Have we hit the bottom of the real estate cycle now bonds have dropped and central banks have stopped increasing interest rates and is it now time to get a clients pre-approvals to capitalise on the potenial property recovery

The real estate market has been through a rollercoaster ride in recent years. With the impact of the pandemic, fluctuating bond prices, and changes in central bank policies, it has been difficult to predict what the future holds for property prices. However, with bond prices dropping and central banks halting interest rate increases, many are wondering if we have hit the bottom of the real estate cycle. Is now the right time to get a pre-approval and capitalize on the potential property recovery?

The relationship between bond prices and real estate

Bond prices and real estate are closely intertwined. As bond prices fall, interest rates rise, and the cost of borrowing increases. This can lead to a decrease in demand for real estate as potential buyers are discouraged by higher mortgage rates. Conversely, when bond prices rise, interest rates fall, and the cost of borrowing decreases. This can increase demand for real estate, as buyers are more likely to take out mortgages to purchase property.

Central bank policies and real estate

Central bank policies also have a significant impact on the real estate market. When central banks increase interest rates, it can make borrowing more expensive and discourage potential buyers. Conversely, when central banks lower interest rates, it can make borrowing more affordable and encourage buyers to enter the market.

The current state of the real estate market

With bond prices dropping and central banks halting interest rate increases, many experts believe that we may have hit the bottom of the real estate cycle. This means that property prices may be at their lowest point, and we could be on the verge of a recovery.

Additionally, the Australian government has announced a number of measures to support the real estate market, including the HomeBuilder program, which provides grants to homeowners and builders for new builds and renovations. These measures have helped to stimulate demand in the market and may continue to support property prices in the coming months.

Should you get clients a pre-approval now?

If amnyone is considering purchasing property, now could be an excellent time to get a pre-approval. A pre-approval can give you an idea of how much you can borrow, which can help you to determine what you can afford and narrow down your property search.

Additionally, with the potential for a property market recovery, getting a pre-approval now could help you to capitalize on any potential price increases. By securing a pre-approval, you can be ready to act quickly if you find a property you want to purchase.

Final thoughts

While it is impossible to predict with certainty what the future holds for the real estate market, the current state of the bond market and central bank policies suggest that we may be on the cusp of a recovery. If anyone is considering purchasing property, now could be an excellent time to get a pre-approval and capitalize on any potential price increases. However, it’s always important to do your research, consider your financial situation, and seek professional advice before making any big financial decisions.

Doug Daniell – Guest Contributor