We’ve been hearing a lot about property prices falling this year, and while this might make some owners nervous, especially those looking to sell soon, it’s usually welcome news for buyers. Many are inevitably asking if now is the time to buy. So what’s the verdict? Should you rush out to buy a property in Melbourne?
In my opinion, the best time to buy is when the bank will lend you the money and you can afford to take on the debt. The second best time to buy is when the market has turned from a balanced market to a buyers’ market, which is where we appear to be now. CoreLogic recently released research that found stock levels nationally had reached their highest since 2012 and clearance rates are now regularly around the 50% mark, with many properties passing in on vendor bids. More stock and fewer buyers - and therefore competition - means more choice for buyers and less urgency to act, with potentially more opportunity to negotiate a better price. Post auction ‘pass in’ is often a good time to buy, as there is the potential to haggle on price and negotiate for extra conditions to be included in the contract.
While there are opportunities for buyers in this market it is easy to get overwhelmed with too much choice and struggle to make a buying decision. First homebuyers in particular, however, have been very active in recent months, taking advantage of the cooling market conditions to get a foothold on the property ladder. Banks are also favouring them with lower interest rates, and of course they have the benefit of accessing the First Home Owners Grant if buying under $750,000.
While things are looking positive for buyers, on the flipside, in the current market selling conditions are harder for vendors. But remember, even if you are a seller in the current market, if you have an investment-grade property there’s nothing to fear, as these will always be sought after, ensuring they hold their value. As any expert will tell you, there is no such thing as one property market, but many, many markets around Australia, each of which are performing differently at different times. In Melbourne – and indeed Victoria - rare and sought after properties with the right attributes in the right locations are still generating strong competition in the market right now, especially in the more affordable price bracket of under $750,000.
If you want help finding an investment-grade property in Melbourne or elsewhere in Victoria or selling a property in the current market, contact us for some advice today.
What is it costing you to wait for the market to ‘drop’ before you buy?
Even though it’s already a buyers’ market, some buyers are still waiting for the market to fall further or even ‘bottom out’. This is not a wise strategy.
First of all, it’s impossible to tell when a market will hit the bottom, and by the time it can be identified you’ll have missed it and it will be on its way back up again. Second, despite almost daily headlines predicting that the market will fall further in Melbourne, as I said earlier, that may be the case for the overall market, but the stronger submarkets that we would advise our clients to buy in are chosen very carefully and hence hold their value. That means if you’re waiting to buy it’s probably costing you.
Waiting for a market to drop further or bottom out is a short-term trading/flipping strategy that often loses sight of being in the market over the long term for capital growth, which is the most solid strategy to adopt. Time IN the market is what’s important, not TIMING the market for those with a capital growth strategy. Trying to time the market also assumes buyers will automatically qualify for finance when they want it, but we know the lending landscape is changing dramatically, and, as I said, the best time to buy is when the bank will lend you the money, before their offer is taken off the table.
For buyers who are waiting for the market to fall further, be aware that there are plenty of growth drivers which could see it rebound sooner rather than later. Population growth in Melbourne is continuing unabated, as I explained last month, which is a major growth driver, as all these people need somewhere to live. Another factor that could see the market turn is the end of the Royal Commission, with the report to be delivered on February 1 next year.
The Royal Commission has resulted in banks being more conservative than ever before when assessing finance applications. What used to take one week for finance approval is now taking upwards of a month, and lenders are rejecting borrowers for seemingly petty reasons. This is, of course, to ensure they keep their ‘noses clean’ and don’t provide any reason to call attention to lending procedures which have drawn so much heat during the Royal Commission. But this behaviour can’t last forever. Banks don’t make money if they don’t lend money, so in time they may loosen some of their criteria to make way for more homebuyers and investors to borrow money again. The differential in interest rates for homebuyers and investors may keep investors at bay however. Reducing those rates will likely have the effect of stimulating investors to buy again.
Ongoing or reduced immigration levels will determine the demand and supply levels in Melbourne and Victoria moving forward. There has been talk of a revised immigration policy requiring immigrants to locate to regional centres to qualify for visas, which will be a boon for larger and smaller centres alike. Conversely, if there is a reduction in the number of immigrants moving to Melbourne and Victoria, prices could be adversely affected.
For advice on where and what you should buy in the current market, contact us today for an obligation-free discussion.
Why do you need a buyer's agent?
Paul, Marg and Paul engaged our Ballarat buyers’ agent services to find them a high performing cash flow SMSF property in the highly competitive Ballarat market, to create a future retirement income stream in their super fund over the long term.
After just eight days of our services being engaged by the buyers, we purchased this gorgeous period style 4 bedroom house, generating a 4.2 % yield and under their budget.
We were able to jump on this opportunity before the property went to the first open for inspection, resulting on our client securing it and many other buyers missing out. The agent representing the seller fielded many calls from interested purchasers after we had signed a contract, only to have to inform them that they had missed the boat. This is exactly how a buyers’ agent can help – we have connections within the industry that gives us access to properties either off market or before they come onto the market. Average buyers do not have these opportunities, and so often the miss out on the best properties.
If you want to benefit from the advice and expertise of our buyers’ agents, click here to book a time with us to discuss your requirements. It’s 100% obligation free
After being referred by their financial advisor, Alice and Simon engaged our Melbourne Buyers Advocacy services. We purchased three properties in one year for our clients, to establish their property portfolio. While they have all performed well, we wanted to share the success of the second purchase with you, as it has performed well above the market average.
The property, a 3 bedroom, 1 bathroom house in the highly-sought after suburb of Ascot Vale, was bought at auction three years ago for $890,000 and in that time has fared very well, today being conservatively valued at $1.25 million.
The property has grown in value by $360,000 or 40% over the past three years, a huge 24.4% above the market average. Growth per annum works out to be $120,000, equating to around 13.5% - very impressive!
If you want similar results, click here to book a time with us to discuss your requirements. It’s 100% obligation and cost free.
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