What to expect in the next 12 months
If you are thinking of buying or building a home in the next 12 months, it pays to be prepared for what lies ahead in the Melbourne market. So if you are looking for a Melbourne property market forecast, look no further.
We will answer all your property questions such as:
Is there expected melbourne property market growth?
What are the experts saying about melbourne property market predictions?
What factors will impact the property market in the months ahead?
After the pandemic, more people work from home
During the many lockdowns Melbourne struggled through in 2020 and 2021, everyone became accustomed to working from home. Now that we are opening up again, many employers are moving to hybrid working models. Federal government forecasters predict that working from home is here to stay.
If you are stuck working from your dining table, you might start considering buying a home or locking in a house and land package. Understandably, you may want to create that extra space if you need to work from home permanently. Here at First-Place, we are seeing a strong level of demand for this reason.
People want to build a home that meets their lifestyle requirements. Of course, working from home is not the only factor in the decision to build a new home. It’s also about investing in an asset for the future and building a home to your requirements, to suit your family's needs and budget. Working from home and wanting to create that all-important dedicated workspace is a common advantage for people investing in building a new house. That’s why no Melbourne property market predictions would be complete without mentioning the new work from home trend.
Election timing eases demand on the Melbourne property market
Melbourne buyers advocate Carly Susic says, ‘In an election, traditionally buyers and vendors tend to put property decisions on hold, so the market sits in a holding pattern. People worry about government policies impacting taxes or housing affordability, especially if there is likely to be a change of government.’
So we can expect that the Melbourne property market will cool over the coming months, as people wait for the outcome of the election. Demand also tends to slow down over winter, as people like to wait for warmer weather to sell homes.
Cost of living pressures, especially petrol
The conflict in Ukraine is causing ‘petrol panic’ and prices rising to above $2 per litre. This puts pressure on the budgets of everyday Australians. So, people may be even more reluctant to travel unnecessarily and keen to work from home as often as possible to reduce petrol expenses.
The increasing price of petrol hits you in the hip pocket, and many businesses feel the pinch too. Anyone who has to travel for work will need to adjust their budget, and many businesses incur extra costs too. Any business that uses transport to ship goods around the country (and that’s plenty of them) will be facing extra costs. So, prices for other everyday household items may rise too.
So what does this mean for our Melbourne property market forecast? The extra costs may cause people to think again about increasing their mortgage. We can’t know for certain, but it’s likely that some will reconsider selling or buying a home and sit tight. If this does happen, then the property market may cool even further. In turn, this does mean that it can be a good time to buy, because prices are easing and there are fewer competitors for quality homes.
A slow property market hurts renters
The Sydney Morning Herald contributor Emma Dawson predicts: ‘Where the sharp increases in cost of living brought about by petrol price rises will hurt is at the bottom end of the housing market: those in private rentals, some of whom may still be hoping to buy their first home.’
If costs of living rise, then landlords may decide to increase rents. And with international students returning to Melbourne, demand for quality rental properties increases at the same time. These factors may combine to cause rental rates to jump. So if you are currently renting, you might be wondering if now is a good time to stop paying someone else’s mortgage and build your own home. Owning your home means you aren’t at the mercy of a landlord or changing rental prices. However you do need to be prepared to meet mortgage repayments and withstand a potential upward swing in interest rates, so speak to your financial advisor to get advice.
Interest rates set to rise
Because interest rates have been at record lows for years, there is plenty of speculation that interest rates will rise in 2022 and beyond. This means that for homeowners, or anyone wanting to buy or build a home will be impacted. When calculating mortgage repayments, consider how you’d cope with payments if interest rates rose by 1% or 2%. It’s important that your budget has some wiggle room. Otherwise, when interest rates rise, and your monthly mortgage repayments increase, you could find yourself under financial pressure. Even though it’s not great for homeowners, we have to include interest rate rises in our Melbourne property market forecast.
Where you live matters more than ever
Amidst the turmoil of global conflict, petrol prices, federal election and a slowing property market, people may be feeling the pinch. And it’s your community that will rally together to support anyone doing it tough. So while economic factors might impact your budget, it’s your community and the people around you who will get you through. Having friends, family and community nearby matters more than ever. Creating a safe haven in a family home can give you a feeling of security and peace of mind that despite challenges, you’re building your financial future with a wise investment. Particularly if you’re hit with household costs due to petrol prices, you’ll be likely skipping that expensive holiday. So it makes sense to create a home you can enjoy every day, with the space and comfort you need to enjoy time with family.
Ready to stop renting?
Check out our first home buyer guide for everything you need to know about buying your first home, including finances, grants, buying a land, buying a house and contract basics.
Have fun with our home design configurator and start building the home of your dreams. Or call 1800 1First (1800 134 778) or fill out our online contact form to arrange a chat with our sales team.
Disclaimer
This advice in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs. It is recommended you seek professional advice from a financial adviser before making any important decisions.
First Place is not a financial adviser. You should consider seeking independent legal, financial or other advice to check how the website information relates to your unique circumstances.
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