Weekend Gold Coast Bulletin - Property
Falling home values not a worry
House prices have been dropping nationally for about a year and more falls are expected by many forecasters as interest rate rises continue to bite.
So far it’s been nowhere near the dire predictions of those tipping a 15-20 per cent plunge from 2022 peaks.
The biggest mortgage pain is yet to come. Many fixed-rate mortgages will soon revert to high variable rates, but I don’t think we will see 15 per cent-plus drops – especially as some capital city price falls appear to be flattening out.
Price falls do not greatly impact a vast majority of homeowners – unless they are struggling to refinance or sell right now and their home is in negative equity.
Weakness is not necessarily a worry. Here’s why:
MORE THAN AN ASSET
Property’s most important role is not financial. It provides shelter, space for family and freedom to put a stamp on your surroundings.
Its capital growth is completely tax-free, and it doesn’t count towards pension assets tests – meaning retirees can own $3m homes and still receive full age pensions.
LOOK LONG-TERM
Short-term fluctuations in home values may grab headlines, but the longer-term picture is clear and positive. In the past 20 years, house prices in every capital city have either doubled or trebled.
Those who own and invest for at least 10 years almost always come out on top.
SAME MARKET SELLING
Property price falls should not be stressful to people buying and selling at the same time in the same market.
Remember that the true financial value of a property is not what a real estate agent thinks it’s worth, or what you think it’s worth.
It’s the price someone is prepared to pay for it when you sell it.