Honestly, if I got $10 for every time I’m asked the question: “Is this a good time to buy?” I could retire on the earnings tomorrow. Good for you, you’re thinking, but what’s the answer? Well, the answer depends a lot on you; your situation, your motivation and your goals.
In one sense it doesn’t much matter what’s going on in the world around you, unless you’re ready and motivated to buy. Are you ready to tie yourself down to paying off a loan for the next 25-30 years? Do you have a stable and secure source of income? Does your income comfortably pay the bills? Does it accommodate the lifestyle you’re hoping to build? Sports cars, frequent fine-dining, overseas trips and private schools for the kids all cost plenty! If you can manage these expenses and still maintain a healthy financial complexion, this may well be the right time for you. If not, then no. You don’t attempt a marathon unless you’re fit to start with.
Are the signs encouraging?
As you know, interest rates are at a record low. Right now you can secure a loan at the variable rate for as low as 4.49%, with fixed rate at 4.29% for the first year, then jumping to 5.14% for subsequent years (check out http://www.canstar.com.au/ for the most up to date figures). These are fantastically good rates by anyone’s reckoning, and they are undoubtedly bringing heat to the property market.
A balanced view of interest rates, however, has to account for the fact that, in October, 85 lenders raised their fixed rate home loans. The CBA, which is usually a fairly reliable benchmark, has its fixed rate loan sitting on 5.09%. That’s still a great rate, but if I were you, I’d check it again in 6 months to see what it’s doing. You’d expect rates to go up – they can hardly drop any further– but when, and by how much? We’ll wait and see.
What’s the Market Saying?
Meanwhile, we’re being told Sydney is experiencing a property boom. I’m not going to disagree with that, but my question is: Which part of Sydney are you talking about? Median property prices range widely from suburb to suburb––obviously!––as do sales numbers and value increases. Whatever the market is doing, good deals can still be found.
In terms of aspirational locations with genuine hit-list potential, the Inner West, Inner East and Eastern Suburbs are probably where I’d be looking. There are properties to be found in some of the coffee culture suburbs that continue to flirt with affordability. I’m thinking here of places like Rozelle, Lilyfield, Leichhardt, Marrickville and Alexandria. Of course, you can always push further east towards the beaches – Clovelly, Bronte, Coogee. The strength in the market here is with properties in the sub $1.5m range. One of the great things about these kinds of addresses is that whatever happens in the economy, they hold their value. The East will always have its beaches, and the Inner West, as I pointed out in a recent interview with the Daily Telegraph (p11, Saturday 16 November 2013) is increasingly being seen as affording a wider array of lifestyle options.
The Professional Way to Buy Property
Is now a good time to buy? Absolutely, but only if you’re ready. And if you are ready, there’s one final thing I would add. If you want to minimize the risk and maximize the value of your property purchase, get the right professional advice. The time, money and heartache a buyer’s agent can save you, more than pays for the cost of the service. So. If you’re thinking of buying a property in 2014, it would pay you to talk to Buyers Domain.