Property investment platform Wealthi says the predicted 15% to 20% fall in property prices in May might not happen.
Wealthi co-founder Peter Esho (pictured) said when the front page of the newspaper starts telling you how bad interest rate rises will be, it’s time to start shopping for bargains.
“Many of the predictions we’ve made in recent months around property prices are now coming to fruition,” Esho said.
“There seems to be a sense of gloom rising in the real estate market, everyone is waiting for things to come back. Everyone is sure and certain that the party is over.”
Esho believed the real estate market would slow signs of slowing in the short term.
“Prices have come down in the past few months, demand is slower, sellers are nervous,” he said.
“But I just don’t think we’ll see the massive price falls everyone is expecting. There are many people in the market waiting for a 15 to 20% fall so they can get in, which in some markets that will probably happen.”
Esho said mortgage brokers would play an important part in advising clients how to manage their debt in a rising interest rate environment.
“It might not necessarily be switching to fixed, as in the short-term variable rates are priced more competitively,” he said.
“Having a broker who knows product, process and pricing is critical to many households.”
Esho said in situations where people had borrowed too much money on properties that were a little out of their reach, the market would see a correction.
“Places in western Sydney like Oran Park, The Ponds, Bella Vista and Castle Hill are vulnerable because high price growth has been fuelled by cheap debt and little income growth,” he said.
“However, the lower end of the market is still hot.”
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With the cost of building materials increasing and supply hard to come by, Esho said the rising costs of building a house provided support to entry-level house prices.
“The markets which I think will do well [and probably keep rising] are outer Melbourne, Canberra and maybe even places like Perth and Adelaide where there is more supply of affordable housing,” he said.
Esho’s advice to investors is that if your mortgage is against an investment property you should be ok as rents were likely to rise.
“It is likely the market will slow down in the next few months but if you have the opportunity to buy or grow your portfolio, this will be a great opportunity,” Esho said.
“I remember purchasing property 14 years ago when I first entered the market and everyone was giving me excuses about how a collapse was imminent. The market slowed for a little while, but then it bounced and bounced and bounced again. There is never a perfect time.”
