Falling property prices and rising interest rates have been a blessing in disguise for Emma Crichton’s strategy to move from a rented apartment in Sydney into her own place on the Gold Coast.
Ms Crichton, who has responsibility for her five-year-old grandson, Alexander, says she was able to buy her three-bedroom luxury apartment overlooking the beach for around 40 per cent cheaper than its price during recent market highs.
Emma Crichton and her grandson Alexander in their rented apartment in Darling Point, Sydney.  Natalie Boog
“This has worked in my favour,” said Ms Crichton, who had saved a deposit.
“Banks are less likely to lend to buyers and investors that don’t have all their ducks in a row,” she said about banks tightening lending terms as rates continue to rise.
For a borrower with a $750,000 loan, Tuesday’s 0.25 percentage point rate rise will add $110 to the monthly mortgage repayment for an average owner-occupier with 25 years remaining on their loan, according to RateCity, which monitors rates. The cumulative effect of rate rises since May would be an additional $1030 in monthly repayments.
A $1 million borrower’s monthly rates for the same loan and term will rise by $147 following the latest increase and $1374 since May.
Ms Crichton, who works in human resources, said her mortgage and body corporate costs in the luxury apartment block would be about $1100 a week, or what she is paying for renting her two-bedroom apartment in Darling Point, Sydney.
Rent for her apartment has increased by around 20 per cent in the past year.
According to SQM Research, which monitors property markets, capital city rental prices have increased by just over 20 per cent during the past 12 months as vacancies slipped to less than 1 per cent.
“The apartment was a bargain,” she said. “There was little competition at the auction. There were two other bidders and one pulled out early.”
She paid just over $1 million for an apartment that was recently selling for closer to $2 million.
“I’ve more control over my life, am confident about capital growth and am very happy about not draining money away in the rental market,” she said.
The apartment’s facilities, which include a swimming pool and gym, meant she could cut spending on other health facilities, she said.
Lenders are offering loan discounts and cash-back offers of up to $10,000 for borrowers with a deposit of at least 20 per cent and proven capacity to repay the loan.
Ms Crichton’s move to the Gold Coast reflects a big exodus from the southern states to Queensland during the pandemic and a surge in Sydney prices of nearly 29 per cent from their pandemic low in September 2020 to their high in April, according to analysis by CoreLogic, which monitors property prices.
Since then, national average property prices are down by around 5 per cent, with falls of about 9 per cent in Sydney, its analysis shows. During that period fixed rates have jumped threefold to between 5 per cent and 6 per cent.
Analysts are predicting peak to trough property falls could be between 15 per cent and 20 per cent.
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