The Joy of Missing Out

It felt like all three couples conspired to call me at once.

The only thing was, they didn’t know each other.

It was bang, bang, bang in the first week of February last year.

All three were first home buyers desperate to break into a white-hot property market with an average mortgage of $800,000 each.

And I was dead against the idea.

Firstly, oil was flashing red suggesting inflation was about to scream and secondly, the bond market was waving its arms like a man in trouble warning us rates would rocket…soon.

But each couple wanted to buy NOW!

They were gripped by FOMO (fear of missing out) and believed the RBA when it said rates wouldn’t go up until 2024.

And then rates went up two months later and the market started to cool.

By December FOMO had morphed into JOMO (joy of missing out) and it seemed the property gods were smiling upon them.

Until last week.

One of the couples spoke to their bank and were shocked to learn their borrowing capacity had been reduced because of the rate rises.

And now they’re scared they’ll miss out again if the market turns.

So, if you’re a first home buyer, or worse, a divorcee in your fifties trying to get back on your feet, then grab a black texta and write the following sentence on your fridge door…

The banks are doing you a MASSIVE favour by tightening their lending right now.

Here’s why…

Firstly, the RBA cash rate will go north of 4% in a canter. This means mortgage rates will approximate 7% and the property market will probably cool further.

Secondly, the bond market is frantically waving its arms again suggesting the impending recession will have some teeth. This won’t bode well for stock and property markets in the short term.

Thirdly, the next couple of years will be dominated by debt and decarbonization (interest and energy prices). Meaning, consumers and investors will have less surplus cash to buy assets.

In summary, 2023 will most likely be the polar opposite of 2021, economically.

And just so we’re clear, I’m not saying, “don’t buy”.

If you find a property you can’t live without because it has a chimney and a treehouse for the kids, then go your hardest.

All I’m saying is this…

If you’re a first home buyer and you’re willing to leave your hands in your pockets a little longer, the backend of 2023 may feel like the whole world has conspired in your favour.

And you’ll have your JOMO back.

Have a great weekend!

Adam

Note: the information in this Moowsletter is simply my opinion and general in nature. Please seek your own advice specific to your own situation. Thank you.

Back paddock – I saw this a couple of weeks ago…

Never reply to a message when you’re angry,
Never make a promise when you’re happy,
And never make a decision when you’re sad.

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