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Choice Matters
February 12, 2019
Our First Home Owner MO Program
March 5, 2019

Should I Buy Now?

At present, there is so much conflicting information in the media about the condition of both the finance and the housing markets.  You can be forgiven if you are confused.

To cut through the chaos and make sense of things, let’s put things into perspective to give you some confidence about moving forward.

Finance

The first thing to clarify is what is happening in the FINANCE landscape.

For the past couple of years, we have enjoyed  very low interest rates and while this is great, it has also been a huge attraction to property investors.

As a result, they had been buying up as much property as possible.

Unfortunately, those who wanted to buy a home to live in, were caught up in the home buying frenzy which kept pushing prices up. Property fast became a sellers’ market with vendors making huge profits quickly and easily.

It was not unusual to see frantic buyers outbidding each other to the point where prices, in some cases, even exceeded the real value of the properties.

To even the playing field, the government stepped in and banks were forced to change their lending policies making it more difficult for investors to borrow money but easier for owner occupiers.

Whilst obtaining credit remains tighter, owner occupiers do have it easier than investors when applying for a home loan.

Just remember though…

  • there are many factors that need to be considered when choosing a home loan product. It’s not just about choosing the one with the lowest interest rate!
  • your home loan should be tailored to your personal circumstances and should consider your short, medium- and long-term goals. It should have the features and flexibility that will allow you to adjust from time to time to support any changes to your circumstances.

Property

The second thing to clarify is what is happening in the PROPERTY MARKET.

The tightening of finance generally, has resulted in fewer buyers which in turn has resulted in many sellers dropping their prices. In addition to this, some areas have experienced an oversupply new property further resulting lower property prices in those areas.

Whichever the case, the heat has now come off the property market..

This is great news for home buyers as you are now purchasing in a buyers’ market which favors you not the seller.

Capital City Home Value Changes, published by Australian Broker Magazine in January 2019

Buying a home will always be a major investment in your life, so looking at how property and finance has performed historically is always a smart thing to do as it will give you an idea of what may happen in the future.

A report produced by CoreLogic on the highs and lows of the national residential property markets from 1993 to 2018 has revealed five distinct growth cycles resulting in house values increasing by 412% or $459,900 and unit values increasing by 316% or $392,000 over that period.

According to Core Logic, should this historical trend continue over the next 25 years, Australia’s property values could rise to $2.9 M for houses and $2.1M for units by 2043.

The lessons here are, that both finance and property move in cycles.

What we are seeing now is a “correction” to those overzealous prices we have all witnessed.

These corrections are healthy as they slow the market down to make housing more affordable for people who would otherwise be priced out of the market.

More affordable means lower prices so opportunity is knocking!

Unless you have a crystal ball, you can never really predict when property values have hit rock bottom and then start to rise again.

What is certain, is that property values will continue to move through their individual area specific cycles with periods of growth and decline.

So back to the question, is now the right time to buy?

The answer is a simple one.

Buy when you are ready to buy…

Buy when you can afford to do so, regardless of the market conditions….

Buying property should always be approached with a long term investment.

There will always be a home out there with your name on it……

you just need to keep looking.

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