2021 has been defined by the property price rises that have seen rents and business rates surge while sales fall. ABC have highlighted the 16.1% rise in house prices in Perth over the past 12 months, a trend reflected elsewhere in Western Australia and creating a huge impact on the wider housing industry. It is a seller’s market in the truest sense of the word, and can be difficult for both sides of the equation. Do I wait to buy, whether for a home or a new catering business? Should I sell right now, or will conditions continue to improve? There are, of course, more factors at play – primarily concerning mortgage rates.

Rising rates

Mortgage rates remain at historic lows but there are rises on the horizon. This has led to lenders being encouraged to undertake a greater level of affordability tests, according to The Guardian, to ensure that renters on variable rate mortgages will be able to afford them in 2 years and not just now. This shows that buyers must be wary about the agreement they enter into, but it offers a lesson for owners, too. Rather than looking to cash out and embark on a new credit agreement, now is a good time to settle on old lines of credit and find ways to pay down a home loan. The risk of becoming out of pocket is a real one in the future, and there’s an opportunity with low rates and inflation to lessen the debt burden.

Value in unexpected places

When property prices rise, it’s usually expected that the high-density urban areas, like Perth’s CBD, will be the place impacted. However, the latest trends have run counter to this. WA Today highlights the biggest increases occurring in suburban areas – Spearwood has seen a 3.3% increase, Kingsley 3.1% and Leda 2.9%. The CBD has of course seen increases, but not to the extent often expected in such inflationary markets. That presents an opportunity for urban families.

Set to continue

Analysts predict that the market will remain hot. Interest rates mean that house buying will still see increased interest and, crucially, people will keep borrowing. Perth Now quotes one analyst highlighting that $500,000 mortgages can be procured at only $200 per week – a very good deal for many Australians, and something that allows them to get their hands on bigger and better property than they might have hoped to previously. Deposits remain an issue, but with inflation pushed down and rates staying low right now, there has seldom been a better time to save. 

House building is still at low levels, however, and it has been noted that the region has been under-built for years. There is instability underlying the market, and while it’s good to get active and start buying and selling, a degree of caution is necessary. For most homeowners, the situation is fine – but it will pay to be vigilant about market conditions over the next few years.