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How to make housing market predictions in uncertain times

It’s the age old property question, what’s the future of the housing market? If you’re in the process of buying, selling or just want to learn more about how to make housing market predictions in turbulent times, then you’re in the right place.

Housing market predictions and timing the market: Should you buy or sell?

If only we could have a crystal ball and look at the future of the housing market, right? Everyone likes to make housing market predictions, no matter if it’s your next door neighbour, your aunty or even your high school friend, everyone’s a so-called ‘expert’.

But how do those predictions go during periods of housing market fluctuations? We want to help you better prepare for the unexpected in the Australian property market, no matter if it’s a boom, or a bust.

The housing market changes, there’s no doubts about that, and the Australian property market is notoriously unpredictable. We’ve been told for years the bubble will burst, but prices still climb. Add in the potential for recessions and uncertainty and it’s no wonder you’re not sure where to start.

Whether you’re looking to buy, sell, build, renovate or refinance your home, we’re here to help answer any questions you might have about the Australian property market, particularly during periods of uncertainty.

What happens to house prices during a recession?

There’s always talk of the future of the housing market in Australia leading to the ‘property bubble’ bursting, or a recession causing house prices to crash, but what would actually happen during a period of economic downturn? Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital, predicts that “a relatively short recession that sees unemployment rise to around 7.5% would likely only set property prices back around 5% or so, after which prices would bounce back. But a deeper recession with, say, 10% unemployment risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20% fall in prices.”

Whether we’re in a boom or bust period in the Australian housing market, the only thing for certain is that the housing market is incredibly complex. There’s no doubt going to be periods of housing market fluctuations in the future, so it’s important to consider your goals. Are you taking a long-term, 30-year view or looking for quick investment returns? Are your goals only financial or do you have other objectives in mind?

What will happen to the value of homes in my area? Will they rise or fall?

The future of the housing market will involve prices rising and falling. This often depends on national or global events, making housing market predictions tough in times of uncertainty. For instance, during the 2009 Global Financial Crisis Australian homes dropped in price (as expected). But in many parts of Australia, the Covid-19 pandemic caused prices to actually rise – interest rates lowered, the government provided income support and added certainty to the market, and people saved more by not spending on leisure and holidays.

To understand the effect of market conditions on your home value, or the home you’re thinking of buying, it’s best to speak with a local expert. Keep in mind that real estate agents can’t be relied on to be totally impartial when it comes to housing market predictions (they want to sell houses!), so it pays to invest some of your own time doing research about future of the housing market using these online tools:

  • Online property databases, and allow you to search by postcode, street name, property type, number of bedrooms and so forth. You can save searches and build up a property portfolio for comparison reasons.
  • Domain’s suburb profile tool offers further analysis to help potential buyers better understand the lifestyle factors and housing market fluctuations affecting that suburb.
  • Historical market reports offer an insight into how quickly or slowly properties are selling, whether they are selling via private sale or auction and keep you abreast with market trends, forecasts and housing market fluctuations; information that can be vital to helping you decide the best time to sell or buy. Check out Real Estate View and Domain Property Profile.
  •’s neighbourhood overview tool calculates annual growth, medium rental yield and rental demand. This is particularly useful if you are looking at an investment property.

How many properties are for sale in your area? How long are they staying on the market? How many buyers are registering for auctions? What is the auction clearance rate? Is there a significant gap between asking and selling prices?

However, before you rush to the internet, consider the following points:

  • Firstly, when you read about housing market predictions, be mindful that Australia doesn’t have one housing market, it has many. In some cases, there are even micro markets within sub-markets, such as highly desirable streets or school zones that elevate property prices. Individual properties can also have characteristics that make them more desirable.
  • Secondly, for most homeowners, property is a long-term proposition. If you’re not planning to sell soon, the current housing market fluctuations may have little bearing on the long-term performance of your home value.
  • Thirdly, a home’s true value is more than its market valuation. It’s a place to live, work, to be creative, to entertain in, to live near friends and family, or far away, to raise a family in, to be near the beach or close to the city or nestled in the hills. In other words, there are many more considerations than price alone.

Is it worth renovating my home if I’m wanting to sell?

Instead of looking at housing market changes, what about changing the value of your property by doing something within your control. From a property value perspective, it’s always prudent to ask yourself if a DIY project will appeal to future buyers. According to Domain, kitchen and bathroom updates tend to offer the most bang for your buck. On a smaller scale, Domain also says that painting, landscaping and general maintenance also offer good returns.

What about buying, can I get a home loan right now?

Remember the golden adage: Time in the market beats timing the market. If you’re done with housing market predictions and want to buy now, then why not take the steps to start that process?

If you’re currently earning an income and working in a secure job, your loan application will be considered. According to our MyBudget Loans team, they are submitting loan applications for our clients daily. All of the banks, and most home loan lenders, are processing them.

That being said, loan assessment requirements have tightened and may change again in the future. The only way to tell if you’ll qualify for a home loan is to chat with your bank or broker.

Is now the right time to refinance my mortgage?

If you’re a MyBudget client, our lending specialists will help you work out if you meet the requirements for a home loan using current criteria across a range of different lenders. We can also do a home loan health check for existing borrowers or a first home loan assessment for new borrowers.

For MyBudget clients, all of these services are free via our ethical lending team at MyBudget Loans.

As well as offering market-leading mortgage rates, the MyBudget Loans team specialises in products for borrowers who might be rejected by their bank. On average, we’ve been saving clients who refinanced (and/or consolidated other debts into their mortgage) hundreds of dollars a month compared with their previous payments.

I’ve got numerous debts – should I try to get a debt consolidation loan?

With official interest rates at a record low (and look to be staying that way for the foreseeable future), now may be a good opportunity to consolidate multiple debts into your mortgage. A debt consolidation loan may save money, free up cash and reduce stress.

However, debt consolidation is not without its risks. MyBudget clients are encouraged to speak with the MyBudget Loans team. Members of the public are recommended to start with a free budget consultation to get a detailed picture of their overall financial position and all of their options.

I’m a mortgage holder – what will happen if the value of my home drops below the value of my mortgage?

Housing market fluctuations can raise a number of concerns and queries for mortgage holders. Will the bank expect me to take out mortgage lenders insurance? Can they repossess my home or ask me for more money?

Mortgage holders would not be expected to take out Mortgage Lenders Insurance (MLI) in the case of their home value falling below their home loan balance. MLI would only be required in the case of refinancing which, in this circumstance, would be a moot point since the value of the property would be less than the amount needing to be refinanced. The refinance application would be rejected.

Likewise, if you have an existing loan, your lender would not ask you for a lump sum payment, as long as your loan repayments are up to date.

Generally speaking, a lender has no right to repossess your home unless your mortgage is in default. The lender must also serve you with a notice that gives you time to rectify your payments. Repossession is generally a last resort and a protracted process.

If you are finding it difficult to make loan repayments, you should contact your lender immediately to request hardship arrangements. Lenders will generally try to help borrowers work out a payment arrangement that avoids repossession (see below).

Don’t worry about housing market predictions, get your own customised budget

Instead of worrying about housing market predictions, why not build your financial health? If you put yourself in a position where you are financially stable, then housing market fluctuations won’t bother you as much. The best way to beat housing market changes is to take control of your finances.

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This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.