The latest data from the Reserve Bank of Australia (RBA) show that Australian households and borrowers remain remarkably resilient. Home values are climbing, and most homeowners are comfortably servicing their loans. As buyer’s agents, we break down what this means for you – whether you’re a first-home buyer or a seasoned property investor and how to plan your next move in this dynamic market.

Borrowers Are in Good Shape

Australian property owners have built up solid equity and cash buffers, which is great news for overall market stability. Housing prices have increased by around 10% since early 2022, even amid rate rises. This growth boosts homeowner equity and means very few people owe more than their property’s worth (less than 1% of households are in negative equity, a much lower share than pre-2020). In short, rising prices have put a safety net under many borrowers.

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Importantly, mortgage stress remains low. The share of home loans over 3 months in arrears is back to around pre-pandemic levels. Unemployment is near record lows, so most people can keep paying their loans on time. Strong employment and rising incomes (real wages are finally growing) support mortgage serviceability, helping borrowers stay afloat.

Many households also got ahead on their loans during the past few years. Lots of borrowers made extra mortgage payments into offset and redraw accounts, building sizeable reserves. In fact, the median mortgage holder’s prepayment buffer is even larger now than before COVID, in some cases, well over a year’s worth of repayments saved up. These savings and equity cushions give Australian homeowners flexibility to handle rate changes or income shocks, reducing the risk of forced sales. All this borrower resilience means our housing market faces a lower short-term risk of a downturn, which helps investor confidence moving forward.

Market Insights for Buyers and Investors

From a buyer’s agent perspective, here are key takeaways from this resilient market and how they could impact your buying strategy:

• Continued Capital Growth Potential. Housing supply remains tight, and prices are trending up, supported by that tight supply and solid demand. This environment points to ongoing capital growth potential for well-selected properties. If you already own property, your equity is growing; if you’re looking to buy, be mindful that values could keep rising in many areas, so timing can be important.
  
• Rising Investor Competition. Investor activity is on the rise again – housing credit to investors has grown above its post-GFC average. As interest rates ease, more investors are likely to enter the market. That means more competition for the best properties, which can drive prices higher, especially in popular segments. If you’re an investor, be prepared for competitive bidding and consider acting sooner rather than later to beat the crowd.
  
• Rate Cuts Spur Buyer Momentum. With the RBA starting to ease monetary policy (rate cuts in sight), borrowing power is increasing for many buyers. Cheaper finance can quickly translate into more buyers shopping for property. To avoid getting left behind, plan your finances early – get pre-approval and have your budget sorted. 

Ready to buy a home or invest? Key2Dreamz can help you make a smart plan and use the current market to your advantage. Call us on +61 439 260 917 or book a free consultation to talk about your property goals. We’re here to help you turn today’s opportunities into your next home or investment.