How to Beat the Ticking Property Time Bomb

July 14, 2021

Have you been thinking about buying a bigger property to finally get that forever home you’ve always been dreaming about? Or perhaps you love your home but feel like your family has outgrown it and you need more space? We get it.

As your kids grow older, comfort and space are becoming a priority. And with such favourable borrowing conditions currently, it’s tempting to sell and move to a bigger place. Yet, you might want to hold off and stay put for now.

Wondering why?

To help you make an informed decision, we’ve outlined below the current property market conditions before deep-diving into the benefits of a home extension in a low interest rate environment.

The Current Situation in the Australian Property Market

Australia is coming out of recession with a strong property market.

Yet, a recent report called Housing: Taming the Elephant in the Economy highlights the risks associated with this red-hot housing market.


Interest Rates are Likely to Rise in the Coming Years

It’s a fact, currently sitting at 0.10%, interest rates in Australia are historically low.

And even though many see this as a fabulous opportunity to get their foot in the market or upgrade to a bigger home, buying now is riskier than ever. That’s because, given how low the interest rates currently are, there’s a genuine risk that they go up in the coming years to get back to their pre-pandemic levels. This should happen before 2024, as the surge in house prices might force the RBA to reevaluate its interest policy, thus posing a real threat to mortgage payers.

What’s more, some experts believe banks will even start raising the rates of their own volition in 2022, making the situation a slow-burning fuse ready to explode for mortgage payers.

Household Debt Has Never Been so High in Australia

Unfortunately, household debt has doubled in the past thirty years, and home occupier debt now represents 56% of all personal debt in the country. Indeed, consistently high property prices have forced home buyers to borrow more and more money to cover their mortgage.

In fact, the average house in Sydney is $1.1 million, and the average unit is $800,000. Therefore, the average buyer in Sydney is now borrowing 15% more than they were a year ago as increased prices require larger mortgages.

So, if you’re considering buying a bigger house or switching from an apartment to a house to get more space, you’re running the risk of ending up in mortgage stress, with a debt impossible to repay when coupled with rising interest rates.

Note that a Sydney household needs to earn at least $177k a year to avoid mortgage stress.


Property Prices in Capital Cities are Rising To Record Highs

As mentioned before, low-interest rates are fuelling the property market leading to soaring prices across the nation. Sydney, for instance, has recently experienced the biggest rise in 30 years, with a +8.5% increase in housing prices in the quarter to April 2021.

Buying a property now means that if the market cools off in a couple of years due to changing external conditions, you’ll be left with a huge mortgage to repay and a property that is worth less than what you paid for it.

Regional Property Prices are Soaring Too 

The rise of remote working and the increasing number of young people moving to regional areas, as they can’t afford to buy in capital cities, has led to a sharp increase in property prices in regional areas too. For instance, property prices in Newcastle have soared 11.8% in a year.

As a result, now is not the right time to buy in a regional market in the quest for more space and comfort to accommodate your family, as there’s a real risk that the value of your property might decrease when the market cools off in 3, 5 or 10 years.

5 Reasons Why Investing in a Home Extension is Better Than Moving

Whether you need more space or simply want to improve your lifestyle by adding extra amenities to your home, an extension might be a better alternative to buying in the current market conditions.

A Home Extension Is more Affordable than Buying a New Home

When you invest in a home extension, not only can you enjoy the freedom of space, but you can also do it the affordable way. Indeed, selling and buying a new property can prove extremely expensive when adding up the myriad of costs associated with the process, including real estate agent, marketing, advertising, legal, and moving fees. Besides, you’ll be avoiding all the paperwork that’s involved when selling your old home and buying a new property. And you won’t have to go through the stressful and lengthy process of spending your weekends or weeknights hunting for the perfect home, either.

The cherry on top of the cake, you ask?

You’ll avoid the current volatile market conditions that could end up creating financial and mental stress.


A Home Extension Adds Value to Your Home

By extending your home and adding fabulously functional and well-thought-out rooms and amenities to it, you can enhance the space and really add value to your property. Some of the extensions that can provide the most value include:

  • Granny Flat: the beauty of a granny flat is that not only does it add value to your property, but it can also immediately provide an income stream, helping you quickly improve your lifestyle. At Cubitt’s, we specialise in home extensions, and we’re always amazed at how much value a well-designed granny flat can bring to our clients.
  • Extra bedrooms
  • Extra bathrooms
  • Second floor
  • Alfresco Living Areas
  • Media and Leisure Rooms

You Can Tailor your Home Extension to Fit your Lifestyle and Needs

Let’s be honest; finding the perfect home that matches all of your criteria can be pretty difficult. At least, it’s way harder than transforming your current house or apartment into your dream home.

With a home extension, you can literally design and create your dream, tailoring the space to your specific preferences and ever-changing needs as your family grows.

Essentially, with a home extension, you get to keep everything you absolutely love about your home and upgrade what you don’t!

You Get to Stay in the House You Love So Much

Perhaps your home has a lot of sentimental value? Is it a family home passed down from generation to generation? Or is it where your kids grew up?

Whatever the case may be, you might really like it, but you just need a bit more from it now, including space and functionality.

Well, a home extension is the best way to have it all! By adding a brand new space to your existing one, you’ll be able to get the home you want and a mortgage you can afford. Plus, all these treasured memories of the time spent with friends and family in this special place can be preserved.

Cropped shot of a senior couple spending quality time together at home

You Can Live Where You Love

Becoming part of a community and finding a suburb with all the facilities you need, including good schools, and sports, medical and lifestyle amenities, can be difficult.

If you love your neighbourhood and your kids enjoy their schools, investing in a home extension could be a better alternative to moving out and buying a new property. It will allow you to keep enjoying the suburb you feel so comfortable in, and your kids will be able to stay in the school they like with the friends they love so much.

Sure, your current house or apartment might not be what you’d always dreamt of. Yet, with some well-thought-out home improvements, you can turn your house into your forever home and start creating even more incredible memories with your family and friends. Need some help?

At Cubitt’s, we’re committed to fulfilling our clients’ dreams. As a result, we work very closely with them to design and build high-quality and highly functional home extensions and granny flats to transform their space into their dream home. Not only do we take a transformation for comfort approach to the building process, but our designs always promote equity growth so that you can rest assured that your property goes up in value.

So, don’t hesitate to get in touch with our award-winning customer team to discuss your vision, needs, and dreams and how we can help.

What a renovation looks like with Cubitt’s

Here at Cubitt’s, we’ve built our business around home extensions and renovations. We’ve completed more than 300 extensions across Sydney, Newcastle, Wollongong, Canberra and beyond - we love seeing a house transform into a dream home, which is why we’re considered one of the leading renovation teams on Australia’s east coast!

Reinvent your home with Cubitt’s - give us a call on 1300 721 150 for an obligation-free consultation today!


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