With the latest property data showing values have increased 2.2% in the 12 weeks to the end of September, many buyers will realise the tight supply of homes for sale has injected some real heat into the market.
This time last year, buyers had the momentum with the cash rate at 4.35% and retail mortgages above the 7% mark. Sellers were doing discounts back then. Not now. A lot changes in 12 months.
The Reserve Bank of Australia has reduced the cash rate three times and it now sits at 3.6%. Disappointing employment figures last month have fired up economists, who now predict another cut before Christmas, most likely taking the rate to 3.35%.
However, the most telling statistic from a buyer’s perspective is the shortage of homes for sale.
Currently, there are 20% fewer homes on the market than the five-year average, according to data from Cotality, the industry researcher.
This is coupled with the fact that population growth and immigration are putting pressure on the housing market at a time when construction and labour costs are rising, often making new building projects financially unviable.
For buyers, your best bet is to buckle in. Standing on the sidelines will gain you no favours. If you are a first-home buyer or upsizer, your future purchase is becoming more expensive with every day you delay.
Here are seven buyer tips for today’s market:
Key advisers – Opinions are cheap in real estate. Everybody has one. So, choose who you listen to carefully. You want advice only from those who understand your goals and financial situation with a good handle on the market. They’ll give you insight, not an opinion.
The ‘A’ team – It might sound a little premature, but you need to pull together a good team to ensure your purchase goes smoothly. Start with a mortgage broker or loans officer who you trust to offer the right deal for you. Identify a conveyancer to help you with the legal aspects of a purchase – arguably, they’re your most important ally.
Be cash ready – Don’t bother taking a seat at the table unless you have a preapproved mortgage. Sellers are not interested in those who are not ready to make their move. There are too many motivated buyers to justify spending time with someone who hasn’t organised their finances.
Making an offer – At auction, you buy a property unconditionally. All your due diligence, such as checking the Contract of Sale and commissioning building and pest inspections, should have been done in advance. In a private treaty sale, don’t make an unconditional offer. Always do your due diligence.
Too choosy? – You can lose a great property if you take too much time with your decision. So, be clear on what you want from your next property. Make must-have and nice-to-have lists so you know where you’re prepared to compromise.
Refine target areas – Your research should reveal the affordable suburbs. If you have your heart set on a particular area, you may need to compromise on the style or size of the property. Alternatively, look at nearby areas that do not command the same premium.
Stay strong – With 20% fewer properties on the market than the five-year average, you can almost guarantee there will be at least one property that eludes your grasp. Don’t worry. It happens. Home-hunting tests your resilience, so you need to keep your eye on the prize. There is a great property out there, and it’s waiting for you.