The humble owner-occupier is taking advantage of record low interest rates to borrow and upgrade their abodes. For many it is to complete the dream they had for their home, further fueled by the new abstract meaning the pandemic placed on our place of residence, forced to become the home, office, and entertainment arena for the majority of 2020. The flurry to the bank to refinance to allow for upgrades is also being driven by the high market prices with homeowners wanting to upgrade to capitalize on the potential for a high sell price. 

Of all the capital cities in the country, Melbourne has recorded the most activity with record level auctions, taking place over the last few weeks. The flurry and market mayhem taking place across the humble suburbs of Melbourne is being fuelled by a combination of factors.  

Real estate agent Chris Babalis, of Jellis Craig Ringwood, reports there has been a 30% increase in enquiries coming through for potential house sales.  

 “The increase in enquiries and subsequent properties being listed for sale are being driven by a multitude of factors. We are finding that the financial impacts of the pandemic are forcing homeowners to reassess their financial position and in some unfortunate situations home-owners are no longer able to afford owning their home”. 

Although the rate of unemployment has seen a positive fall to 5.8 percent, there is no denying the financial impacts of the pandemic along with the ceasing of government payments is forcing Australians to reassess their financial positions and serviceability of their home loans. In saying that, the record low interest rates are fueling a property frenzy for those wanting to take advantage of the low rates and put their stamp on the property market. 

 Babalis shared, that it is a combination of factors that have led to current hot property market we are experiencing. “There is no denying the extremely low interest rates is a huge driving force. Many were unable to purchase a property in 2020 due to the unpredictability of job security and limited stock available due to multiple lockdowns, but now that things have stabilized along with the competitive interest rates on offer, we are making up for lost opportunities in 2020”. 

A hot property market has its benefits for the banks, the economy and for home owners alike. However, first homeowners are being increasingly priced out of the market and left desperate and hopeless in their attempts to find their very own parcel of prized land and white picket fence to call their own. 

“We are finding those who initially were looking in the inner-city ring have given up hope and now venturing to the far outer rings of Melbourne to try secure their first home. Although it provides for more options, in terms of price range and bang for your buck, the demand we are now seeing in the outer suburbs is leading to median prices in those areas increase by 20%, which really can cancel out the objective of looking further out”. 

With both market and desire on fire, how does one maneuver through it to achieve that goal of purchasing a property? Babalis has seen prospective buyers make their dream a reality by becoming well informed and lining up all ducks in a row.  

“With the increased numbers of people attending inspections, the enquires of how-to are also on the rise. People desperate to purchase are turning to us in hopes we have the magic wand. My advice to all property seekers is to seek out the assistance of a mortgage broker. Personally, and professionally speaking, the benefits of going through a mortgage broker are invaluable. You have someone doing that hard work for you, reading all the fine print and advocating for you. Being well informed and prepared also places you in a more lucrative position with Vendors and puts you in a stronger negotiating position, as vendors will settle for a lower sale price if it means there is no subject to finance terms on the contract of sale and a shorter settlement period”. 

With Interest rates not expected to rise until at least the end of 2022, as well as the Government’s extension of the New Home Guarantee scheme, which has been extended until 30 June 2022 with 10,000 new spots made available and introduction of the Family Home Guarantee Scheme which will give the opportunity to 10,000 single parents to re-enter the property market with only a 2% deposit, the real estate market is expected to continue to explode for some time.