By Daniel Gold
It’s one of the most common questions I get asked. “Do you think I should buy now, or wait?”
As a mortgage broker it’s obviously not my place to give property or financial advice, but from a general perspective, here are my thoughts…
If you’re worried about your job security or financial position, don’t buy a property now – that wouldn’t make any sense.
Similarly, if you’re of the opinion that we’re still set for a large crash in house prices (despite mortgage deferrals and JobKeeper being extended), then I’d encourage you to stay out of the market now as well.
However if you’re confident about your financial position, and like most mainstream analysts you feel the residential property market might contract slightly before staging a recovery again, then focus your energies on finding the right home.
For a home buyer, it’s not easy finding the right house, and it’s even harder finding it within a short window (maybe a handful of months) when the experts are predicting a potential ‘bottom’.
Buying a home is most often for lifestyle and family reasons. It’s often a 10yr+ journey, it’s not like trading a share for potential short term gains.
So if you’re well placed financially, and you’ve found a great property which will give you 10+ years satisfaction, then it might very well make sense to buy now, particularly if you can ‘buy well’.
A lot of our clients have seemingly bought very well recently as there is limited competition. Properties are regularly being bought in the current market at a respectable discount to where they were trading pre-Covid.
Two final thoughts…
There is a thought that the massive amounts of Covid led stimulus, both locally and abroad, will eventually result in higher inflation, as economic growth gains traction.
Inflation tends to be a positive for home owners because their mortgage commitment remains the same in dollar terms each month, but the real cost of their commitment reduces, while prices and often wages rise.
Also, if one still believes that the long term prospects for well located residential real estate in Australia is strong, then buying a nice home to live in could result in a sizable tax-free capital gain some time in the future. Which other asset classes are available which offer that right now?
Once we supress Covid-19 it’s not hard to envisage economic growth picking up again, along with increased demand/ competition for property.
Long Property blog content provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing on the Long Property website constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.