Dr Woon-Weng Wong, a lecturer at RMIT University’s School of Property Construction and Project Management, said that mortgage holders and people looking to buy a home should keep in mind that an initial change in interest rates can take anywhere from six to 24 months to spread throughout the economy.
He has highlighted that even though falling house prices may seem like a good thing for people who want to buy, the true costs of owning a home are much higher when high-interest rates, taxes, and other costs are taken into account.
Dr Wong wants people who want to buy or stay in the market to always do their research and make sure their finances are in order. Before jumping into the market just because home prices have gone down, people should take a good look at their current and future situations.
Reflecting on the pandemic, Dr Woon-Weng Wong noted, “property prices rose quickly, by about 25 per cent. It’s not surprising, then, that much of that growth turned out to be unsustainable, and the market is now correcting itself.”
“Despite the recent softening, the market is still significantly above its long-term trend, and there are substantial headwinds in the coming months. Headline inflation is still red hot, and the central bank won’t back down until it reins in these spiralling prices.
“With the fuel excise ending, petrol prices will ramp up, with many operators already capitalising on the opportunity. This will only feed inflation and further tightening of interest rates. These obstacles will continue to place downward pressure on house prices in the foreseeable future.
“Those looking to buy, or stay, in the market should always do their homework and get their finances in order. People should seriously be evaluating their current and possible circumstances before jumping into the market just because of the drop in housing prices,” he noted.
The property market performance specialist said: “You never know when an iceberg is going to appear and it’s too late to steer the ship away.”