After a tumultuous year in property, you may be wondering what the next 12 months has in store! Here’s a snapshot of what we believe 2020 has to offer.
First home loan Scheme
The first home buyer incentive scheme kicks off on 1 January. It allows first home buyers to secure a loan with just a 5% deposit (the government will guarantee the remaining 15%). Although it is possible to get a mortgage with a 5% deposit today, you currently need to pay Loan Mortgage Insurance when borrowing with less than a 20% deposit and LMI is an expensive additional cost.
Things to know about the scheme
• You still need to borrow 95%, but you can avoid LMI
• Your mortgage needs to be an owner-occupied loan with principal-and-interest repayments
• Eligible first home buyers can’t be earning more than $125,000 a year ($200,000 combined for couples)
• The value of purchase must be below $700,000 in Sydney (varies state by state)
• Access to the scheme is limited to 10,000 borrowers
The low stock levels seen throughout 2019 are predicted to continue into 2020. Discretionary vendors are being deterred by the undersupply of property due to the fear of not finding a replacement property. Owners that need to sell in order to upsize, downsize or relocate will be able to enjoy a sellers’ market and price growth!
Economists are almost unanimous in predicting further interest rate cuts in 2020. We expect to see a reduction in the first quarter. As always, we will need to wait and see how much the banks will pass on. With many lenders offering rates under 3%, it will be interesting to see how low they will be prepared to go.
High demand for property from enthusiastic and confident buyers will continue into 2020. Although we anticipate higher stock levels in 2020, due to owners being lured by strong prices, we do not expect to witness a huge influx. We envisage lively competition amongst buyers and consequently, expect prices to grow steadily throughout much of the year. Many commentators are predicting that house prices could return to the peak of 2017 by the end 2020. Apartments will take much longer to return to the peak.
Selling in 2020
If you are planning to sell, get an accurate price appraisal from an experienced agent with local knowledge. On-line versions are a helpful guide, but they do not offer the accuracy of an agent. Your agent will also provide valuable tips on how to prepare your home for sale and methods to consider when marketing your home i.e. auction, private-treaty or off-market methods.
If you are not moving out of the area, your agent may also be able to help you find your next property. The most important thing is to start a conversation with an agent you trust and to have a realistic price for your property.
• Request a 3 month or longer settlement if possible. This will enable time to search for a new property
• Preferred method in a declining market
• Have an accurate/realistic price for your own property
• Ask for a 3-month settlement to allow time to sell your own property (2 weeks to prepare your home, 4 weeks to market/sell and 6 weeks settlement)
• Preferred method in a growing market
Buying in 2020
Contact your local agents and ask to be added to their buyer database. Provide your requirements, so that you only receive notifications about suitable properties. Get your finances in order and know your borrowing power so that you will be able to act quickly if required. Good properties frequently sell prior to auction, so be prepared to make an offer if your see something you really like.
We sold numerous properties off market in 2019 because many homeowners were keen to avoid marketing costs by letting us sell their home using our buyer database alone. The only way to learn about off market sales is to contact local agents directly.
Our team is excited about 2020. Please call us on 8303 1800 to discuss your property plans.