No one could have expected the strange curveballs that the year 2020 would throw at all of us. No industry remains untouched by the pandemic, and there are certainly economic consequences that we could not have seen coming last year.
In terms of the real estate market, both locally and abroad, the tables have turned, and in Australia the world of property is now favouring homebuyers above home sellers for the first time in a long time.
If you were thinking of selling your property in 2020, the latest developments don’t necessarily mean that you should or shouldn’t change your plans. There are certain circumstances in which selling your property now makes total sense, while you might have to reconsider if your personal circumstances are different.
Here are a few guidelines to help you decide whether now is the time to sell, or whether you should try holding on to your property for just a while longer.
Sell in 2020: Interest Rates Are Expected to Remain Low
Interest rates around the globe have been falling even further since the outbreak of the novel coronavirus. In Australia, there were already significant rate cuts in March, then again in June, with data from RateCity finding that 41 lenders cut home loan rates out of cycle in June – 19 lenders made cuts to at least one variable, while another 22 lenders made cuts to at least one fixed home loan rate. This saw a new lowest home loan rate of 2.17% being set by one lender, Freedom Lend.
Late in July, home loan rates dropped even further, with variable interest rates falling below 2% for the first time, and various lenders offering extra perks like cash-backs of a few thousand dollars to entice eager buyers who are salivating at the buyer’s market that is currently at play.
These record-low rates mean that there is likely to be interest in properties that are for sale, which bodes well for sellers. While your property might not be able to fetch a selling price that is quite as high as it might have been a year ago, there is certainly a chance of competition among buyers, meaning that the asking price you advertise for could be fair and attainable. Ask your real estate agent to assist you with a price estimate that fits in with the times, but doesn’t leave you without cash in pocket.
Sell in 2020: You Can’t Afford Your Home Anymore
Just about everyone is in dire financial straits now, and you might find yourself having difficulty keeping up with your home loan repayments due to extra financial pressure in these very uncertain economic times. Once your mortgage payment exceeds 25% of your salary after deductions, you are wading dangerously close to not being able to tackle other debt you might have, like car repayments or student loans.
In this instance, it might make more sense to rather look for a home that is more affordable, or to find a place to rent until things are a little more financially stable for you.
When looking for a different property, make use of a mortgage calculator to ensure that you will be able to pay the mortgage every month. Need help looking for a property you can afford? A qualified and experienced real estate agent should always be your right-hand man or woman, whether you’re looking to buy, sell or rent. Use an online agent finder like Perfect Agent to find an agent in your city or suburb who understands your exact needs and knows the ebb and flow of the property market in the area.
Sell in 2020: You Need to Move
There are many reasons that a person might have to move, even in the midst of a global pandemic. Perhaps you’ve gotten another job, or your children have started at another school, but whatever the reason is for having to move, you will, of course, have to look into selling your current home before you do so.
If you have, unfortunately, lost your job due to the economic fallout of Covid-19, you will have to look for something more affordable, especially keeping in mind that you don’t necessarily know when the economic circumstances will be more favourable, or when your job prospects will improve. This will necessitate moving to a different home.
When you have to move, it’s good to keep in mind that it might prove a little more convenient finding an agent in the city or suburb you are moving to, to help you find another property there. Perfect Agent’s database includes real estate agents across the country, and we’ll be able to recommend an agent that knows what you are looking for and what is the most affordable option, as the world grapples with the economic consequences of the coronavirus.
Wait to Sell: You Just Refinanced
Refinancing a property comes with a number of benefits for the homeowner. These include:
– A shortened term
– Lower monthly repayments
– A better mortgage rate
– The opportunity to consolidate debts
If you have recently refinanced your current property, it probably means that you are already in a more comfortable financial position than you might have been before refinancing. This will mean that your homeownership is perhaps a little more secure than many other people’s, and in this instance, it makes more sense to hold on to a property instead of selling now.
If you have started thinking about selling the property, it might be good to hold out on that decision just a little, as chances are you might be able to fetch a better selling price in a year or two, when the market might be more in favour of home sellers than it is at the moment.
Wait to Sell: You’re Worried About Affording Your Next Purchase
If there is any doubt in your mind as to whether you can afford the loan repayments on another property, this might not be the right time to look into purchasing said property.
Even if you are lucky enough to still be employed, you might have had to take a pay cut over the past month or so. As industries adjust to what is becoming the new normal, there is always the possibility that you might be furloughed in the next few months or may lose your job altogether. While these are not comfortable things to think about, it is very important that people looking to sell their property in favour of purchasing another, more expensive home have these difficult conversations with themselves.
Should you find it is becoming more difficult to keep up with loan repayments on your current property, now is the time to speak to your lender and discuss refinancing options that might take the pressure off for a while.
In short, don’t sell if you are not absolutely sure you can afford another property.
Wait to Sell: You’re Not Willing to Compromise on Price
Home sellers should always keep in kind that the price boom which Australia has seen over the past few years has come to an abrupt halt in the current global climate. Property prices were seemingly stabilising even before the Covid-19 outbreak, but it’s safe to say that home sellers are very unlikely to get the same selling prices that they might have got in 2019 or in 2018.
Sellers that are unwilling to compromise on their selling price would be better off waiting to sell, instead of pushing overpriced properties that sellers automatically discount in favour of other, similar properties that are selling for lower prices.
Comparable properties in your city or suburb always give you a good idea of what homebuyers are likely to be willing to pay for a property. This is even truer now, when the future is uncertain and home loans are making it more attractive to buyers to purchase properties they can actually afford. Home prices that are too high are always detrimental to the ultimate sale of the property – speak to your real estate agent about a price that makes sense in 2020. If that price is too low for your liking, you might want to consider holding off on putting your house on the market now.
Home sellers looking to sell because they need to move or can’t afford the property they live in anymore might want to stick with their decision, while sellers that are nervous about not being able to afford another property should probably wait before selling. On the other hand, sellers that are expecting to fetch the same selling price as they would have last year are likely to be disappointed. Prospective sellers should remember, though, that individual cases differ, and that what works for one seller isn’t necessarily right for another.
Planning to sell your home in 2020? A trustworthy real estate agent, recommended by Perfect Agent, is indispensable – contact us today to find an agent you can trust to help you sell at the best possible price, whatever your current circumstances – and the state of the world – are.