Currently there is a lot of media attention surrounding the residential property market, creating a lot of hype and with that, a lot of uncertainty. With proposed changes to the Residential Tenancies Act (the last time the act was reviewed was in 1997), banks tightening their lending criteria and forecasts surrounding interest rates, there’s certainly plenty to talk about. These factors combined have led to a steadying in the buying market, followed by further media conjecture around a “cooling market”.
The biggest question I’m being asked at this time is, “is now a good time to buy”. The truth of the matter is, there’s not ever really a good or bad time to buy. Property prices, especially in metropolitan areas, will steadily rise as time goes on and if you are wanting to enter in to the realm of home ownership then you should buy as early as you are able to. This type of market, though, can provide advantages for buyers and make it easier to break in to the property market overall; here’s how.
Whilst a slower property market may not be a thrilling time for a vendor, it’s certainly an advantageous time for a buyer. Lower asking prices, less competition as well as tighter loan amounts means you can negotiate harder and are more likely to secure a property on your terms.
In a hot market, during an auction, oftentimes if you want to secure the property, the price you pay is determined by the level of bidding on the day and if you want to be the successful bidder, you’re going to need dig deep and pay the highest price. In a slower market however, you may find yourself one of few bidders at the auction or even the only bidder. The likelihood of the property passing in to you is greater, allowing you to go in and negotiate hard on purchase price. With stricter finance parameters, you may find other bidders holding back due to having a lower borrowing capacity. Just make sure your own financial position is firm and approved before you put your hand up.
Fear also plays a big part in the real estate market. Human beings are a race of followers after all. We do as we see other people doing and social proof plays an enormous part in our decision making (whether conscious of it or not). Buying a property will be one of the largest purchases you will ever make, and it does not take much to spread doubt. Consistent media attention only circulates this doubt and thus follows a herd of hesitant buyers with their hands in their pockets on auction day.
So what does this mean for you?
It’s crucial to remember that the area you are targeting and the type of property you wish to secure play an important role. For example there is still a lot of buyer competition surrounding villas and townhouses in the outer suburbs of Melbourne, due to the affordability factor for first home buyers. Correction rates are also varied across the suburbs and in some areas, property is still selling quite quickly. Do your research and get some on the ground insight about the conditions in your chosen area. Attend auctions regularly, speak with agents, track sale prices etc. All of these factors empower you to make an informed decision and when it comes to securing the right property, you’ll be armed with the knowledge you need.