One million Aussies are staying in their homes as the housing market slips into a crippling stalemate that’s seen homeowners reluctant to list their properties because they want to buy their next home first.
It’s triggered a self-feeding cycle where fewer homeowners are selling because there’s little to buy, and few homes are available to buy because owners will rarely sell first.
New Mortgage Choice research has laid bare the problem, with an estimated 1.8 million Australians expressing interest in selling their properties but only 800,000 following through on the plans.
It comes as PropTrack data showed new listings were down three per cent year-on-year nationally, despite interest rate cuts driving a renewed drive for people to move home.
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House listings have declined nationally since last year, according to PropTrack. Picture: NCA NewsWire/David Swift.
Mortgage Choice revealed that the complexity and stress involved in the buy-sell process were the major concerns for sellers.
A survey of 1,000 Australians found that 7 out of 10 potential sellers wanted the flexibility to buy before they sell.
Other concerns included not being able to buy a suitable new home in time (29 per cent) and having to pay two mortgages until their home is sold (16 per cent).
According to Mortgage Choice CEO Anthony Waldron, Australians have needed a new way to move between homes.
“No doubt heightening what is already a stressful situation is that many homeowners are unfamiliar with a solution that could help,” he said.
“Not only should making your next move be less complex and stressful, but our research also found that although sellers want the flexibility to buy before they sell, 46 per cent aren’t familiar with bridging finance, and 51 per cent of homeowners view it as an ‘expensive last resort’.”
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Mortgage Choice CEO Anthony Waldron.
A bridging loan, or bridging finance, is a loan that helps loanees finance the purchase of a new property while they sell their current property.
Eight-nine per cent of recent sellers surveyed by Mortgage Choice who had used bridging finance found it helpful and 72 per cent agreed it made the buy-sell process less stressful.
Mortgage Choice has announced a new bridging loan, Freedom Move, in partnership with Athena Home Loans.
The loan aims to simplify the complex and costly process of buying and selling a home at the same time, giving sellers the flexibility to buy first and providing up to 12 months to sell their old property, with no repayments on the bridge loan until settlement.
As part of Freedom Move, Mortgage Choice have also released a new comparison tool, Move Modeller, that uses real-time PropTrack data to help homeowners compare the cost of buying first, selling first, settling the same day, or keeping both properties.
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New loans may provide a solution for buyers who want to buy before selling. Picture: NCA NewsWire/David Swift.
Freedom Move Modeller aims to assist sellers in understanding pros and cons, timelines and costs, as well as the impact of market conditions.
Mortgage Choice broker Richard Brown said buyers and sellers “aren’t aware” of bridging finance as an option.
“What may be even more common is that people do know about bridging loans, but they don’t understand it or what the repayments are going to be and how much it’s going to cost,” he said.
“The level of understanding of bridging loans is very low.”
Sydney couple Simon and Sally Rusden are currently planning a move to The Central Coast from their current residence in Baulkham Hills.
They are seeking a lifestyle change that will bring Ms Rusden closer to work, provide more space for their two daughters in their twenties and set them up for retirement.
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Simon and Sally Rusden are using a bridging loan to finance their move while selling their property in Baulkham Hills.
Mr Rusden said The Central Coast’s “very hot” market meant they wanted to be ready to act quickly.
“We wanted to be in a position where if the right house came up, we would be able to make an offer,” he said, “and not be in a situation where we could risk losing the perfect house.”
After consulting with Mr Brown, Mr Rusden said a bridging loan was “the only viable option” for them financially.
“We had a lot of questions about how it worked,” he said.
“The key thing for me was that it doesn’t actually take effect until settlement, whereas I originally thought that you were paying or accumulating that gap from contract execution.”
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The couple are planning a move to The Central Coast.
Mr Rusden said he had heard “horror stories” about the “extremely high” interest rates that could come with bridging loans but it proved not to be the case.
He addded that managing both buying and selling has been “incredibly time-consuming and stressful”.
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