It’s hard not to believe the hype, but there are situations where you really should not. The Australian property market is one of those situations. It’s true that the market is currently going through one of its worst periods in recent history; house prices in capital cities have fallen year on year and our mortgage debt is higher than any other western country, with banks holding $1.7 trillion for owner occupiers. However, it’s also true that the Australian property market is extremely resilient, we have a consistently strong economy (apart from a recession or two …!) and buyers are generally optimistic when it comes to risk.
So, from that foundation, it’s easy to understand why - despite predictions of a property market crash, and anxiety about where all that debt is actually leading us – people still want to buy houses. If you are chafing at the bit to buy, but feeling concerned about buying when prices may still have further to fall, read on to learn how you can navigate the choppy waters and still achieve your goal.
Learn what the market is doing
As prices fall, there’s often an instinct by buyers to jump in and buy, at what they think are bargain prices. However, buying in a falling market is not like the boxing day sales. Ideally, you want to buy after the fall, not during it. Buying as the market falls is a risk - it may well keep falling after you’ve jumped in, putting you in a more precarious position than you were in before.
It can be impossible to predict exactly what the market will do, but there is so much information available, keeping abreast of what might come next is entirely possible. Read a lot, pay attention to trusted experts, columnists and news sources and have regular conversations with your local real estate agent. By tracking what the market is doing, you will refine your instincts around when things might change and ideally you can get a great bargain, that will increase in value after you’ve bought in, as the falling market corrects itself.
Get some context
As well as understanding what the local and regional property market is doing (relevant to your plans), you should also be considering other factors for context. Keep your eyes on things like interest rates, what the banks are doing regarding lending and what current supply and demand looks like (you can check auctions and clearance rates regularly through CoreLogic). Houses are regularly overvalued by homeowners, there are now more first home buyers hunting for property than we’ve seen in some years, and a change in government could really screw up your plans.
Be ready to buy
This may seem a little obvious but plenty of people lose time and miss out on the ideal property as they try to find finance – get that organised first. Meanwhile someone more organised is picking up the keys and letting the movers in while you’re at the bank crunching numbers. First home buyers are hiding around every corner – many have been saving hard to pull together that deposit, secure their First Home Owners Grant, and get into the market. Poor planning and unrealistic expectations are everyone’s worst enemy, so make sure you’ve done your sums and can make as solid and strong an offer as anyone else on the day.
Do your research
The best thing you can do to research your options is see a lot of properties. If you are looking for a 3-bedroom house with a garden in a specific suburb, then see as many of those properties as you can in that suburb and its neighbouring suburbs. Go to all the auctions and keep track of what properties are selling for – some will go for more than you expected and some much less. Some will attract a lot of buyers and some not so many. The more you see and learn, the better prepared you will be to spot a diamond in the rough that may not have caught the attention of others.
On one level, you want to see as much in your category as possible, but this will also help you to drill down to what you specifically want and how realistic your budget is for that kind of property in the current market. The market will dictate the kinds of properties that are available to you, so be really clear about what it is you want before you look at any properties; then do your best to stick to that once you start to see them. Making a checklist of what you want might be useful, so you can take in all the properties at face value, but then really drill down to the specifics once you’re actively pounding the pavements to see them.
Don’t think and plan yourself out of opportunities
Yes, you need to put careful though into your investment and yes you need to plan and research effectively so you are making solid, informed choices. But as well as all the thinking and planning, you also need to develop your instincts and not lose sight of your goal. If what you want is to buy a house now to live in then you should buy a house! Contributing to a mortgage rather than paying rent will almost always put you in front and if you find a reasonably priced property, within your budget that meets your needs then go for it! As long as there’s no plans for an open cut coal mine or a toxic waste dump, you can’t really go wrong.
The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.