by Craig Heppell, Principal, Ulverstone Real Estate
On May 4th, 2022, the local property market changed. Why that date, and why did it change?
On May 3rd, 2022, the RBA lifted interest rates by 0.25% after dropping them to just 0.1% to balance out State and Federal Government responses to COVID.
Before this rate hike, Australians took advantage of ‘cheap money’ and dove into the property market, pushing prices up rapidly. But the rate increase in May 2022 slammed the brakes on this speeding car.
Interest from first-home buyers and investors plummeted. These two groups typically drive hot markets, especially in the budget to mid-range sectors. That first rate rise sucked the confidence out of both buyer segments overnight.
Market sentiment took a hit, shifting from confidence to mild trepidation quickly.
Then came another 12 rate rises over the next two years.
The RBA has paused rate hikes for the last few months, and although they continue to hint at further increases, the global economy suggests rate drops might be on the horizon in the next 3-9 months.
Currently, first home buyers and some investors are cautiously dipping their toes back in the water. This trend should continue as long as the RBA keeps their fingers off the UP button. A slow drip back to confidence? Maybe.
The past two years have seen subdued price growth in the local property market, with median prices in the northwest increasing by about 2-3% over the last year.`
The State Government has introduced incentives to encourage first-home buyers and boost confidence:
Stamp Duty Exemption: Genuine first-home buyers are now exempt from stamp duty on homes up to $750,000. Previously, they paid only 50% of applicable stamp duty.
Refunds: First home buyers purchasing from February 2024 onwards may be eligible for a stamp duty refund. Check with your broker or bank.
Considering the median house price in the northwest is around $500k, the stamp duty concession could mean a saving of over $9,000!
MyHome
The State Government, in conjunction with Bank of Us, offers eligible home buyers a chance to contribute just 2% of the purchase price. The government will contribute a portion of the purchase price (repayable), and the remainder will come as a normal mortgage with Bank of Us.