The Advertiser - Real Estate

Dealing with rising values

- Anthony Keane Personal finance writer

House prices are heading higher.

And quickly, according to a growing number of forecaster­s predicting big things in the next couple of years.

Just 10 months ago we heard dire prediction­s of 30 per cent house price falls caused by the coronaviru­s. Now it’s the opposite. Economists have tipped prices to average 5-10 per cent growth annually, and there have been reports of a Reserve Bank analysis finding house prices could rise 30 per cent in three years if borrowers believe today’s low interest rates are permanent. House price growth is good for owners and investors who see their assets rise, but not-so-good for potential first home buyers who may find themselves priced out of the market. And if it gets too hot, we end up with a boom-bust cycle that creates financial pain everywhere.

Anyone interested in property should keep an eye on price movements this year. shows recent sales in postcodes, while has a home value index for each major city. Here’s what to consider.

BE NIMBLE: While real estate works best as a long-term asset, sometimes you should act quickly. I’ve found over several decades that decisivene­ss works best when making property moves, rather than waiting and hoping. Having an idea of what you want from property, plus having an exit plan and backup plans helps stop you from being paralysed by indecision when circumstan­ces change quickly.

CONTROL FOMO: Fear of missing out (FOMO) can tempt people to do silly things, and pay silly prices. In rising markets some sellers ask unrealisti­c prices and hope that panic buyers will come the party – just as panic sellers created some brilliant bargains for savvy purchasers during the initial coronaviru­s lockdowns last year. Remember that the price of a property is not what you think it should be, or what the seller thinks it should be. It’s simply the amount of money that someone is prepared to pay for it.

STAY IN THE MARKET: When prices climb fast, you don’t want to be out of the market even for just a few months. I’ve known people to their home to go travelling around Australia for a while, and when they returned they’d been priced out of their market by rapidly-rising home values. If you’re selling, have clear plans to buy quickly. Rising markets are one time you won’t mind holding onto your existing property while buying a new one – as long as you can handle bridging finance and other money matters.

GET FINANCE SORTED: Times like these make it important to get pre-approval for a mortgage. That way you’ll know the maximum you could buy without stressing your budget too much and you can confidentl­y make bids or offers.

RIDE THE CYCLE CAREFULLY: Just because you read that home prices are rising doesn’t mean they will in your area.

Real estate moves in cycles, so try to understand where your suburb or town sits in its long-term price cycle.

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