Why it could be a good time to buy
2015-05-27WITH all the talk of housing bubbles, it’s good to be cautious about the property market but for some people this could actually be the right time to buy.
“It can always be a good time to buy. While buying during a slump is best, you can still find good properties in a boom, as some properties might get forgotten or left behind,” he said.
“It all depends on the property cycle and where the cycle is in your area.”
Mr Winter said that there were overheated markets in central Sydney and Melbourne but in most other areas of Australia, prices were not at their peak, and had not even returned to levels experienced in the last boom cycle.
“If the price of a property is not back to what it was seven years ago, then it’s not at a peak,” he said.
Property prices in Sydney have risen 14 per cent in the first four months of this year and are expected to crack the $1 million median soon. But interest rates are at historic lows so it’s never been cheaper to get a loan.
Mr Winter’s advice for buyers trying to get a foothold in central Melbourne or Sydney, was to look at a different area or a smaller place.
But he warned that even when buying a “compromise property” that buyers should do their homework.
“If in three or four years time you do need something bigger, the property may not have increased in value or you could even have made a loss so you there’s no point selling, in that case you might want to rent something bigger, so make sure you can rent out the (first) property for a reasonable amount,” he said.
“If you’re in one of those bigger markets, the most important thing is to ensure you can afford it, and if you can afford it now, ensure you lock in your finance at least for the next three or four years so you know you can pay it off (in case interest rates rise).
“This is not the time to be looking at variable options.”
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Mr Winter also advised people to analyse why they were buying.
“A word of caution if you’re buying your first home, your seventh or whatever, decide if profit is important to you.
“If you’re buying a forever home ... if you get carried away that’s probably ok because you will hold on to it for a while but if you are buying a first home or an investment property, and everyone wants the property, they’re all chomping to get it, you probably need to walk away.”
“A bit of online research is just not enough, go to the area, talk to the agents, look at the papers, attend open houses even they are not your type of home, just to get a feel for the area. Get down and dirty as they say.
“The reality is the best time to buy is when nobody else is.”
CoreLogic RP Data senior research analyst Cameron Kusher said when deciding whether an area represented good value, the important thing to consider was whether you were buying at the right price and for the right reasons.
“Look for areas that haven’t seen much growth of late, are undergoing urban renewal or are seeing new infrastructure investment which will boost the area’s desirability,” he said.
“The best opportunities at the moment seem to lie outside of Sydney and Melbourne given the strong recent growth in values.”
Mr Kusher said while these cities were still recording growth, buying now meant you would be paying higher prices and would also have missed out on the past two and a half years of growth.
“The opportunities appear to be buying for the longer term in markets yet to have seen much in the way in capital growth,” he said.
“Although the Brisbane and Adelaide housing markets remain fairly muted and may do so for the next few years, they typically follow the growth in Sydney and Melbourne.
“Of course at this point their economies aren’t as strong but at some point, as people are priced out of the two largest cities, they may start turning their attention to these two cities. “Alternatively we are also staring to see some growth appearing in near capital city markets like Illawarra, the Hunter region and Geelong.”
He said the biggest consideration was interest rates.
“Given they are currently at historic lows, borrowers should consider how they can/will serve that debt when interest rates increase. Obviously other things to consider are cost, location size, future requirements, up-keep etc.”
Source: News Corp Australia
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