Many prospective buyers breathed a sigh of relief at the dawn of the new year, with the majority of reports predicting slowing of recent crazy growth in the Australian property market. Investor demand certainly accelerated market growth, pushing prices up - but it also stimulated a surge in construction that has resulted in a glut of apartments, particularly in the eastern states. In addition, the Australian Prudential Regulation Authority (APRA) stepped in early last year to tighten lending standards in an effort to cool things down.
The overall effect of that, is that buyers can now enjoy that cooling off period in the market, making it the perfect time to upsize property without fearing that they’ll lose too much purchasing power while temporarily out of the market. The market is expected to be much more balanced in the coming years, according to numerous assessments. A NAB Group Economics survey from the end of 2017, predicted that national house prices would increase by just 3.4% in 2018 – a significant shift from the double-digit growth figures of recent times. They are also expected to drop off slightly in 2019 to 2.5%. Forecasts for unit prices are for a rise of just half a percent this year and a little less than that next year. However, while numerous industry reports have released similar figures, there have also been claims of 25% price reductions due to distressed sales in some areas.
Ordinarily the choice to upsize can mean a significant investment, and an increase in expenses. You spend more naturally, just because you are buying a larger property. However, if you’ve asked yourself all the important financial questions first, you’re in an ideal position to make informed choices about upgrading your current investment situation to the next level. If you get the timing right, you could get a great result from the sale of your existing property and then know how much you will have available when searching for your next property. Of course, this potentially puts you out of the market for a period of time if you don’t immediately find something you’d like to upsize to. But if you see things tracking pretty consistently, you can bide your time and jump back in when you have found the perfect home.
Upsizing can mean different things to different people – it’s no longer as cut and dried as moving from a 1 bedroom flat as a single, to a three-bedroom house for a family. Modern living has changed so much that the reasons for upsizing are distinctly personal. Maybe you’ve grown tired of the 3-bedroom, single fronted, inner city semi and want a change. Your version of upsizing may be to empty that semi into a spacious open plan 3-bedroom apartment, with bigger windows, great views, more natural light and a casual stroll away from the beach. Now is a great time to upsize to apartment complexes because there are so many on the market. Not only do you increase your general living space but most newer apartment complexes come with perks, like resident parking, gyms, libraries, cinema rooms, rooftop outdoor living areas and swimming pools – features which upsize your lifestyle too by default!
Despite the stricter guidelines for lenders, mortgage rates are still relatively low and should remain so for the time being. That scenario, combined with the kitty from your recent property sale, and the constant presence of cranes across eastern city skylines - diligently working away at towering apartment blocks - can only be good news. Brisbane in particular has had a construction boom over the past year. Right now, it’s definitely a buyer’s market where some off-the-plan apartment deals are concerned. Developers hustled hard in the early stages of projects to presell and collect deposits. As settlement draws near, they’re now start to bite their nails as foreign buyers, who are now subject to different lending rules, drop off. Developers then have to make deals to keep the project afloat and you can snap yourself up quite the bargain, if you do some strategic hunting.
Whatever your reasons for upsizing, the opportunities for buyers this year are certainly interesting. If you don’t have one already, get yourself a good financial advisor and/or First National Real Estate agent to advise you on your next best steps forward and upsize your way into 2018 and the next exciting stage of your life!