Missing out easier with supply woes

AS my wife loves to remind me, there is a cost to procrastination.

Sometimes, it’s missing the ticket to that show you really wanted to see (or finding yourselves 15 seats apart, in the back row), or it might be going in to finally buy that couch – which is no longer on sale.

In property, the cost is often expressed with the regret that comes from a financial if, that in hindsight has a promise of success ‘I remember when you could buy beachfront for $12,000, and now its $2,000,000’ – you get the gist.

There will be plenty today, regretting they didn’t get into the property market in early 2020, as alarm bells went off and most of us were sitting in lockdown and taking on another mortgage was the last thing on our minds.

To be fair, this is one that most of us got wrong, including the big banks, so don’t judge yourself too harshly on what might have been.

With looming interest rate rises, some of those that did buy might be having second thoughts, and for others, sitting on your hands might seem the more prudent decision but what does that look like over the next 12 months?

As tempting as it might be to say ‘I’ll keep renting, so rate rises won’t affect me’, unfortunately they almost certainly will.

Rising funding costs will mean that even the most kind-hearted landlords (and they do exist!) are going to look to offset those costs with rent increases at the end of each term, and that’s on the back of the steady increases we are already seeing due to unbalanced supply and demand.

For buyers, money will still be available, though not as cheap as we have become used to over the past couple of years. That said, rates on offer would still look attractive to anyone borrowing a decade ago.

Supply remains the biggest constraint to our market, which means that even with a more normalised demand and in the absence of the urgency inspired by southern lockdowns, there are still more buyers than sellers in many market segments.

Short of sending people away, which we don’t want to do, the only solution is to build more, and with higher costs for brand new builds, values of existing homes will continue to be supported as the only viable alternative. FOMO might not be quite as scary as it was, but missing out or paying more is still on the cards.

Tom Quaid is the REIQ Zone Chair for Cairns