Is now a good time to invest?
Your client is ready to invest, but that doesn’t necessarily mean it’s the right time to. With the property market becoming more precarious (will that bubble burst?), it can be tricky to know when to dive in.
Australia’s property market has undoubtedly grown, with our economy performing well. It’s no secret that foreign investors are making an impact on the market—10% of all new housing purchased in the first quarter of 2017 were by foreign investors.
However some local buyers are holding off buying property due to the potential of increased mortgage rates. In a survey conducted in January by Westpac, 60% of respondents said they expected increased rates within the year, and in April, the Commonwealth Bank did increase mortgage rates on interest only investor loans.
Mid-year, a survey was conducted by Galaxy Research which found that 65% of Australians were unsure about whether property investment is viable. The main reasons for hesitation were difficulty in raising a deposit, concerns around debt and the rising expense of properties.
Part of understanding the best time to buy can also come from assessing the seasons. Winter is typically a sluggish period, with spring being the peak selling time. Warmer weather brings buyers outside, gardens are looking their best, and people are keen to secure a home before the end of year. The market quietens down again come January. So, while buying in November will give you a wider array of properties to select from than if you were looking in June, buying in winter could snare you a better deal.
Being aware of the market’s busy periods is important, but it won’t give a definitive answer on when you should invest. Other factors such as the population growth of the area you’re looking to purchase in, prevalence of construction work and number of available properties should also be taken into account.
Investors should also do their homework by reading up on Australia’s economic climate. According to the latest statement from the Reserve Bank of Australia, housing prices have been rising in some markets but declining in others, so the market varies considerably depending on location.
Set realistic goals and start working steadily towards them to prepare yourself for entering the market. Getting professional advice from a broker or real estate agent will help you understand the market based on a range of factors, rather than charging ahead without consideration.