This is a question we are being asked on a daily basis, and the answer is, if it suits your circumstances then yes! Want to move on to the next chapter in your life, then yes! Actually making the decision is the hardest part.
On a daily basis we are being inundated with so much doom and gloom about property market from the media, that it’s pretty much a self-fulling prophecy – so could that mean it’s actually a good opportunity to buy? Once again it depends on your circumstances. We have always said, if you buy and sell in the same market, it doesn’t matter. Some people are worried about selling now, then the market will kick off again and they will miss out. In my opinion I don’t believe that will happen, if anything they might fall a little more and then stabilise for a number of years.
There are some sellers who absolutely HAVE to sell due to their personal circumstances although chances are the majority of people selling are either looking to downsize or upsize, then of course you also have your first home buyers. You must remember that no matter what the market people still buy and sell and in one of our previous blogs we discuss the advantages of upsizing in a market like we are experiencing now.
Below are some points to consider about the market we now find ourselves in:
- Growth v’s decline
Sydney has seen an 85 % increase since 2013, with investors — which account for over half the values of mortgages in that period — pushing up prices to record highs. Some believe the boom should have lasted 3 years, which interestingly looked like that had happened in Nov and Dec 2015 but when we came back in Feb 2016, prices kicked on again. So the boom overshot itself by 2 years and now it is correcting with media reporting we are already back to 2016 prices.
Over the past year, Sydney was the worst performing city, with prices off 6.1 per cent……..so people have made a measly 79% on average in Sydney over the past 6 years? (yes, I am using sarcasm) There is no way prices could continue to rise at the rate they were and I am unsure why people are so surprised about this. We should note that these figures are related to Sydney as a whole and some suburbs have been hit harder than others, but those suburbs more than likely also saw more price growth than the average rise.
- Types of Properties
Most of our readers are located in the North West area of Sydney where we were the first to see the prices rises when they started and we were the first to be hit with the drops and these drops vary on the type of property you are selling. It should be noted that many people that have recently put their properties on the market, we were speaking with over a year ago and yes unfortunately they missed the opportunity to sell for more money. But it’s all relative, if they haven’t bought already, they are also benefiting from the market slow down.
If your property ticks all the boxes, then you are in a great position. Quality proprieties are selling and still achieving great prices – people want quality. That being said I believe the majority of properties on the market at the moment have a lot of things wrong with them and yes these properties would have benefited by selling in 2017. These properties have also seen the biggest drops compared to quality properties. One of the reasons for this is that buyers now have choice and a lot of it. When prices were going up and up, stock was low, buyers were buying anything as long as it had 4 walls and a roof, their main fear was missing out. Now they are getting picky, they want to see value for money and they fear paying too much.
Interestingly in the past 2 years developers were paying huge money for potential development sites in our area where they could build villas or duplexes on. This has now shifted. Blocks for duplexes were achieving around the $2.2m or even more, are now lucky to get $1.8m and that has to be a pretty perfect block. Low side, and irregular shaped blocks will achieve less.
When you have a look at a lot of properties that haven’t sold, it all comes down to price. A lot of vendors are still hoping there are buyers from last year still looking. And yes there are, but the issue is these buyers cannot get the finance they were once approved for. Due to many factors including the Royal Commission, banks have tightened lending standards by asking more detailed questions about exactly how much prospective loan customers spend and on what. For example, Westpac’s previous loan application included fields for basic expenses, childcare, education, insurance, telephone, internet and others. Now these have been added to with categories like groceries, medical and health, recreation and entertainment, transport, and others.
Recent reports state that lenders are going through people’s expenses with a fine-tooth comb, including scrutinising how much and how often they splash out on holidays, clothing and takeaway food rather than relying on the Household Expenditure Measure (HEM) – a basic living expenses calculation.
Finance is very important right now and your agent should be ensuring that prior to submitting an offer, they have asked the important question if buyers have their finance pre-approved, because if they haven’t the process takes a lot longer and they may not actually the obtain the amount they thought they would.
In summary, my opinion is if you are buying and selling in the same market, then just do it. Get on with the next chapter of your life. I did it, and yep, I got less than I could of last year when selling, but also bought for less and I love it, my family loves it. Don’t get stuck waiting, and living with what if’s, look to the future and get excited!