Buying a House in Melbourne in Early 2019

whatthehell on 17/01/2019 - 15:56

Hi Everyone

I'd like to hear everyone's thoughts and opinions if its a good idea to buy my first house during early 2019 (basically Q1), or is it a good idea to wait for the house prices to go down more.

I have a good deposit saved up and can afford a house from 600k - 700k, considering Keysborough, Springvale, Rowville for a house. I don't want to end up buying one now, only to see it go down in value more during the year or years.

What do you guys think? Would like to hear from other people that are buying their first homes during this period as well?

Home & Garden

Comments

  • poboy on 17/01/2019 - 15:59
    +11

    The consensus here is generally; if you want to buy to live in for while - buy when you want. If you want to buy as an investor, be very careful.

    • HighAndDry on 17/01/2019 - 16:39
      +6

      Basically this OP. Buying to live in will come with a lot more benefits in addition to the capital gains, such as long-term housing stability, ability to make modifications, having a home loan and the potential features of said loan, etc.

      And losses aren't really losses unless they're realised, so if you're buying to hold and live in, when you sell in 10-20 years' time, a few percentage points of difference all those years ago won't make too much of a difference.

    • whatthehell on 17/01/2019 - 16:48
      +2

      Thank you for this! I was thinking about this as well! I suppose sometimes you need extra validation to know you are thinking about it the right way!

      • bobbified on 17/01/2019 - 17:15
        +6

        I did this late last year, despite all the doomsday news warning property prices "dropping by up to 40%".

        The requirements for buying a place to live are very different to buying a place to invest. For example, I would happily pay extra tens of thousands for a balcony in a place I will live in but wouldn't necessarily do that for an investment property because the return on that "extra" may not be worth it.

        For every year that I don't buy, I'll be paying a bit over $25k in rent.

        • swapsey on 17/01/2019 - 19:08
          +1

          If u buy a house u are paying “rent” to the bank. It takes many years to start to pay off principle, in which time the property may go down in value which will give you negative equity and you will be worse off than renting where you want to live.

          • bobbified on 17/01/2019 - 19:42

            @swapsey: With a typical deposit to buy a property being in the 20% range, it would require a drop in prices of at least that much to put someone in a position of negative equity. If that was to happen, we'd all have much more to worry about than just house prices. There'd be a high unemployment rate and other massive economical issues.

            It takes many years to start to pay off principle…

            The minimum monthly payment does include the principle if you choose to do so and that portion grows as the years go by. There's an option to reduce that "rent" (interest) if you choose to pay more than the minimum monthly payment. It is the"minimum", not the maximum. I personally pay 3x the minimum payment each month to reduce the final total amount of interest that will apply over the duration of my mortgage.

            If you look at the monthly rents vs the property value, they're almost the same as the minimum monthly mortgage payment. Rent for 25 years or so (I was already renting for a third of that time before I bought) and you could've paid off the mortgage on that property in that time.

            I have the option to rent my home out and rent a much cheaper place so that the difference subsidises my mortgage, but I enjoy my place. That's something I can't put a price on. I'm not looking at making money from my home.

            As I was saying earlier, all of the above goes out the window for an investment property, for which I would be taking a completely different approach.

            • swapsey on 17/01/2019 - 23:21
              -1

              @bobbified: We will see -20/30% from peak by the end of 2019. People who bought 12 - 18 months ago are approaching negative equity right now.

              • bobbified on 18/01/2019 - 08:59

                @swapsey:

                People who bought 12 - 18 months ago are approaching negative equity right now.

                Source?

                I haven't seen anything that suggests the property prices have dropped anywhere near 20%! The variances are still in the single digit % figures.

                • swapsey on 18/01/2019 - 09:36

                  @bobbified: Sydney has fallen 10.1 from peak and that's averaged across all areas. Some areas are well above this number already which is why I say new buyers are under water. Do some more searches to see what predictions are. Not looking good. There are no interest rate brakes as well and banks have been raising rates already putting more people under stress than we have seen in a long time. All we need is a disaster like a high rise needing to be demolished due to poor building/engineering during the boom and… oh wait.

                  • bobbified on 18/01/2019 - 10:09

                    @swapsey: Thanks for the article with the figures.

                    Unless the prices completely crash, negative equity doesn't really impact people who live in their own homes. They will continue to make their mortgage payments as per usual. As with shares, the "loss" is only on paper until it's realised by selling the property. Banks don't constantly monitor the equity/value ratio so as long as the mortgage payments are made, no-one gets kicked out of their home. The only time there would be a problem is when someone wants/needs to sell with negative equity . Coughing up the difference may or may not be easy depending on income.

                    • swapsey on 18/01/2019 - 10:41

                      @bobbified: They end up prisoners in their new home. Can’t take job elsewhere. Very limited options even if you lose the value of your deposit. Which for some was only 10% of a 800k valuation. Margins are razor thin. Have to think about young people who were suckered into the great Aussie dream and false promise of capital growth.

                      On a side note did u know that when u average capital growth over last 80 odd years property grows 1.5% per annum. Not the great asset class spruiked by agents and banks.

                      • bobbified on 18/01/2019 - 10:54

                        @swapsey:

                        They end up prisoners in their new home. Can’t take job elsewhere.

                        That's true - the owner will be locked to the house if they can't afford to pay off the negative equity. There's still the option to rent out the home if someone needs to move - the rental income will be lower than what it could've been previously, but then the rent that's payable to live somewhere else will be relative to the rent being received. A subsidy from the hip pocket may be required to maintain the mortgage.

                        On a side note did u know that when u average capital growth over last 80 odd years property grows 1.5% per annum. Not the great asset class spruiked by agents and banks.

                        Over a period of 80 years, an average of 1.5% per annum may not sound like a lot, but in between, there would be certain periods where there's been rapid growth. The way I see it, it's all about the timing.

                        • swapsey on 18/01/2019 - 13:04

                          @bobbified: Yes 100% timing the market is great advice for young people. Business decisions less emotion.

  • pyramid on 17/01/2019 - 15:59
    +6

    Your request is in queue. We'll be with your shortly. All OZB home buying advisers are busy at the moment.

    • oscargamer on 17/01/2019 - 16:34
      -4

      Boring and predictable answer.

      Come up with a new retort.

      • HighAndDry on 17/01/2019 - 16:36
        +5

        Hey! Don't treat our private concierge like that!

        • oscargamer on 17/01/2019 - 17:39
          +1

          OK, that's refreshing !

          :)

    • elgrande on 17/01/2019 - 19:13

      General advice only right?

  • dcep on 17/01/2019 - 16:07

    I don't want to end up buying one now, only to see it go down in value more during the year or years.

    Well don't buy then. My crystal ball says 2021 bottom out, as denial takes 1-2 years and when they feel the pain starts to bleed, that's when you see corpse laying on streets.

    But then, the markets can remain irrational for longer than you can remain solvent.

  • oscargamer on 17/01/2019 - 16:23
    +1

    Buy when you find the right house in the right area at the right price.

    In the short term, you may make a little or lose a little money (which is only pretend money, unless you sell)

    In the long term, you will make money.

  • swapsey on 17/01/2019 - 16:34
    +1

    I'd be waiting til mid year at least. But that's not advice. It's just what I would do.

    • whatthehell on 17/01/2019 - 16:38

      Thanks! I was thinking the same

  • WreckTangle on 17/01/2019 - 16:39

    Jeez, if you want to buy a house then buy one…houses aren’t supposed to be a get rich quick scheme.

    • HighAndDry on 17/01/2019 - 16:40

      houses aren’t supposed to be a get rich quick scheme.

      Eh. There isn't, and shouldn't be, anything restricting people from buying and selling property as they wish. We live in a free country after all, not Venezuela.

    • whatthehell on 17/01/2019 - 16:44
      +1

      Its my first home, Not exactly a get rich quick scheme. From whats been happening, it feels like house prices could even decline for a few years, when that spills into 2 year territory of declines till 2020, then waiting for them to recover for two years, and even then there is no guarantee that they will come up to the same price that they were bought at it. This means waiting for 5 years just to see my house come back to the price that I bought it at. I've only been in aus for 6 years, so have only seen a boom, havent actually ever seen a decline. Im a noob at all this, just trying to see what other people think and not smart ass comments, with all due respect.

      • chumlee on 17/01/2019 - 16:47
        +1

        So in 5 years time house prices will rise. Sweet, I've marked it in my diary to buy a house in 4.5 years from now

        • whatthehell on 17/01/2019 - 16:48

          Sweet! Glad I could be of help!

        • elgrande on 17/01/2019 - 19:14
          +1

          I thought you were busy that day.

  • chumlee on 17/01/2019 - 16:39

    How do you know what house prices will be in the future?

    • pyramid on 17/01/2019 - 16:41

      By asking some random keyboard warriors on internet

      • chumlee on 17/01/2019 - 16:43

        Sounds totally logical. Media does the same thing

  • swapsey on 17/01/2019 - 17:15
    +1

    Is it just me or are some of the comments in here salty about prices dropping…. maybe there are even sellers upset that many buyers are holding their wallets closed. Why are people so upset with the idea of not buying right now?

    • whatthehell on 17/01/2019 - 17:40

      Pristine observation skills! Thank you for pointing it out!

    • bobbified on 17/01/2019 - 18:12
      +3

      Why are people so upset with the idea of not buying right now?

      Who's upset?

      I know people who are panicking in real life and are actually annoyed because they're having trouble selling. They're trying to tell people to buy. It's pretty bad on their part.

      I can't see which comment you're referring to in this thread though?

  • [Deactivated] on 17/01/2019 - 17:25

    Asian suburbs. Check your school catchment zones carefully and you should be safer.

  • [Deactivated] on 17/01/2019 - 18:05
    +1

    It's almost never a bad idea to buy a house for the purpose of living in when you can afford the mortgage.

    It is the polar opposite of buying a car you cannot afford.

    • dcep on 17/01/2019 - 18:09

      what about apartments ?

      • [Deactivated] on 17/01/2019 - 18:11
        +1

        I'd be worried about cracks.

        On a serious note, no. Landed

  • kizashi on 17/01/2019 - 19:30

    As most people say, no one can predict future. You need to be happy with house you are buying and getting right one is more important than trying to pick bottom of the market. Buying and selling costs are expensive, so choose wisely that suits needs and are happy. Research and look many houses and try not to over pay when you do buy. Also ensure when interest rates do increase, that can afford this.

  • vince088 on 17/01/2019 - 23:52

    i live in this area, 600-700k would probably either get you a really old house, or a newer townhouse..

    really need 800K to 1Mill

    a 6 year old single storey 4 bedroom house sold down my street for 960K

  • [Deactivated] on 18/01/2019 - 11:34
    -1

    if you buy a place in melbourne then you'll have to live in melbourne which is a huge downside

  • iand on 18/01/2019 - 12:10

    He could do worse and buy in North Sydney where he'd have trouble finding anything to live for

    • dcep on 18/01/2019 - 12:55

      Mortgage

  • Jdm2me on 03/03/2019 - 15:05

    I am in the same boat as OP, still thinking to wait for a bit to get a better house with the same budget. I might be wrong.

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