Media Release

Borrowers warned: don’t wait for property prices to fall or face missing out on savings

  • Reserve Bank leaves official cash rate on hold at 2.50 percent
  • National median house price up by $80,000 in five years, despite drop from previous month
  • Opportunity for borrowers to fix before rate rise

JUNE 03, 2014, SYDNEY - First home buyers are being warned by one of Australia’s biggest comparison websites finder.com.au to be careful with waiting for property prices to fall further or they could miss out on significant savings.

The warning follows the Reserve Bank of Australia’s decision to leave the official cash rate unchanged at 2.50 percent for the ninth consecutive board meeting today.

According to Australia’s biggest monthly Reserve Bank Survey by finder.com.au, all 16 of Australia’s leading economists and experts expected no change today, while the majority forecast the Reserve Bank to start lifting the cash rate by the end of 2014 or next year.

Michelle Hutchison, Money Expert from finder.com.au, said fixed home loans are more appealing with rate increases on the horizon.

"While there was no change to the cash rate today, interest rates are set to rise so it's a good time to consider locking in a fixed interest rate.

“Despite new figures showing a month-on-month drop in property prices across the country, property values are higher than ever. In fact, our research shows that national median house value has increased by almost $80,000 or up 16 percent to $575,000 in May compared to five years ago.

"Some are speculating that the month-on-month drop in national median house values of 1.90 percent could be a sign that values could fall further. Even if you waited for a property to drop before buying, interest rates could rise and outweigh the benefit of waiting, said Mrs Hutchison.”

According to RP Data figures analysed by finder.com.au, Sydney-siders have been hit the hardest as the median house price jumped 37 percent to $800,000 in May 2014 from $582,543 in May 2009. Whereas borrowers in Adelaide felt the least impact with less than 1 percent increase to $415,500 in May 2014 from $412,516 in May 2009.

“With a rate rise around the corner, it’s worth comparing fixed rate options if you’re a first home buyer and lock in a low rate if you’re ready to jump on the property ladder.

“Fixed rates are attractive right now, with the average three-year fixed rate on finder.com.au/home-loans is 5.09 percent and are as low as 4.69 percent. Compared to variable rates, which average 5.32 percent and start from 4.54 percent.

“After waiting a few months for a $500,000 property to drop by 4 percent to $480,000, with a 10 percent deposit and a loan size of $432,000, the lowest three-year fixed rates could rise by then to say 5.19 percent. Purchasing a property now at $500,000 with a 10 percent deposit and loan size of $450,000, locking in the cheapest three-year fixed rate of 4.69 percent could save you about $1,400 over three years compared to waiting for property prices to drop and rates to potentially increase.

Median house price compared to five years ago

Capital CityMay 2014May 2009Difference ($)Difference (%)
National*$575,000$495,287+$79,713+16%
Sydney$800,000$582,543$217,457+37%
Melbourne$612,000$469,357$142,643+30%
Darwin$590,000$493,430$96,570+20%
Canberra$560,000$487,012$72,988+15%
Perth$544,500$475,481$69,019+15%
Brisbane$470,500

$458,748

$11,752

+3%
Adelaide$415,500$412,516$2,984+1%

source: finder.com.au, RP Data, ranked by highest value May 2014

*National - May 2014 includes 8 capital cities and May 2009 includes 7 capital cities (excl. Hobart)

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Disclaimer

The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.

About us

More than 3 million Australians turn to finder.com.au every month to save money, time and make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.

Our free service is 100% independently-owned by two Australians: Fred Schebesta and Frank Restuccia. Since launching in 2006, we’ve helped our users make more than 17 million decisions.

We continue to expand and launch around the globe, and now operate in the United States and United Kingdom. For further information visit www.finder.com.au.

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