With house prices declining for the first time in years, here’s what you need to know to get the best out of the property market.
Buying a property in Australia used to be simple. You would buy as soon as you can, spend as much as you could afford and the market would take care of the rest. That was how simple it was for success.
But today, prices are starting to fall such as Sydney. The risk of buying now is suddenly much higher.
Below are some tips on how to help navigate this extremely unusual point in Australia’s housing market.
1. Don’t buy now. Try and wait and see if you can buy the same place for 10 per cent less next year, buying it this year is costing you money. So long as the market is falling, you should stay cool and calm and wait for your moment to pounce.
2. Don’t wait for ever. Markets fall for a while and then they turn up again.
If you read a bit about the Australian housing market you should know by now all the reasons why housing might be overvalued: low interest rates, high greed, insufficient supply, banks lending too much and with the belief that housing only ever goes up.
But don’t forget there are a lot of balancing factors that will most likely prevent Australia’s housing market from having a crash:
● First home buyers are on the sideline and they have been saving hard for years. Some big deposits are out there lurking
● Chinese buyers are out there looking for options cheaper than, say, Canada
● Banks can cut interest rates to help people borrow
● The RBA can cut rates if things get really bad
● Our financial system is strong so even if prices drop, you can’t expect a banking meltdown to accelerate the downturn like we saw in the US.
This means a housing price fall in Australia is unlikely to become the extended five year, 40 per cent crash first home buyers dream of at night. Waiting too long can be more expensive as waiting too little.
3. You can never time the market perfectly. Give up on it. Only one person buys at the absolute bottom. Getting a bit closer to the bottom than if you bought now is the best you can hope for.
Time in the market beats timing the market. If you decide to wait and the prices start to rise while you’re sorting the loan out with your bank, you’ll feel plenty of regret.
4. Do your research. And not just online.
The places that look appealing on real estate sites, lots of other people also think they look good. They are most likely beautifully presented, under priced, or both. There will be a lot of competition, but don’t rule out the ones that seem unappealing online.
Research puts you in a strong position. The housing market is not perfectly harmonised. On some weekends, a house can sell at a really high price, and other weekends a very low price.
Just because the market overall is doing one thing doesn’t mean a particular house won’t do something totally different. You can catch a bargain by paying really close attention. Look at a lot of houses. Strike when you find a good one.
5. If you want to buy a house to live in now, buy a house to live in now.
Say you will own a house for 20 years, one year is five per cent of that time. If you buy now and the house loses five per cent of its value, just remember that you got a lot of value by living in a house of your very own for a year.
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