With the Australian property market still strong and stable, both purchasers and investors are feeling confident. Despite the higher interest rates over the last couple of years, the majority of borrowers are keeping up with their repayments, and property prices are still increasing. This mix of strong borrowers and growing prices is creating new opportunities and a bit more competition for anyone planning to buy or invest in real estate.
Borrowers Remain Financially Resilient
Recent data from the Reserve Bank of Australia (RBA) shows that loan delinquencies have stayed very low. The number of home loans overdue by more than 90 days has dropped back to around the same level as before the pandemic. In other words, homeowners are largely keeping up with their mortgages, even after the rate hikes. A big factor is Australia’s record-high employment, which has kept household incomes steady and helped people meet their repayments. Many borrowers also built large savings and prepayment buffers during COVID, giving them breathing room to handle higher rates. In fact, the median mortgage holder is ahead on repayments by more than they were before the pandemic.
This financial strength means fewer distressed sales and defaults in the short term. Less than 1% of households are currently in negative equity (owing more on the loan than the property’s worth). So even those feeling mortgage stress have options to refinance or sell on their own terms, rather than being forced to sell at a loss.
Tight Supply and Rising Prices Boost Equity
Another supportive trend is that housing prices have been climbing in many areas. Nationally, prices are up about 10% since early 2022 despite the higher interest costs. This growth has bolstered homeowner equity – basically increasing the cushion of value above what’s owed on the mortgage. When home values rise, it not only protects existing owners but also reduces the number of people underwater on loans, as reflected by that tiny <1% negative-equity figure.
For prospective buyers, the tight housing supply in the market (few listings and low vacancy rates) combined with this price growth, signals that properties are continuing to appreciate. Limited supply is helping to drive capital growth, so well-chosen real estate purchases now could ride further upward momentum.
Preparing for Opportunities Ahead
Looking ahead, the potential for interest rates to decline in 2025 could rekindle buyer enthusiasm. With rates moving lower, it is normal for housing credit and buyer demand to pick up. Many buyers will return to the market once borrowing costs are lower, which could create a wave of competition. The bottom line is to get started early. Savvy buyers are having their finances pre-approved now so they can act quickly and secure a property before the throng returns. It’s also a good time to run your budget through a less expensive rate scenario.
If you’re looking to take advantage of these conditions, now is a great time to get organised. At Huddle for Property, speak with our team today to understand your new borrowing power and the best options available. You can book a call or contact us at 480 758 738.