From FOMO to COMO: Buyers forced to compromise or miss out

Two Red Shoes mortgage broker, Rebecca Jarrett-Dalton, said the COMO phenomenon has primarily impacted first home buyers and upgraders nationwide.

“While the majority of the people who are making compromises are first-time buyers, upgraders also have to compromise,” Jarrett-Dalton said.

“Upgraders who have run out of space do not want to sell before they buy; they are getting anxious to be left without a home, so they also have to compromise by either staying on their property or renovating rather than buying.”

Jarrett-Dalton said that buyers had to compromise on location, property type, size, or even moving from a PPRO to an investment property to ensure they could afford to enter or stay on the market.

“Buyers are moving out locations, but more than that, they’re changing their property types, and on size.”

“People who might have wanted a house are now looking at townhouses or even units, or buying something with a much smaller backyard than they initially thought,” she said.

While Jarrett-Dalton said that buyers always have to compromise when buying a property, the compromises are becoming increasingly significant due to market circumstances.

She said that the lack of supply, increasing competition, high property prices, and tight borrowing capacity have pushed buyers to compromise further.

“Compromise has always been a thing, but it’s just really, really, really difficult at the moment,” she said.

“There are not very many properties on the market, and the properties that are there are very expensive.”

Nationwide, Australian Bureau of Statistics data showed that the mean price of residential dwellings rose by $6,900 to $1,002,500 over the March quarter, breaking through the seven-figure barrier for the first time.

“Even with rate cuts, borrowing capacity is pretty restricted as property prices have skipped so far ahead, pushing people to make different decisions.”

She said that while the Reserve Bank of Australia has been cutting mortgage rates three times, it hasn’t offset the 13 increases borrowers faced over the last couple of years.

“Buyers do not understand their borrowing capacity, and even with a big deposit, they need to be able to make their repayment.”

“They do not have a complete idea of what their money can buy, but as soon as they open any kind of real estate app, reality crashes in for them as they quickly get priced out of the market,” Jarrett-Dalton said.

She said that while Australians around the country have had to compromise or miss out on a property, Sydneysiders are bearing the brunt.

“The average family can no longer buy the average median-priced home in Sydney anymore. In fact, the average family can’t even rent the median-priced property or the average property in Sydney anymore,” she said.

Cotality data showed that Sydney remained the most expensive capital city in Australia, with a median dwelling price of $1,210,222, recording a 0.6 per cent increase in June.

Jarrett-Dalton said that even by moving further away from the Sydney CBD, buyers still have limited options.

“How far do they have to go to compromise? To what extent? That’s a personal judgement call, but even that is proving challenging.

“I live in the Blue Mountains, it was a cheap place to buy – not anymore; properties are a million bucks now.”

Additionally, Jarrett-Dalton noted that buyers are exploring alternative strategies, such as purchasing investment properties or co-owning with others, to gain a foothold in the market.

“I’m seeing rentvesting on the rise. People have been investing in units in other states or buying their retirement property early, which will be paid off by the time they move in.

“Purchasing with other people is a growing market, which can have other issues in the long term, but we see people buying fractional ownership in a property with their siblings, parents, or even friends.

“They have been compromising who they are buying with to ensure they secure a property.”

She said that buyers need to be mindful and ensure they understand the compromises they are making when buying their property.

“I would love to be on the beach, but it’s a decision that I made years ago to buy a location that was economic and not drown myself in debt and have a space with less traffic, and my kids can run around.”

Jarrett-Dalton said that ultimately, buyers have had to adjust their expectations and make difficult trade-offs to achieve their property goals.

“It’s all personal, isn’t it? However, it ultimately comes down to assigning a value to your goals and what truly matters to you,” she concluded.

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