After two-years of firmly being stuck on Struggle Street, the property market is bouncing back to life and rising house prices are once again becoming a topic of debate at suburban barbecues around the nation.
The number of Aussies planning on buying a home is nearing record highs not seen since the 2017 peak, propelled by the Reserve Bank’s three most recent rate cuts, according to Commonwealth Bank’s Household Spending Intentions series.
Sales of homes by private treaty (not auction) have been rising in two of the country’s biggest housing markets: Sydney and Melbourne.
Auction numbers have also been stronger, which property analysts say is a strong indication the market is recovering.
House prices are also tipped to rise significantly in 2020, led by double-digit annual gains in Melbourne and Sydney, according to a report by analysts at SQM Research.
SQM’s Managing Director Louis Christopher predicts prices will rise by as much as 15% in Melbourne.
Price rises could be even stronger if the Reserve Bank cuts rates for a fourth time, which is the current forecast of many leading economists.
If that happens, Mr Christopher says prices could go up by as much as 17% in Melbourne, with Sydney trailing behind at 16%. Property prices in Adelaide could rise by 4%, 3% to 7% in Perth and Brisbane respectively, up to 9% in Hobart, and between 3% and 8% in Canberra.
If you’re thinking about snapping up a property before prices rise too much, here are a few of our tips on buying property.
Get pre-approved first
Before you get too caught up in the house-hunting process, make sure you actually qualify for a home loan first. After all, you don’t want to go through the heartbreak of falling in love with a property, only to discover that you’re not even eligible for a home loan.
While pre-approval isn’t an iron-clad guarantee, it’s the best indication your lender finds your financial situation acceptable and would be willing to lend to you.
Having pre-approval can give you an edge over other buyers, as most sellers are keen to lock in a sale. If you can show them that you’re well on your way to obtaining finance, you’re in a better position than buyers who haven’t got pre-approval.
Location, location, location
Whether it’s an investment property or your primary place of residence, it’s important to consider its future value. There are a range of factors that influence a property’s price potential, but its location is easily the biggest key to future capital growth.
There are many elements to consider:
The safety of the neighbourhood
Proximity to schools, medical services, shops, public transport links, major roads, entertainment, cafes
Developments or planned infrastructure (i.e. an influx of high rise apartments could drag down property values)
Median property prices in the area
The average number of people looking for property in a suburb versus the number of properties for sale (high demand and low supply indicates a booming suburb)
Compare home loan options
The home loan market can be a complex. It’s important to compare home loans to make sure you’re getting the right interest rate and features for you.
You also need to know what types of home loans are out there: interest-only loans, variable or fixed-rate home loans, investment home loans, etc.
With so many different types of mortgages with a range of features (redraw facility, offset account, loan splitting, etc) it’s important to make sure you fully understand the in’s and out’s of home loans.
View your home loan options
Get your ducks in a row
If you’ve fallen in love with a property, you can safely assume others have too.
That’s why you want to put yourself in the best position you can to secure it, like getting all your paperwork and deposit together and making sure you’re pre-approved.
Consider ‘bridesmaid’ suburbs
If you’ve been priced out of the area you really want to buy in, it’s not necessarily game over.
‘Bridesmaid' suburbs are the suburbs surrounding their more expensive ‘bride' counterparts.
While they may not be the centre of attention, they’ve still got plenty to offer as they benefit from their close proximity to their neighbours with all the amenities at a better price.
If you’re drawn to an area because of its rising value, that value could spill over into the surrounding suburbs.
Once you’ve found a property you like, act quickly. Rather than wait for the Open for Inspection, give the agent a ring and make an appointment to view the property, and be prepared to act quickly if the property ticks all your boxes.
Things move quickly in a hot market and if you take too long to make a decision, you risk missing out.
Don’t get caught up in the hype
With that said, if you have missed out on a few properties it doesn’t mean you should lower your standards just to get into the market.
If you wouldn’t buy a property when the market is more calm, you shouldn’t buy it in a hot market either.