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  • The upsides of the changing property market: how you can benefit

The upsides of the changing property market: how you can benefit

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With high inflation pushing interest rates up at a rapid pace, the media is dominated by gloomy headlines about a slumping property market. Is the news all bad, though? 

There are silver linings to every situation, and in this case, there are plenty of people who stand to benefit from the changing market conditions — sellers included. 

So who will see the upsides to the new rate-hiking environment? 

Upsizers - or anybody buying and selling at the same time

With the possible exceptions of Adelaide and Perth, it's looking like most of Australia has moved on from the peak of property price growth. 

While the sudden and sharp rise in interest rates has started to put downward pressure on sale values in most markets, that could be a positive for people buying and selling at the same time.

For upsizers in particular, a cooling market means a reduction in the price gap between their current property and their next home, making upgrading more achievable. 

Listings are broadly on the rise too, and that means more choice when it comes time to buy. 

BuyersBuyers co-founder Pete Wargent explained "The cost, time, and stress involved due to the market conditions over the past couple of years prevented many from upgrading. 

"Often there simply wasn’t the suitable stock available for upsizers to move into, and many were fearful of selling in case they couldn’t get back into the market."

2021 was undoubtedly a seller's market. As things shift towards a more balanced market, anybody looking to buy and sell at the same time is facing less pain when it comes to the buying side of the process. 

"Overall, a well-executed upgrade in a softer or declining market can prove to be a financially astute move," Mr Wargent said. 

Investors may be lured back into the market

The market downturn is likely to deter those looking to turn a quick profit, but for investors looking for both long-term rewards and improved cash flow, this may be a welcome change. 

Australia's rental market has reached incredibly tight levels in recent months. Nationally, the current vacancy rate is just 1.0 per cent, a 16-year low, according to SQM Research

That undersupply of rental accommodation has pushed asking rents up dramatically, with some markets surging by up to +12.8 per cent over 12 months. 

Rents have soared to remarkable new heights over the past year. Source: CoreLogic

"While higher interest rates are likely to discourage some investors, I wouldn’t be surprised to see investor demand holding reasonably firm considering how tight rental markets are and the prospect for higher yields and long-term capital gains," CoreLogic's head of research Tim Lawless explained

Savvy investors will also be aware that this period of downturn is just part of the property market's natural cycle. There's plenty more growth to come in the long term. 

Mr Lawless also said he "wouldn’t be surprised if more investors looked towards markets like Brisbane, Adelaide and Perth, where buy-in prices are lower, yields are higher and potentially the prospects for medium-term capital gains are higher. 

"Commutable regional markets are also likely to be more popular with investors for the same reasons."

Refinancers stand to gain from renewed lending competition

While it might seem counterintuitive, changes in the current lending environment may also present opportunities to homeowners looking to refinance. 

"There's this assumption that because rates are rising, people are on the back foot when it comes to renegotiating their home loan,” RateCity's Sally Tindall told The New Daily.

"That's not true — banks still need new business coming in the door. Understand your worth as a borrower, because if you have equity up your sleeve then you’re in the driver's seat."

After a long period of the cash rate holding stationary at its all-time-low 0.1 per cent level, rising rates mean lenders will have to get competitive again. 

The big four banks are already advertising introductory offers to new customers that demonstrate a clear motivation to reel in new customers. 

The big four banks' rates for existing customers more-or-less reflect the RBA's new hikes, but significantly lower rates are being offered to new customers. Source: RateCity, The New Daily

"The banks are fighting tooth and nail for new customers — they want to be on the receiving end of any refinanced loan, not the losing end," Ms Tindall explained.

"They're still willing to throw ultra-competitive rates at ideal customers."