Breaking into the housing market may feel next to impossible as house prices soar. With no sign of the boom slowing, many may be wondering when the best time to buy property is, if it exists at all!
While some may be holding out in the hope that prices will soon drop, others are taking a different approach and buying a place to satisfy their fear of missing out.
So, is it worth waiting for a ‘good’ time to buy, or should you be putting in offers all year round? We’re here to help.
When is the best time, seasonally?
Each season presents opportunities for buyers and sellers alike. It’ll probably come as no surprise, but the best time of year to buy property in Australia is just before or just after winter. As people hibernate during the colder months, fewer properties are listed for sale. There is also a significantly reduced number of buyers. While there aren’t as many properties to choose from as there are in the warmer months, you may be able to get a great deal on a place against the decreased competition.
Buying a house in winter will give you a good indication of what the place is like during the colder months. When the weather’s warmer, everything appears lighter, and the warmth gives off a positive feeling.
Things to look for when attending winter open houses include:
- Is there adequate heating, and does it heat the whole home?
- How much natural light is there?
- What does the garden look like after any heavy rain or wind?
- Are there any leaks in the roof or a damp smell lingering?
Although winter is the best season to purchase property, the time right at the beginning of January – just after Christmas – also allows for a great opportunity. The first month of the year is likely the most suitable time for buyers to get a house. They may find a bargain on a property that was passed in before Christmas, as most buyers also want to settle in before vacation starts. Often, many Australians go away on holidays during January – especially before school goes back. This can also decrease the level of competition between buyers.
When is the best time, financially?
The best time to buy property isn’t always seasonal – it’s also financial. Many aspects make up the best time financially to buy a house. These include:
Being financially stable: Being financially stable is crucial when buying a house. You must prove to lenders that you can budget for mortgage repayments, utilities, groceries and any extra expenses or subscriptions you may have. Financial stability also relates to your credit score and any history of unpaid debt or bankruptcy.
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Receiving a reliable income: This doesn’t always mean a significant income. Receiving a reliable income shows a lender you’re a reliable choice to loan money to and will be able to service the loan. They’ll also consider your job and how long you’ve been with your current employer. If you move around regularly from job to job, or have had periods of unemployment, this may be a risk in the eyes of a lender.
You’re not expecting any significant life changes: If you’re expecting a baby, planning to start a family, taking out large loans for a new car or even a holiday, you will need to discuss this with your broker. These extra expenses could limit how much you can borrow.
Having adequate savings: Showing that you can save money over time is another crucial aspect lenders evaluate. A separate savings account that you add cash to consistently is a must for those who want to buy a house.
Inovayt Director of Wealth and Financial Advisor Melbourne, Tony Stewart, says, “Entering the property market means making a substantial purchase, and the associated purchase expenses are also high. Because of this, it’s important to get the decision right.”
A combination of these factors will essentially make the difference between whether it’s the best time to buy a property or whether you need to wait a little bit longer before jumping into the housing market.
When is the best time, personally?
Lastly, assessing where you’re at emotionally, along with your ‘why’ reason to buy, will help decipher whether it’s the best time for you. Many of us want to jump right into buying without seriously thinking through why we want to buy. A few common reasons why people feel like they should purchase include:
- Feeling like renting is dead money
- A lease that’s running out
- It’s a ‘grown up’ thing to do
- Rates are still low
- Fear of missing out
While these are all reasons, they’re certainly not something you should base your decision on. Personal factors to take into consideration include:
Commitment: Buying a house is a commitment – and a large one at that. Most home loans range from 20 to 30 years unless they’re paid off sooner. If you’re not entirely sure about a house or area, or you plan to move in a couple of years, it’s a good idea to reconsider the reasons why you want to buy. Buying a home includes committing to other expenses like stamp duty, lenders’ mortgage insurance (LMI) and conveyancing fees. If you chose to sell and buy somewhere else a few years later, you would need to repeat all these fees.
Certainty: Buying a house isn’t something you should decide on a whim – especially if you’re buying with someone else. You need to have conversations with those you may be buying with and consider who may be impacted by the purchase, such as current roommates or landlords. It’s also essential to keep in mind that, unlike renting, anything that gets damaged in your own home is your responsibility. There’s no landlord to pay the costs of a leaky tap or broken door. These expenses will all rest with you, so you must be sure these are costs you can cover where necessary.
Cost: As previously mentioned, all maintenance costs fall to you when buying a home. If you’re struggling to live off your paycheck week to week while renting, it’s probably not the best time to purchase a property. Even if you’re managing to service your loan and the upkeep, do you have enough money left to save for a holiday or go out for dinner with a friend? Consider what the actual cost of buying a home will be to you.
“You need to understand your goals and objectives, do your research and engage an expert,” Tony says. “Some things to consider include whether the property is going to be for personal use or an investment, how much money you have saved to put towards the property, and whether your cashflow will support a future interest rate rise.”
The best time to buy property isn’t the same for everyone. While seasonal factors indicate the colder months are the best time for buyers, your financial and personal circumstances may tell a different story. If you want to know when is the best time to buy your home, get in touch with one of our mortgage brokers today.