Margaret Lomas

If you buy on the way up or when the market is about to turn, it's very likely that within the next 12 months you will have a property that's worth less than you paid, particularly when you factor in the fact that we have fairly high stamp duties in this country and that adds to your essential buying cost of that property.

So what you pay for that property is probably $30,000 or $40,000 or $50,000 more than the purchase price because of all of those buying costs.

Once the market turns, you can quickly lose equity in that property.

So that's the first thing.

If you're about to buy property, whether you're unsure of rates or not, whether rates are going up or going down, don't buy when the market is heated.

Wait that little bit longer.

The second thing to remember is that if you only just qualify for a loan, if you scrape in by the skin of your teeth and you have to use every available income source to prove to the bank that you can afford this loan, if you're using your family payments and your part-time job and your full-time job and every other scrap of income you can save,

scraped together and the bank only just qualifies you for that loan, then it is likely that you can't really afford that loan because there will always be a time when interest rates go up.

Buy a property when you've got a fair amount of margin built in so that these interest rate rise, while they're not nice or welcome, they don't hurt your bottom line as much and you won't feel that stress that you're going to have to have a forced sale.

I want to be able to say that it isn't necessarily the rate rise that is now making vendors wait.

We had a very overheated market in Sydney.

Coming in behind that, parts of Melbourne certainly heated up and so did Brisbane.

The result of that, of course, is property prices flew up and became much higher than they'd been in the previous two to three years.

To me, it's more the fact that in all of those markets, I guess with the exception of Brisbane suburbs, properties then got to the point where the price of them was starting to get out of reach of the average income earner.

And suddenly we saw a lot less buyers in the markets.

So where before a vendor could put a property in one of those markets on the market and have interest within three days and probably a sale within a week, we began to see extended times even before rates really started to go up.

And that's always a signal that the market is going to cool.

So I think the interest rate rises have just pushed that a tiny little bit along.

But we were always going to see around this time vendors deciding that they wouldn't sell now and they will wait for a better time and waiting.

And I think if we don't have an interest rate rise next time around, which is highly unlikely, I don't think that situation is going to change a lot.