As September 2010 passes, renters in Victoria have again seen a month with no sign…
Buying property is a major purchase, and one that should not be taken lightly. Not only do you have to find the right property for your needs, but you must also determine the right time to buy or sell. When you think about the right time to buy, you may immediately assume that the answer will be when the market is at its lowest. Naturally, this is an advantageous time to buy because it means that property prices will be low. As the market picks up again, the property prices will increase, making it a sound investment. Yet it’s difficult to determine when the market has really reached its lowest point. In fact, you can’t really make this distinction as it is happening, but only in retrospect.
Although you can’t foresee the future of property prices, you can use the facts available to make an informed prediction. Real estate agents make this their business, which is why they are a good source of information when you are trying to decide whether or not it’s a good time to buy. You can register your details at LocalAgentFinder to start comparing agents side-by-side, granting you access to their professional expertise. Using a buyer’s advocate or agent can be quite beneficial.
Low vs. High Interest Rates
In addition to property prices, interest rates are another factor to watch. The ideal conditions for purchasing property will be when both housing prices and interest rates are at a low. These rates impact the cost of mortgage repayments, so locking in low interest rates will lead to a lower cost in the long term. Although this situation is true in theory, there are also advantages to purchasing when there are high interest rates, because it creates a buyer’s market.
Because high interest rates will lead to slightly higher mortgage repayments, many buyers will decide to hold off on buying property during these periods. This doesn’t mean that sellers will stop putting their properties on the market, however. With a high supply and a lower demand, you can take advantage of the larger inventory and potentially lower prices due to competition. Additionally, with fewer buyers to compete with you will be better poised to negotiate a low price that could end up being well below market value. No seller wants their house to sit on the market for a long period of time whilst waiting for interest rates to drop.
There are pros and cons to both situations. Although the added bargaining power can be a benefit to purchasing during times of high interest rates, others will prefer to wait for a low interest mortgage. Your personal reasons for purchasing property should also factor into this decision. If you are looking for a new home because of a career change, you may not have the luxury of waiting. This could also be true if you need to upgrade to a larger property in anticipation of a new baby, or if your rental lease is ending and you are ready to take the plunge into home ownership.
The right time to buy property will vary from person to person. To receive individualised advice, it’s a good idea to use the fresh dashboard service at LocalAgentFinder to compare agents who can point you in the right direction. They can help examine your situation thoroughly in light of the current market conditions, to provide sound advice.
Further Tips to Consider:
- Are you in a position to finance your home? If you have outstanding debts or will need to borrow more than 80% of the home’s value, it may be better to wait until you’re in a better financial position. Otherwise, you will probably need to pay extra money out of your own pocket to cover mortgage insurance. This is standard practice to protect lenders from default when more than 80% of the property value is covered by a loan. You’ll also want to be sure that no more than 33% of your income is dedicated to mortgage repayments, or you could be in danger of defaulting down the road.
- Are you ready for a long-term living situation? Purchasing a home is best if you are planning on residing in it for at least 5 or 10 years. There are numerous costs associated with buying a home, so if you plan on upgrading or moving in the near future it may not be worth the trouble just yet.
- Do you have an urgent need to buy? It’s best to buy a home with as little pressure as possible. If you feel a sense of urgency, you may agree to terms that are less than advantageous, or pay more than you would like. You might be willing to accept any asking price without shopping around to see what else is out there. It’s best to buy at a time when you have the luxury of seeing many different properties, and negotiating a price that works out in your favour.
- Is now a convenient time to move? Families with children will need to keep school schedules in mind to choose the right time to move. Moving house can be stressful and it’s best not to let it interfere with studies and work obligations.
With the financial means to purchase a home, the willingness to make your residence a long-term commitment, and the freedom from obligations which could lead you to feel pushed into a decision; you may be ready to buy.
If you’re not sure about whether or not this is really a good time to buy, it’s helpful to sit down and chat with a buyer’s agent. Compare real estate agents now at LocalAgentFinder. Find out how it works and start your search for the perfect property today.
You can also find out more information by reading our following articles:
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