In 2018, the Australian real estate market experienced a significant downturn in Sydney and Melbourne. According to the latest Domain House Price Report, property prices in Sydney dropped 9.9% over the 12 months to December: https://www.domain.com.au/news/sydney-house-prices-fall-9-9-per-cent-domain-report/ There are many factors that led to this fall such as the tightening of credit following the Banking Royal Commission along with reduced demand from overseas buyers and investors. Many industry analysts believe that property prices in these cities will continue to be soft for the first and second quarter of 2019.
Whilst many buyers will delay their property purchase plans until they see a turnaround in the market, savvy buyers understand that by the time the market picks up, they will have missed the boat. The market will pick up as it always does and the best time to buy a bargain is in a downturn. Buying in a downturn also gives you time to focus on selecting a superior property that would be far more difficult to secure ahead of strong competition in a rising market.
It can take many months to carefully plan to find and buy the right property so there is no point sitting on your hands. Here are my tips for buying well in 2019:
1. Make Sure your Finance is Approved
Following the credit tightening and recent regulatory changes, applying for a mortgage is not as easy as it used to be. The final report into the Banking Royal Commission is due to be submitted to the Governor-General by 1 February, 2019. Following the report, there could be further changes impacting upon the finance sector.
Work with a good banker or mortgage broker who is abreast of all the recent changes and who can turn your mortgage application around in a reasonable timeframe. Make sure you have submitted all the information required. Nearly enough will not be good enough. Remember that finance delays will cause problems and can potentially cost you your dream property.
2. Do Not Try to Time the Market
No one has a crystal ball. Whether you buy now or in 6 months’ time, you should be focusing more on your needs, the needs of your family and the requirements of the property. Do not become too distracted by the market, media reports and what everyone else is doing. At some point, Sydney property prices will recover.
Take a long-term view. Buying a property should never be for the short term unless you are making a speculative purchase. Consider how your needs may change over the next 5 to 10 years and whether the property will continue to meet those needs.
3. Focus on Finding a Quality Property
Quality properties in quality locations perform well in any market, even in a downturn. One of the main advantages buying in a slower market is that you will have more time to find and select a superior property. Do your research up front so that you know what you should be looking for and just how far your budget will stretch.
4. Negotiate Hard
Negotiation is always your best weapon to prevent overpaying for a property. If you are ready to buy with finance in place, you should be in the driving seat to negotiate the best deal against a motivated vendor. Check how long the property has been on the market. The more days on market, the more likely the vendor will accept a lower price. Do not become emotionally attached to the property because your emotions will likely lead you into paying too much. Tell the agent that you are considering other properties and that although you are interested in this property, it has some drawbacks which you need to weigh up when considering the other properties. Be prepared to walk away.
5. Consider Engaging Professional Help
Buyers’ agents enable you to find the right home that suits your budget and lifestyle. At Buyers Domain, we have intimate knowledge and experience of the area and market you are buying into. We’ll be able to guide you through the complex minefields of finding and securing the right property by saving you time and by protecting your budget.
Give us a call on 02 9568 6330 to find out how we can help you.