Real Estate

Should you wait for house prices to fall further, or buy now?

Written by The ReReport
As seen in the Source link, written by on 2018-12-14 13:14:56

While the news is grim for many Aussie homeowners, things are finally starting to look up for first homebuyers who have long struggled to enter the market.

As the country faces tumbling house prices — with new CoreLogic figures revealing Sydney’s housing downturn is set to eclipse the 1989 recession — there has been a flurry of first homebuyer activity.

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ABS housing finance statistics for October released this week show that in 2017-18, more than 110,000 first homebuyers got a loan — the strongest result since 2009-10.

Meanwhile, the proportion of first home loans to total loans increased to 18.1 per cent — the highest share seen since 2012.

But while many have jumped at the chance to finally snap up property, others are sitting on their hands as they face an agonising choice — wait for prices to drop further and risk missing out altogether, or buy now and potentially miss out on the best deal.

A property sentiment survey conducted by ME Bank has found that in contrast to price falls in some regions, first homebuyers are still worried about housing being too expensive, with 77 per cent saying they’re worried housing is increasingly out of reach.

Meanwhile, 38 per cent believed prices will go up in the next two years, while 23 per cent say prices will stay the same.

But Aussie property experts Luke Harris and Matthew Bateman, who founded real estate mentoring business The Property Mentors in 2014, said it was impossible to predict price trends.

“My take is first homebuyers should always get in the market when they are financially able to do so,” Mr Harris said.

“There is no point in first homebuyers trying to pick the best time in the market because there’s no such thing. You could spend weeks and months researching when the best time to jump in is based on historical data but you’re not able to predict the future.

“If you’re willing and able to get a loan and take on debt and you’re in a position to do it emotionally and financially then you need to take advantage of the market conditions at the time and not be too worried about the noise out there.”

However, Mr Bateman also urged first homebuyers to consider rentvesting, by renting where they want to live and investing in property in cheaper, high-growth areas.

“If you’re able to afford property then get in the market because if you’re waiting for the perfect time you might miss out getting the area you want,” he said.

“The lower end of the market is typically where first homebuyers are shopping which means there’s more demand — so people can shoot themselves in the foot by waiting for the right time.

“On the flip side you can use the media noise to your advantage — if there’s a seller who is not as savvy who might be scared by what they’re reading, you might be able to negotiate slightly harder than you could 12 months ago.”

They predicted 2019 would see the Brisbane housing market start to take off as baby boomers from Melbourne and Sydney started to sell up and opt for a sunny retirement.

They said Hobart’s property market would continue to be a strong performer while they expect investors to “sit on their hands” for now amid uncertainty regarding to the upcoming federal election and potential changes to negative gearing and capital gains tax policy.

Starr Partners chief executive Doug Driscoll told he had seen first-hand the increase in first homebuyer activity which he put down to government incentives, a softened market and low interest rates.

He said while it was “not inconceivable” prices could drop further, waiting for the “perfect” moment to buy was fraught with risk.

“Contrarians may say you’re better off waiting a little bit — but I’d say clearly at one point in the not too distant future rates are likely to move and, following the royal commission, money is increasingly difficult to get hold of as the banks become more prudent in their approach,” he said.

“In some of our areas, five per cent of properties were being sold to first homebuyers but that number is now circa 20 to 25 per cent depending on the territory and across the board it’s around 15 to 20 per cent.

“My advice is if something is the right fit and it ticks all the boxes then go for it because there’s never any guarantee the same thing will come up again in three, six, nine months.”

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