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Big life decisions are inevitable. Whether it is career choices, buying our first property, welcoming children into the world, upgrading our home, downsizing to retire or refinancing to get through
life’s ups and downs, we all face these sometimes tough decisions.

There is no doubt that many Australians are finding life challenging right now. But for those who are
able, this market of low-interest rates and low market activity could be an opportunity to buy a better
home for your dollar.

The reasons to upgrade will vary between families. They may include the chance to cater for a growing
family – a spare room for working from home, additional desk space for homeschooling or larger
bedrooms for growing teenagers.

Currently there are also additional consideration with government schemes and grants associated with building and renovating. With research, planning and stable finances, an informed decision can be made as to whether it is appropriate to upgrade the family home through renovation or to purchase a new home for a growing family’s size and needs.

Home Values Drifting Lower But Showing Resilience

Australian property data shows us that so far the impact from COVID-19 on housing markets has been milder than initially anticipated. Home values are drifting lower, but the market has showed some resilience in values¹. However you need to be mindful that there is no ‘one’ housing market – different areas, states and suburbs wil beb inpacted differently.

You will need to watch the market closely to consider the impact of the pandemic on changes in lifestyles, impacts on earnings, further stimulus packages and the run off of government support packages to determine how they may potentially impact housing within your area of interest.

Likely Recovery Ahead

History shows us that the Australian residential property market goes through stages of peaks and troughs. Home values that may take a hit during a recession or downturn inevitably recover on the
other side. This has been evident in the past – the recession in the early 90s, the bubble burst and the global financial crisis in 2008.

Benefits of Upgrading in a Softer Market

While you may be initially attracted to upgrading due to the historically low interest rate environment, there are additional advantages well worth considering to upgrading in softer market

These benefits include:

  • Lower Acquisition and Transitional Costs
    The two major transaction costs associated with upgrading to a new family home are real estate agent selling commissions and stamp duty. The basis of calculating each of these costs is referenced to the price (value) that your existing and new home transact. Accordingly if prices fall in softer market conditions then there will be a corresponding fall in your transaction costs.
  • Less Competition
    Generally when there are less people in the market looking to buy property, there is a softening in prices associated with less competition. However this can be a generalisation as good quality property in good quality locations can still generate competition. Accordingly it is important to closely monitor the market to ensure that any offer is at a fair value.
  • Price Gaps Shrink
    As upper end properties may be more susceptible to movements in the market, now could be an opportune time to consider upgrading when the price gap between your existing home and next ideal home begins to narrow.

Are You ‘New Mortgage’ Ready?

If you feel it is time to upgrade but not quite ‘new mortgage’ ready, we can help you. We have set out 7 tips to help prepare you for your next mortgage. From your credit rating to borrowing power and
more, there are several factors to consider before you leap into your next property and consequently
your next mortgage.


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