House pricing are going down. Would you buy a house now, or wait a few months/year to see if the prices will drop more?
Is anyone in the market for a property now and can provide some insights?
Purchasing a property - Now or Later - Price drops
bargin424 on 11/08/2018 - 10:09
Comments
Wait
Depends on your circumstances as well. If you already have a property, then you are buying/selling in the same market?
If you are renting…
Depends on your view of the market. Assuming you are paying the average rent ($450), and buying the property at the average house price ($672K) (based on realestate.com.au data), then you need the property price to drop by at least 3.5% to compensate for the rent you are paying during the year of waiting (instead of going into your house).
If you think the market will fall by 10%, then wait, if you think it will be flat, or just drop slightly, then you can start looking.It will take some time for you to find your ideal home, so why not start searching, and have a feel of the market?
Note that interest rate is likely to only go up, so make sure you can afford interest payments based on a higher interest rate when you are buying the property.
paying the average rent ($450)
how you know poster doesn't live in Sydney…
But yeah op, like Electricity, everything else, you need to consider/respond with your state/city… house/apartment etc
otherwise you're just going to get response you deserve… irrelevant responses
O sacred crystal ball, your guidance I seek…
What city or state? Sydney I'd probably wait, Adelaide I wouldn't mind buying now.
I think now is a good time to buy. Interest rates are still low and the job market is quite strong. If you are looking at waiting, no chance you will pick up a 1.2 million dollar house for $300K especially in Melbourne or Sydney.
Units in Melbourne CBD are quite cheap but personally I prefer the suburbs. I think with 200,000 people coming into Melbourne every year prices will not go down as people always need a place to live.
Interest rates are low at the present time but interest rates vary. If things get tough, they drop, conversely if they rise they put the brakes on price hikes and even can cause declines.
Getting into property because rates are low now is a very bad idea and you need to look at your personal circumstances and the situation on the ground in the location you want to live.
Circumstances driving people “into Melbourne every year” can change and then what?
Dumb advice!
Unless you have the cash waiting, what is the point of waiting hoping for a drop? Probably if house prices go down it will be due mostly to interest rates going up. Why do you think houses were cheap in the 80s? Cause interest was like 20% or something.
ohh yess !!! middle class will be wiped clean with 20% , everyone will be hitting the streets
in fact, 7% is what required to trigger the domino effect
Property is always a long term investment being PPOR or to rent out. The time is right when you are. A very small % of ppl can time the market. If youre looking at buying & can do so then do it
I would personally wait if i could. This downturn seems like it's going to go on for a while
starting from the market going soft, it takes at least another 2 years to hit the bottom
we are currently at denial stage … the point where peak dips a lil
If only predictions can be made so easily. As posted above there are multiple factors at play - where are you buying, what price range, what sort of property.
I can only speak for Melbourne and my advice to a relative when asked late last year was be cautious and think about it carefully.
However 4 years ago I thought the market was going to stay flat in Melbourne for a few years. Luckily I still went ahead and bought my PPOR and now I have almost 200k more equity on a 580k (purchase price) property. (Basically my wife was right XD)
personally i'd wait until at least 2020-2021, when the most interest only turns into principal and interest, and compound with the expected interest rate rise (if it happens at all at that time). banks may have their lending criteria stricter after the RC. so, it'll be interesting time esp for the overlevereged in syd and melb
in saying that, i dont have much exp in property/investing, so take it with grain of salt :P
Personally I will wait until the end of the year and see how the market in spring does.
If not so much movement with the activity on the auction clearance rate, then it might create more anxiety to the seller to let their property before new year in anticipation of more downward price pressure.
However I always think that buying PPOR property is a long term personal/financial investment hopefully span more than 10years. Hence, it should be in favour for you no matter when you are buying it only based on the long term view of the property cycle and its trend.
It would be different though if you are looking to invest in the property - i personally will wait until next year or so.
I'm personally looking to buy the apartment for investment property in Sydney. My feeling said the price will drop even more next year with all this off the plan property that completed/completing arround Sydney. Most of these developments was bought by the investor either local or overseas hopefully it creates more oversupply and put downward pressure to price.
Rent payment will always be a dead money it doesn't help you anyway financially.
If you in the position to buy with the deposit /income etc, then might good idea to start looking.Hope it helps.
Well that my 2cents using my personal economic feeling ^¬^
If you are buying to live in, start looking and make it a hobby. It is not just an investment decision. We paid over the odds slightly we loved the property. Eighteen years later, my wife still loves it. I am happy with the house and grateful my wife loves it. Worth a lot more than a few thousand.
OP clearly stated they're looking at a HOUSE, It's not difficult to see they're in Melbourne either! It's pretty simple really, if you're currently renting & can find a BARGAIN, then it's always going to be the right time as unless you've bought a 'lemon' you can't really go wrong!
Unless you can foresee the place you buy (at any given time) losing more in value than your projected rental payments (over the term of loan) which are going nowhere!
I bought at the peak not long before the '09 crash & paid $260k(spent $100k on renos & refinanced late '09 & it only valued $238k so was declined((valuer told me on the day I'd be mad to sell under $1M as I'm on 2400m2 with 3 street frontage)) although he can't get me the loan) & have turned down in excess of $600k many many times over the last half a dozen years!
A self employed friend of mine will happily throw $60k at a digital printer they don't need (he already owns 2) but won't bite the bullet & buy a place (he's been happily paying $450 rent for many years) but won't get a $400k loan because the market might go down?! Go figure!
I'm happily renting in outer eastern Melbourne.
Would I buy? …no…
I don't see the value buying when renting is cheaper and affordable.
I could and would buy if I could find a place around $300,000 but I can't find anything suitable so I'll just keep on renting an affordable and suitable property. I have the required 20% deposit for that to avoid any LMI.
Advantages in renting…no council rates, no water rates, no maintenance, no buildings insurance.
Disadvantages…rent goes up every year usually linked to local wages, a tenancy is not as secure as owning a property.
Dear OP
If anybody knew this answer they would be more rich than property tyrant Donald Trump.
The fact is NOBODY KNOWS the answer.Here is why and what to consider…..
The property market is under the full control of the Federal Government, The Reserve Bank, APRA and the 4 Big banks….So its not a market at all as such.
If it was then property prices should have stayed level or gone down since 2012 given rents have always been the "long term" prevailing influence on property prices. Makes sense really. Rents go up over a few years. Yields improve. Property prices follow….But not this time.
If it was a true market then prices would never have escalaed to the point of being ridiculous. But we have ridiculously LOW, unrealistic interest rates acting as a "HIGH" like a drug on the property market. So you have to be very very careful
Also consider that all levels of government have a vested interest in pushing property prices up as do banks as well. Real estate agents are just in for the ride.
But occassionally things get out of hand and the property market spins upwards or downwards out of control.Here is what you need to consider:
APRA has tightened the screws on lending standards as has the effect of the Royal Commission. APRA have flagged that they may loosen the screws shortly since the property market has cooled. If and when they do is anyones guess but when they do the market will probably gain some momentum again.
The banks make profit from lending money so they will do whatever they can to lend more money. But they want to make huge profits too so will minimise any interest rate increases so as to maintain maximum demand for property and hence creating new loans as long as possible. But once they feel they have "squeezed" as many loans as possible from new borrowers it makes sense to cash in by slowly pushing up interest rates.
Banks have borrowed much of thier loan funds from overseas hence they are subject to any rate increases from overseas central banks. The US Federal Reserve and Bank of England are currently pushing up rates so this will force our banks to notch up interest rates every few months to maintain thier profit levels. Thus Overseas Banks are putting upward pressure on our interest rates and hence downward pressure on property investment and prices.
The Reserve Bank hence no longer controls mortgage loan rates even though they have flagged that interest rates under their control will remain low for now. The economy is still soft and with the property market slowing down they may drop interest rates again to revive the property market and offset interest rate increases from overseas. After all "Construction" is the only industry left in Australia and keeping our economy afloat. If the RBA drops rates then "boom" we are in for yet another upswing in property prices.
Demand for property really took off after The Federal Government removed restrictions on foreign investment into new apartment developments (originally just 20%) - mainly to allow Chinese to buy and fund construction of enormous amounts of new apartments. If the government tightens foreign investment policy then watch out! And realistically this is the best way to bring property prices down without driving everyone bust. But highly unlikely.
If inflation picks up in Australia then the Reserve Bank's hand will be forced to start moving up interest rates. Inflation is currently picking up overseas - particularly in the US. We may end up "importing" some of this inflation. If that happens then watch out.
The Federal Government last year removed some generous property tax deductions making property much less attractive as an investment and tax minimisation vehicle. Now if Labor gets into government next year they have vowed to remove negative gearing and also increase capital gains tax by about 50%. If they are able to push this through then this will have a huge negative impact on property as it did back in 1985 when Labor first made this critical error and practically crashed the market. Somehow Labor never learns from its mistakes!
The Australian dollar is yet another consideration. If it starts collapsing then the Reserve Bank will be forced to jack up interest rates. If on the other hand it starts pushing up over 80c then it leaves room for the Reserve Bank to drop interest rates again. Currently at 73c its under a delicate balancing act with downward pressure coming from our low interest rates and "stabilising" upward pressure from rising commodity prices. It has been slowly trending down though since it hit 81c in January this year.
Now as I said to begin with "NOBODY KNOWS" the direction that any of these potential situations will take nor the exact effect on interest rates and the property market and how quickly because its a compicated combination of factors.
We have significant downward pressures potentially in play but also potential upward pressures as well.
Good luck if you can work out the direction of property prices from here.
Definitely down in the short term (this is obvious for now) but for how long nobody knows.AND YES! IM IN THE MARKET…..TO SELL !!!!
Depends where you are looking to buy.