How to navigate cost of living pressures, inflation & high interest rates

Rising inflation and interest rates create great uncertainty. While the real estate industry has stabilised post-pandemic, the economy continues to struggle with inflation, interest rates, supply chain pressures, and societal shifts. 

In a recessionary environment, buying power decreases. So does spending. 

If you’re concerned about the cost of living and Adelaide Hills real estate, you’re not alone. The average South Australian household spends $450 per week, which the biggest stressor being mortgage or rent costs. Groceries, petrol, and utility costs also contribute to living pressures. According to an ABS report, annual inflation in non-discretionary spending was nearly twice that of discretionary spending in June 2022. 

The tension happens when everyday expenses grow, but wages don’t. Financial experts recommend focusing on the ‘big wins’ that have the most impact on you. For example, if utility costs are a major expense, you’re better off renegotiating with your provider than saving a few dollars a week not buying a coffee. 

Inflation and housing 

Inflation affects the housing market directly and indirectly. For example: 

·      Changes in rent (and the number of Adelaide Hills rentals)
·      The price of building a new dwelling 
·      Renovation, repairs, or maintenance costs  
·      Rates and charges 
·      Utility fees 
·      Increases in the cash rate 
·      Domestic and international factors. 

It’s helpful for all things property-related to take a long-term view. It’s easy to feel overwhelmed with all the changes in recent years but if you can remain calm and focused on the decades to come, you’ll better handle the contracting and expanding of real estate. 

Renegotiate your monthly bills 

When was the last time you reviewed your ongoing expenses? It’s smart to incrementally compare your utility bills with other providers. Do this for your electricity, heating, water, insurance, internet, and phone. It’s good financial practice to check what you’re paying against other companies once a year. 

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Assess your mortgage 

If you’re on a variable interest rate, find out what the increase will do to your mortgage payments. Understand how to budget for them and know if and/or when to refinance your home loan. It’s worth having a sit down with your mortgage broker in the Adelaide Hills who can help strategise on the best next steps for your family. 

A small rate change can make a huge difference on your spendings. For example, refinancing on a $600,000 home loan at 3.5% to 5% could save you approximately $1,976 per year. Compare your home loan annually. 

Know what your property’s worth 

During tough economic times, it’s also important to know how your area and suburb are performing. We’ve made this easy, with our free digital tool that provides a property value estimate report on your Adelaide Hills suburb. It provides up to date information about your suburb’s market value, recent sales near you, and rental history metrics for your address. 

This valuable property report is designed to give you all the relevant data to make informed real estate decisions. 

Strategise with your accountant 

The world has changed, and many people are working at home for a portion of the week. If you’re working remotely, book an appointment with an accountant to understand the tax benefits of a home office. Learn what you can claim as expenses for tax deductions to reduce your bill or increase a refund come July 1. 

Lean on your Adelaide Hills property team 

Just like you have support in other areas of your life, reach out to our real estate agents to guide you with housing-related questions, worries or goals. You don’t have to make these decisions alone. Nor are we the type of real estate agents who’ll watch the clock or charge you to answer questions. 

Nitschke will help coach you through every move. Having us by your side and knowing your long-term real estate, investing and lifestyle goals, you can work through stressful periods with confidence. 

Whether you’re looking at making moves now or in the years to come, have a chat with our real estate Adelaide Hills team.