3 reasons it’s a great time to buy new house and land
With interest rates rising, many are wondering if it’s a good time to buy. But there are some good reasons to snap up a house and land package sooner rather than later.
After years of record-low interest rates, the RBA has started to increase the official cash rate.
With inflation sitting above the RBA’s target range of 2-3%, there are likely more hikes to come, according to Cameron Kusher, REA Group’s Executive Manager of Economic Research.
“Our expectation is that by the end of this year, the cash rate is probably going to be somewhere between 2.5 and 3% and a little bit higher early next year,” Kusher says.
The interest rate outlook has some prospective buyers hesitant. However, even if rates increase to those levels, they will still be very reasonable compared to other times, Kusher says.
Plus, interest rates are only part of the equation. There are good reasons to buy in the current market, Kusher shares.
“Some people will need to upsize or downsize to suit their situation,” he says. “People that have already sold, they’ll need to buy another property and they’ll want to do that soon.”
1. Cost of living increases
It’s not just interest rates which are going up. The rental market is currently extremely tight, with demand shifting back towards cities.
This means many people faced with paying higher rent will want to get out of the rental game, even if it means a slightly higher mortgage cost, Kusher says.
“A big part of the conversation here is what’s happening with the rental market,” he explains.
“We’re expecting rental markets to remain really tight. We know that landlords will look to pass on some of the rising costs to tenants.”
Rising costs of living are impacting areas differently. Cost of living pressures are impacting inner-city locations more than outer areas, explains Matthew Mears, Managing Director of Lendlease Communities Australia.
“Increased cost of living and pressure on inner-city rent prices means that the proposition for house and land in newer suburbs is becoming more favourable,” explains Mears.
“House and land packages have always been an attractive and affordable option when compared to the established market, and this hasn’t changed. The majority of our greenfield communities are in growth corridors, well connected to transport and local services, which usually means purchasers can enjoy the best of both worlds with access to the city and regional areas.”
2. Greater buyer power
With many would-be buyers sitting on the sidelines, others will benefit from the reduced competition, allowing them time to do due diligence and power to negotiate, Kusher says.
This is particularly important with the supply of land in many parts of the country very “tight”.
Another reason to act soon is to qualify for government incentives currently in play, like the Home Guarantee Scheme, which allows first-home buyers to purchase with a deposit of as little as 5%.
Mears says one of the best pieces of advice is to “understand your borrowing capacity”.
This includes understanding the difference between fixed and variable rates and how much of a buffer you’ll need for future interest rates rises.
Mears says while demand for new homes is still attractive, buyers are now taking more time to do their due diligence.
“More than ever before, they’re coming to us researched but also with all the necessary checks and balances done,” he says.
“This, in turn, increases the likelihood of a buyer commuting to a purchase.”
3. Great new communities
Mears adds that people must also think carefully about the community they want to live in.
He points to established masterplanned communities in South East Queensland, like Yarrabilba and Springfield, which are topping the sales charts in 2022.
“Look for high quality communities, such as Yarrabilba in Queensland, where there is access to well-planned amenities such as schools, transport, community hubs, sporting fields, bikeways and a plethora of beautiful parkland and outdoor spaces to enjoy,” he says.
“Our communities also offer a strong sense of belonging and authentic connection to community which so many homebuyers are craving post covid. Luxury of space, fresh air and community connection are real drivers for homebuyers now.”
These features not only make daily life more enjoyable, they also contribute to creating a friendly and interactive neighbourhood, he says.
Walkable communities mean less reliance on cars, while native landscaping is more water-wise.
Mears says people also want room to move and create something that’s uniquely their own. Providing a diverse range of housing options give buyers a real choice for a range of budgets and needs.
Lendlease communities at Harpley and Aurora in Melbourne, are good examples where there are carefully curated townhomes, multigenerational homes and the typical house and land packages for sale to match a wide range of budgets and housing needs.
Brand-new communities, including Kinma Valley in Queensland and Figtree Hill in NSW, are also creating a lot of buyer interest for their connection to nature and setting new benchmarks around conservation and sustainability, Mears says.
“Commitments to sustainability and technology is the future of masterplanned-living,” he says.
“Environmentally sustainable homes mean real savings for residents. It is estimated that over 10 years, a new home buyer could be up to $11,000 better off with an all-electric, solar equipped home.
“That’s why we’re creating communities that will be delivered fully electric, enabling them to be run on 100% renewable power.
“We are also providing fibre connections to all our homes and Wi-Fi in select parks which gives our customers genuine flexibility of working from home.
“Sustainability and technology means we are creating communities that are not only beneficial for people but we are balancing the needs of the environment, both now and into the future so our communities can continue to thrive.”