When's A Good Time To Buy Property

Is the housing market hot or in decline? Remember, the right time to buy won’t be the same for everyone so don’t let the fear of missing out on the great Australian dream lead to rash decisions. Several factors influence whether it may be a good time for you to buy a home or even an investment property.  

Regardless of wanting to buy a house to live in or as an investment, make sure you consider the complete picture before you decide. 

Your personal situation 

Purchasing a home is a long-term decision, unlike a renter changing locations on short notice becomes much more complicated. You need to also consider your capacity to manage mortgage repayment, numerous insurance cost, council rates, utilities, and ongoing home maintenance requires commitment, so make sure you’re ready to take on these financial responsibilities before you buy.  

Before you commit, be sure to determine what price point you are able to comfortably enter the market and maintain a reasonable lifestyle after buying a property. Use a budget calculator and get a picture of how your budget stacks up as a property owner when compared you as a renter. The federal government has a very comprehensive calculator on offer, https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner  

Interest rates 

The interest you pay on your home loan will depend on the current market, your lender and the type of loan you get. Ideally, you want to take advantage of lower interest rates to reduce your repayment and the amount of interest you will pay over the lifetime of your loan.  

Lenders tend to offer best interest rates to borrowers who are classed as new business and it’s a good idea to start considering refinancing as you approach the 2-year mark.  

Property prices  

A buyer’s market, in which there are more homes for sale than buyers to purchase them, may signify that it’s a good time to buy a property. Sellers in these markets are price takers, which means they may be more willing to negotiate in-order to sell. This also means there may be more properties on the market to choose from, giving you an opportunity to buy into an area you may not have been able to afford to normally. 

Any real estate agent will tell you that property prices have cycles, this means that for every buyer’s market there will be a seller’s market at some point. A seller’s market means that it’s very competitive between buyers, allowing the sellers the ability to ask for above normal market value prices for their properties. The danger for the buyer is, paying too much for a property due to the fear of missing out. 

Deposit and costs associated with the purchase 

Buyers are expected to make a down payment on the property on signing a contract of sale. The larger a buyer’s contribution is, the less they need to borrow from the lender and this typically means a lower repayment. If your contribution is lower than 20%, your lender may require you to pay for lenders mortgage insurance (LMI), and they may try to sell you other types of mortgage protect insurances to reduce risk.  

Most lenders will also expect you to cover settlement costs, which include government charges, conveyancing cost, moving cost, any outstanding rates and have a little surplus funds to cover any ‘what if’ situation. When planning to buy, you should do a budget and ensure that you have sufficient funds at time of signing the contract or the purchase may fall over at settlement.  

Season

There are typically more homes for sale during the spring and summer months, when the weather is nicer and parents are considering moving into catchment areas for better rated schools before the start of the new school year.  

It can be hard to pinpoint the “perfect” time to buy a property. By creating a comprehensive financial plan that takes your individual goals into account, you’ll be able to enter the property ladder at a time that’s right for you.