Should you wait or buy property in Perth now?
Most first-time home buyers and investors ask the same question: should I buy now, or wait? A fair question, especially when the property market is continuously changing. The state of the property market is affected by many variables – the economy, affordability, sales volumes, consumer confidence, job growth, etc. However, no matter how much it changes, the market moves in a cycle. Where your city is on that cycle will factor into your decision to buy now or wait to purchase property.
A property cycle usually lasts for approximately five to ten years, expanding and contracting over this time. A property clock is one of the easiest ways to understand the cycle.
Image source: Your Investment Property Magazine
According to Your Investment Property Magazine, the bottom of the market is a great time to buy, referred to as an opportunity market. In a buyer’s market, it is easy to snag a discount from panicked sellers. Whereas, the boom of the market signifies a great time to sell. The signs of a boom can be seen in a large interest from the media and a 3-year streak of rampant growth. A rising market is a great time for first time investors to get onto the market to realise profits faster, but as the clock reaches a hot market, purchasing should be avoided due to high demand of people scrambling to buy.
According to Herron Todd White’s October Month in Review, Perth continues to remain at the Bottom of the Market. In a market such as this, buyers are left with the question whether they should buy now or wait to see if property prices will fall further. In August, Property expert Michael Yardney wrote: ‘The Perth property market is likely to bottom out in the next nine months, after more than four years of falling prices, but it’s recovery will be slow and values are unlikely to start increasing any time soon’.
Image source: Herron Todd White October Month in Review
In May, NAB predicted that the Reserve Bank (RBA) wouldn’t begin its rate-hiking cycle until mid-2019. This change in forecast suggests that prospective buyers now have more time to make the most of lower rates before they rise. A slight increase may not seem like much, but the smallest difference can add thousands of dollars to your mortgage repayments.
In conjunction with relatively low interest rates, the Perth property market is still far more affordable than the East coast. According to Landgate, the median house price in Perth currently sits at around $520,000, less than half of the median house price in Sydney - $1,144,217. Ironfish Investors stated that for the eight years it may take for people to save a deposit in Sydney, Perth investors only need an average of four. Furthermore, Corelogic recorded a 2.77 per cent drop in Perth house values so far this year. For savvy investors or buyers paying close attention to where Perth is on the market cycle, the market presents itself as an attractive one.
However, due to the impossibility of knowing exactly whether values will rise or fall in the coming months, it is suggested that buyers weigh up their options. With interest rates still quite low, there are some great deals available on the market. Keeping in mind that house prices continue to grow much faster than average full-time earnings, the decision to buy now or wait later depends on personal circumstance. It’s best to talk to a broker who can determine if buying is in your best interest.
If you’ve decided to make the most of low rates and the opportunity for a good price, give us a call to speak to one of our brokers. At Select, we make finance simple.