interest rates are still low. So what does this mean for our property market?

REA Group economic research director Cameron Kusher says while interest rates often play a part in stimulating the property market, over recent years, low interest rates have resulted in periods of both high and low volumes of sales.

“Lending policies are really the main driver of whether we see a high volume or low volume of sales. Looking at search activity on realestate.com.au, we are seeing increasingly high demand and rising property prices on the Sunshine Coast, but there is still an issue with an undersupply of properties available for sale,” Mr Kusher explains.

“Over the past 12 months, prices in the region are 2.9 per cent higher, which represents stronger growth than both Brisbane and Gold Coast. Price growth on the Sunshine Coast has been stronger more recently with prices 1.9 per cent higher over the past six months.”

Principal at McGrath Estate Agents, Chris Pace, says they’re seeing people motivated by the low interest rates to buy rather than rent. “We’re seeing a shift from young couples renting keen to break their lease and buy because, in many cases, mortgage repayments can be cheaper than weekly rent.”

He says now is a good time to buy on the Coast. “The sooner the better, as we are feeling that 2020 is going to be a great year for growth. We haven’t seen a start to a year busier than what January and February have already been this year.”

Brendan Brial of SMS Finance, says low interest rates and a buoyant property market provides borrowers the opportunity to increase their loans for home improvements, upgrades or purchasing an investment property.

“It also provides an opportunity for borrowers to talk to their mortgage broker and see if there is a better interest rate.”

And while upgrades and borrowing suit some, Mr Kusher says low interest rates generally mean that buyers can repay their mortgage faster because the interest component of the loan is reduced. “It may also mean that they can borrow more than they would be able to if rates were higher.

“A mortgage is a 25 to 30-year commitment and market conditions and interest rates will fluctuate over that time, so the most important thing to consider is purchasing within your budget,” Mr Kusher adds.

Mr Brial echoes that sentiment: “Borrowers still need to be very mindful of their personal circumstances when borrowing any amount of money. Changes to their income, living expenses, increases in interest rates or growing their families can impact their ability to make repayments in the future.

“You never can tell how long the current low interest rates will continue. At some point they will increase and borrowers should be careful not to put themselves in a position that an increase in rates would affect their overall capacity to make their repayments,” Mr Brial adds.

Overall, our experts agree that Coast property stock is low, which is to the benefit of homeowners that may want to capitalise.

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