Buying a home right now may be the last thing on your financial to-do list in the wake of yet another interest rate increase. But it may also be the best time to make a strategic financial decision.
Here’s why getting on the property ladder in a tough financial climate may be the right strategy for you.
The current market sentiment
Surveys conducted by various industry stakeholders to understand the current market sentiment are delivering very similar results. Australians are not confident that now is the right time to buy property.
The irony is that the market is ripe for the buyer’s picking.
Back in the throes of the pandemic, people were nervous of investing in property as the expectation was that the market would crash.
It didn’t.
In fact, those two years presented a record-breaking 24.6% increase between the end of March 2020 and February 2022, according to CoreLogic’s Home Value Index.
This sharp increase resulted from an increase in savings due to the lockdown, a healthy distribution of government grants and a reduction in property supply.
As the market continues to drop and more properties become available with less competition, buyers should be strategising and planning to invest.
Tips to help strategise your property purchase
We cannot overstress the importance of research.
You should split your research into three sections: where they’re selling, why they’re selling and how they’re selling.
Where they’re selling
Consider the area you’re looking to buy into and research its demographic. Look at the average property price performance over time and the age and demographics of the families living there.
Also, what is the purpose of buying? Is it to live in or as an investment rental or a holiday home that you hope to Airbnb?
Get to know the agents or other developers in the area. This information may give you an indication of the area’s growth potential.
Why they’re selling
The why could help define your bidding strategy.
If the current owners are selling due to financial or other urgent reasons, chances are that there will be room to negotiate.
Consider whether the house needs work done to it. If so, determine what a bathroom and kitchen remodelling would cost and how these two upgrades could shift the property’s value.
How they’re selling
Consider how the property is being sold. Is it on auction, as a foreclosure, a short sale or is it a sale from a deceased estate?
Want to help your children get on the property ladder?
We offered our advice on helping children get on the property ladder in a previous blog, however the advice is relevant here too:
- Share your wisdom.
- Gift money to help with deposits.
- Loan the money or be the guarantor.
- Suggest a partnership purchase.
Discuss your plan with a financial expert
Find a financial planner who is as committed to helping you achieve your financial goals as you are. Contact us to make an appointment.