- Property expert Lloyd Edge believes property values may increase in 2023
- Despite negative sentiment, he said a major housing market crash is unlikely
- Homeowners facing higher interest rates can explore their options
It’s not all doom and gloom for property prices and values might have even seen a bottom, according to best-selling author and leading buyers agent Lloyd Edge.
Edge said he is optimistic about the overall outlook of the property market and believes that we should start to see an uplift in property values as soon as the second half of 2023.
He said the fact that property prices in Sydney rose by 1.4% in March, indicated that we may have already seen the bottom of the market cycle despite the fact that sentiment is still low.
Will the property bubble burst?
In a recent survey commissioned by Aus Property Professionals, 2 out of 3 people (67%) believed that it’s inevitable that Australia’s “property bubble” will burst soon, while only 33% of people said they didn’t believe this to be the case.
Edge said, “It’s unsurprising that the sentiment towards property is mostly negative right now, especially with all the pessimistic talk lately. However, keep in mind that in order for a major housing market crash to happen we would need much higher unemployment rates and a huge oversupply of property. None of these things are occurring right now. Inflation figures have fallen for a second month in a row, there is no sign of a recession at this stage and jobs data remains strong.”
“There is also unlikely to be a further decline in property prices this year, as the market is stabilising as interest rate increases start to level off. There are still plenty of buyers in the market and a lack of supply, which is keeping prices up.”
Edge said that the past 12 months have been challenging for many homeowners on the back of a series of unprecedented interest rate rises.
It is also expected that the so-called mortgage cliff is due to hit in the second half of 2023 – where roughly 800,000 homes will be rolling off 2% fixed interest rates and moving on to 5% or 6% variable rates.
Options for homeowners
Edge said that if homeowners are struggling with higher interest rates there are some things they can do.
He said it might be worth looking at options like renting out a spare bedroom to help cover the mortgage repayments in the short term.
He also said that it is worth comparing your home loan options.
“The first step you should take is to speak to a reputable mortgage broker. Your broker might be able to help you refinance to a better interest rate, which will alleviate some of the pressure on you. You never know what’s possible until you seek out reliable, professional advice.”
According to Edge, if you can, it might be worth making some additional repayments.
“If you’re able to make additional repayments on your mortgage, do so now. The extra repayments you make now will save you on interest down the track and put you in a better financial position for when your mortgage becomes variable.”
He also said that it is a good idea to create a savings buffer where possible.
“If you haven’t already, create a solid savings buffer of 3-5 months’ worth of essential expenses. This will ensure you feel secure and prepared for any unexpected financial challenges that might occur.”
“Once your mortgage goes variable, if you have an offset account, you can put your savings in there so that you pay less interest and put more funds towards the principal each month. You’ll not only end up with a healthy savings buffer, but you’ll pay down more of the principal faster this way.”
Edge said for property investors they should try and focus on positively geared properties.
“If you can afford to, purchasing an investment property with a high-rental yield, where the income is higher than the total expenses, is a way to generate more cash flow. However, with interest rates at the highest they’ve been in several years, finding cash-flow-positive investment properties is becoming increasingly challenging. A professional buyer’s agent can help advise you on how to find properties with a high rental yield.”
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