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A new survey has revealed that a third of buyers did not consider interest rates when making buying decisions.
For first home buyers, the rule of thumb is “get in when you can”.
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Preliminary findings from a recent InfoTrack survey of Australians who bought and sold property in the past 12 months revealed that high interest rates were not a major deterrent for aspiring buyers.
Instead, many first home buyers’ desperation to get onto the property ladder – and escape rapidly rising rents – outweighed their anxiety about high interest rates.
Property prices and market conditions were consistently named the biggest challenges faced by buyers.
Tom McGuigan, 27, who recently bought a two-bedroom unit in the Brisbane suburb of Lutwyche, shared that the consensus among his peers was to “get in when you can”.
“In the two to three months that I was looking, properties were going up $5,000 to $10,000 per month, and they are still rising now,” McGuigan said.
“I was looking for a two-bedroom apartment and knew a house within the Brisbane metro area was not even an option for the price I wanted to pay.”
One of McGuigan’s strongest motivators was the desire to obtain an asset of his own rather than “pay[ing] off someone else’s mortgage at an overly inflated price”.
“There was a lot of stress among my peers with rising interest rates late last year, but I factored rate rises into my purchase and gave myself a financial buffer,” he said.
According to Lee Bailie, head of property at InfoTrack, high-interest rates were more likely to influence the type of property purchased rather than be the deciding factor in whether to purchase at all.
“Getting on or moving up the priority ladder is a priority for many buyers, but interest rates, property prices, and the rising cost of living means some buyers must compromise on the size, type, and location of property they buy,” Bailie said.
With Bendigo Bank predicting that interest rates will remain at 4.35 per cent until 2025, it appears that the trend towards tightening buying conditions may continue.
Earlier this year, CoreLogic noted that the likelihood of mortgage rates reverting to an affordable range is remote, noting that “home values have continued to rise, even amid relatively high-interest rate settings”.
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