Good time to buy a first home now or not?

Ughhh on 04/10/2015 - 18:04

Im currently in a bit of a confuffle and dilemma as to whether I should first my first home now or not. With financial reports saying there's a high possibility of Australia heading towards recession, thus higher unemployment/lower job security and fall in house market among other things, it's making me think twice before committing and taking out a loan.

Further more, I guess once you take out a loan, you have less freedom in terms of studying and/or changing (work) industry?

Anyone in a similar boat or have advice for a fellow tightbum?

Financial

Comments

  • gooddealmate on 04/10/2015 - 19:43

    Where are you based? I know that Brisbane and the Gold Coast haven't seen the ridiculous increases seen in Sydney/Melbourne and i would be a hell of lot less worried about buying in those kind of locations.

    Kind of in the same boat myself and my thinking is that i'd rather get on the market now just in case prices follow suit as they have down south.

    • Ughhh on 04/10/2015 - 22:15

      I'm in Adelaide, so less bs compared to Sydney and Melbourne, but still pricey for a first home owner imo. Wouldn't it be better to get on the market when it's even more down? Since it's at it's peak right now?

      • gooddealmate on 05/10/2015 - 09:49

        That's the thing though, how do you know it is at it's peak now? In a country where the population is increasing rapidly and the new home builds are not increasing accordingly, that generally means only one thing… More increases.

        • brownbag on 05/10/2015 - 13:23

          True, you don't know if it is at its peak, but houses are overvalued and even if you have a good reason to think that there will be more increases, it is pure speculation to buy investment properties now. Homes to live in may be a different matter but I wouldn't do it either way.

        • Ughhh on 05/10/2015 - 14:40

          Reports saying that the market (in Sydney at least) has cooled down, possibly due to the Chinese market? A user also stated similar concerns. Of course still is still all speculation, which makes it even more scary!

          I'm not sure about other states, but in Adelaide, subdivision had been pretty hot in the metro suburbs.

          I wonder if non-syd/melb cities will follow syd/melbs trend.

        • arescarti42 on 05/10/2015 - 21:52
          +3

          "In a country where the population is increasing rapidly and the new home builds are not increasing accordingly"

          This was the case in the past, but is no longer the case.

          -Population growth is falling rapidly, and annual growth is currently at only 1.35%, which is the lowest it has been in a decade.
          -Housing construction is running at record levels - we're producing more than 200,000 new homes PA at the moment, which is well in excess of population growth.
          -As a result, a number of commentators are now predicting a housing supply glut in the coming years, e.g, BIS Shrapnel expects an oversupply of 12,000 dwellings by June 2018, whilst Goldman Sachs expects an oversupply of 75,000 homes by 2017.

        • antzz on 06/10/2015 - 15:04

          @arescarti42: 1.35% of 25million is 337500. So population growth is still bigger than housing construction. Have you tried looking for rental properties in Melb / Sydney. that is how much undersupply we are with housing.

        • arescarti42 on 06/10/2015 - 16:42
          +3

          @antzz:

          The number of houses built doesn't need to be greater than the number of new people, because on average there are 2.6 people per house, not 1 per house.

          At 2.6 people per house, 200,000 new homes is enough to cater for 520,000 new people, which is way in excess of population growth.

          If rental accommodation was under-supplied, rents would be rising, but they're not, they're falling (see http://www.abc.net.au/news/2015-08-10/rents-fall-in-every-ca…)

          This is particularly worrying for places like Sydney and Melbourne, because it means that the current boom in prices isn't driven by underlying demand or strong fundamentals, it's entirely speculation.

        • Gershom on 07/10/2015 - 08:48

          @arescarti42:

          While this is correct it is misleading, because population growth, and building, is not evenly spread across Australia. e.g. Victoria has had the most inward migration of any state this year - for the first time since 1888.

        • solar on 07/10/2015 - 11:04

          @antzz: Yes, and finding a rental in Sydney was incredibly easier this year than it was 7 years ago (the last time I looked). Few people at each viewing, property on the market for several weeks with several viewings, and prices that hadn't seem to have risen in a while. Night and day compared to 7 years ago where people would actually outbid each other at a property viewing.

        • kasp on 07/10/2015 - 14:14

          @arescarti42:

          75,000 oversupply when there are 10,000,000 properties doesn't sound like an oversupply. Not crash worthy materials but should stop the double digit growth which has been nuts for awhile.

          Also the majority of that is units so I wouldn't be too worried about house prices. If I had a unit I would be pretty nervous. As the oversupply is most certainly going to be in tat area of the market.

        • noshopping on 08/10/2015 - 01:53

          @arescarti42: Can confirm that housing construction is insane right now. It is very very hard for me to find a sparky, chippies, plumber lately. Tried numerous sparkies, one called back saying he'll be free in 2 weeks. Chipie said he can fit me in 3-4 weeks time.. I spoke to all of them, including a guy who owns a factory producing aluminum gates, awnings, arbors etc and they all said this has been the busiest period in the past 10-15 years (QLD). I have been watching land releases lately and as soon as any land is released, 95% of them are gone within 2 weeks. There is not enough to meet demand it seems. It's really annoying for people who need stuff fixed in their house :(

  • DeafMutePretender on 04/10/2015 - 21:15
    +26

    Good time to buy a first home now or not?

    Depends on who you ask. If you ask any of the following groups of people:

    • Baby boomers
    • People who work in the Real Estate industry (EG real estate agents)
    • People who work in businesses/sectors related to the RE industry (EG housing materials)
    • People who have money invested in the real estate sector
    • People who own houses
    • Politicians

    Then their answer to you, will always be 'yes', regardless of whether it is true or not, regardless of time and regardless of location.

    tl;dr: don't ask anyone who fits the above description

    • [Deactivated] on 04/10/2015 - 21:24

      Who would you ask?

      • DeafMutePretender on 04/10/2015 - 21:33
        +6

        Confucius say ask yo'self because answer lies within yo'self foo', check yo'self befo' ya wreck yo'self

        Do I need a house? (EG. I have nowhere else to live, I'm sick of living in a car, I can't rely on my friend's kindness and free lodging anymore, I have a very bad relationship with my parents, my father sexually abuses me etc)
        If yes, then buy a house.

        If you want a house, then it's a case of examining your situation, weighing up the costs/benefits, and investing in a crystal ball for equal measure.

        • [Deactivated] on 04/10/2015 - 21:41
          +1

          Fair points.

          But I think he wants to buy a house.

          Regardless, are you suggesting that potential buyers shouldn't ask anyone for advice, because the "answer lies within yo'self foo'"?

    • swiggity swag on 04/10/2015 - 22:56

      Which category do you fit in?
      Baby boomers?

    • [Deactivated] on 05/10/2015 - 22:21
      +11

      Agree with you except for the home owners bit. Well, you are mostly correct, except some such as myself still think these ridiculous price rises are stupid. I'm not foolish enough to fall for the wealth effect, because I know that rising prices mean:

      • Increased council rates as they are usually indexed to land value.
      • I know I can still only afford a similar house in a similar area, ie. Have actually gone nowhere.
      • Causes increases in just about all costs of living as the increased prices tend to turn into increases in rents (eg. Retail) which gets passed on to us all.
      • Idiots falling for the weath effect start over borrowing against the house atm which also serves to drive up prices and this leverage adds risks to the economy in general, and us frugal will end up having to bail out these numpties.
      • Increases stamp duty to pay when moving via selling/buying elsewhere.
      • Significant social impacts as greater numbers of people are priced out of shelter altogether.
      • Leads to a ridiculous amount of brainless to renovation shows.
      • Leads to a miss-allocation away from productive ventures into rent seeking behaviour. Look at how most of our productive industries have been sacrificed.
      • Prices out entire generations and the generations who were able to buy at far lower income multiples (such that they could buy a house and start having a family from early adulthood one a single income) now have the gall to try to claim they had it tough and these young una are just lazy.

      And plenty more…

      Disclosure: Home owner, no mortgage, and not a raving idiot.

      • noshopping on 08/10/2015 - 01:58

        Everything goes up. Unions demand more pay for their workers and they get it. Higher wages means higher borrowing capacity, bank gives out more loan $$$, everything goes up further, people get in more debt buying stuff they don't need with their equity.. Repeat! Sooner or later, Australians no longer competitive against world market. We already have top 5 expensive housing, prices for goods, electricity… even our home loan repayments are among the highest in the developed world. Congrats!

  • rgr on 04/10/2015 - 23:02
    +8

    Why is is he getting downvotes? He raised some good points. RE Agents and investors all want you to buy so they can take a cut of your money to line their purses, they'll always have their interests ahead of yours. Furthermore, you'll have down sizers who will want to rip off young australian FH owners to increase their bank accounts.

    • Kevin07 on 04/10/2015 - 23:46
      +20

      because the downvoters are:
      - Baby boomers
      - People who work in the Real Estate industry (EG real estate agents)
      - People who work in businesses/sectors related to the RE industry (EG housing materials)
      - People who have money invested in the real estate sector
      - People who own houses
      - Politicians

      • subywagon on 05/10/2015 - 00:57
        +13

        Or people who are failing to check themselves before they wreck themselves.

      • DeafMutePretender on 08/10/2015 - 02:19

        Natch.

        Last time I checked a few days ago, my post was in the negatives but now it's well in the positive range and staying there.

  • brownbag on 05/10/2015 - 08:03
    +7

    I'd say no - don't buy a home now. Homes are too expensive and any a large portion of the price of any home today is speculation. The price may continue to rise for a year, but could also drop by much more.

  • Odin on 05/10/2015 - 12:07
    +11

    Is it a good idea to buy at the peak of a market cycle, with a looming recession, rising unemployment, and record low unsustainable interest rates?

    • Devils Advocate on 07/10/2015 - 23:22
      +4

      Actually I would refute all three points you made. Analysts (consensus, I'll find the link if you want) estimate chance of an Australian recession at around 20% in the short term. Unemployment also looks to have peaked and is expected to fall. Interest rates may be at a record low, but they are probably going down further late this year or early next year.

      I'm not saying it's a good time to buy. In my opinion property is a bigger emotional investment than a financial investment, so the best time to buy is when you are ready.

      • RocketSwitch on 08/10/2015 - 10:49
        +1

        I like this, good answer.

  • wako on 05/10/2015 - 12:30
    +7

    Start small. Dont buy your dream home straight up..

    I dont know what the markets like outside of adelaide, But can pickup a unrenovated unit from 170-220 depending on metro location.
    a 200k loan is around $1000 a month. Should be pretty safe even if the market did crash..

    The Market crashing dosent worry me because I dont buy unrealistic priced propertys.
    But if you are paying rent or going to, Whats the worry? would rather pay of someone elces house and throw the money away?

    • Ughhh on 05/10/2015 - 14:50

      I'm actually from Adelaide :)

      I know I'm definitely not interested in units or anything with body corp.

      I also know that I want some where in the north eastern suburbs closer to home (not golden grove though, too far).

      Where do you think Adelaide is heading towards?

      • arescarti42 on 05/10/2015 - 22:09
        +2

        The thing I'd be worried about in Adelaide's north eastern suburbs is the impending closure of the Holden plant there, which is scheduled to happen by 2017, and will result in massive job losses. It's not like unemployment isn't already high in SA.

        If buying a house is what you really want to do, and you can comfortably afford it (e.g. taking into consideration higher interest rates, lower income or periods of unemployment, house price falls, etc.) then there's probably worse things you could do with your money.

        For god's sake though, don't just do it because that's what your friends are doing, or your parents have told you to do.

        • Ughhh on 05/10/2015 - 22:18
          +1

          Holden is in Elizabeth, which is more North than NE. Even if the plant isn't scheduled the close, I wouldn't ever move there. I wouldn't recommend any girl to walk by themselves anywhere even in day light. Regardless, I guess Holden closing would affect other big and small industries, thus Adelaide as a whole.

          Good points though.

        • ItsMeAgro on 09/10/2015 - 15:19

          @Ughhh:

          Have a look at Detroit, USA for what happens when a bunch of auto-industry workers are suddenly unemployed on mass.

          Maybe Elizabeth won't quite become an urban warzone, but the property prices aren't exactly going to rise anywhere nearby anytime soon after that…

      • wako on 06/10/2015 - 03:13

        All the markets may drop. But they have been saying that for years.

        The over inflation cost of Adelaide is minimal compared to WA, Syd, Melb

        at the end of the day look what it costs to build a house, That cost is not going to change much.
        the land value may though

        Even still just get your 20% so no LMI
        yeh there are cheaper houses in the NE could get a 2/3 bedder out there for round same amount

        If you can live without a flash kitchen and bathroom straight up, Will save ample money. Then you can get it renovated to your liking when your money get up a bit.

        Yeh theres the closure of holdens. sure. But thoughs people still need houses to live.
        Id be more worried about the irrational oil and gas prices and suitability in that field as well as ore and minerals. There has been more jobs lost in that field in last 24 months than holden will loose and supporting company's. Hasn't affected the housing prices yet and 10,000's of miners are out of work..

        if the "bubble" did burst, Are people prepared to sell there houses at 10,000$ in loss? Some may have to due to unforeseeable circumstances,

        Overall just do it, Just dont overspend what you cant pay back, And stay variable (or part variable) and pay more than the minimum repayments(even $10 a week makes huge difference). and op to pay fortnightly rather than monthly, You wont notice you are paying 1 extra week of payment a year which in turn is a week less of interest too!(and can come in handy in unforeseeable circumstances)

        body corp has its ups and downs.. one of mine is 240 a quarter, but that includes building insurance, yard maintenance, $50 per unit per quarter sinking fund. So all exteriour is covered by the fund. Which has its benifits

        Due Diligence,
        Look at cash back mortgages as well.
        pay for your reno right there after a year or 2
        Remeber brokers are not your friend.. They are as there name says. To make you broke. Dont let them talk you into more money (so they get more commission)
        well i could ramble on for hours but damn its 3am bed time :S

      • Mamaof3 on 06/10/2015 - 21:48
        +1

        People can umm and ahhh for years and over analyse things. If buying a house is something you really want, work out your borrowing capacity (shoot me a PM and I can quickly work it out for you if you need) and this will help narrow down your search for a house within that budget. You seem pretty clear about what type of house you're after which is a good starting point :-)

        How about suburbs like Holden Hill, Gilles Plains, Windsor Gardens?? All still quite affordable (not sure what your budget is).

        Sounds like budgeting is going to be really important to you so i'd definitely look into fixing your home loan (fixed rates of 3.99% being offered at the moment) which will help you control your mortgage repayments to a certain degree. Even fixing a portion of your home loan and leaving the other part variable if you prefer.

        The hardest part is finding and securing the house so be prepared to spend alot of time house hunting :-)

        All the best :-)

  • jlapr1 on 05/10/2015 - 13:49
    +8

    Start small. Dont buy your dream home straight up.
    Sound advice.
    I recently bought a house in Toowoomba, weekly repayments are $10 more than my old rental prices. For me it was a no brainer, but depends on your circumstances.

    • fillit on 05/10/2015 - 13:57
      +2

      Yes, just keep in mind you need to pay for council rates, water, insurance etc. So there is an increase in cost compared to renting, however hopefully the capital gain makes it worthwhile.

      • jlapr1 on 05/10/2015 - 14:05
        +2

        I've factored that in before buying, I was actually travelling long distances for work before moving so it's worked out across the board for me

  • [Deactivated] on 05/10/2015 - 20:43
    +1

    It's never a good time to buy a house.

    I recommend you buy a home instead…

    PS: Sorry, I see that's what you're doing. So, yes, buy a home. It's a good time.

    • Ughhh on 05/10/2015 - 22:20
      +1

      Yeh looking to buy a home, preferably a home that comes with a free family :p

  • cashless on 05/10/2015 - 21:33
    +1

    Baby boomers
    People who work in the Real Estate industry (EG real estate agents)
    People who work in businesses/sectors related to the RE industry (EG housing materials)
    People who have money invested in the real estate sector
    People who own houses
    Politicians

    I object to that because I'm a home owner & I find all the others I'm grouped together with obnoxious company.
    Plus, I do not automatically advise anyone to buy a home.

    The way I see it is, if you're in doubt about it then it's time to sit down & have a good long think about it.
    Ultimately, if you are in doubt, then I doubt that it's the right time.

    • UFO on 05/10/2015 - 22:19
      +3

      I think you are bundled in with 'undesirable company' because people who own houses have an interest in ensuring that their properties dont have a sudden 'correction' and losing them thousands of dollars in the process.

      It's like when someone buys anything really, and then advises others to do the same. It's human nature to not be frowned upon and to garner acceptance from everyone for everything. It's why Facebook and Twitter are as popular as they are. People seeking validation. You buy a car, you want the world to know how good it is. You buy a house, same thing. "Cant go wrong with bricks and mortar!".

      No one likes to be told they've paid thousands of dollars for something and it was a 'bad decision'.

      The reality is people who have bought property in most of the larger capital cities of Australia in the last few years have definitely defied logic and sound reasoning as an astute investor. Their first argument is "There is no housing bubble. It might slow down, but it wont burst". That sounds like a gambler's excuse. Ask them what their anticipated return is over the next 5 years, and they'll look at you with doe eyes and say "what do you mean?".

      Every market indicator shows how wrong and risky it is for people to be buying at these prices, yet they continue to do so.

      Well… very soon, the banks are going to start saying no because the people that give money to Australian banks are very worried about the risk.
      And when that happens, prices will fall. Hard. No lending equals no demand (very few people buy in cash!). No demand = Increased Supply. Increased supply = lower prices.

      I have no sympathy for those riding this wave when they come crashing down onto the sand bank wondering what just happened.

      The signs have been there for years- just ignored by most.

  • UFO on 05/10/2015 - 21:38
    +1

    Firstly, are you an "investor" or a "home buyer" ?

    An investor, by definition seeks a return on investment. Feelings and desire for home ownership doesnt come into it. Will I get a good return or not?

    A home buyer, factors other points such as "wanting a house to call home", "doesnt want to rent anymore" (not that renting is a bad thing, but their head has been filled over the years by people around them telling them that "rent money is dead money"). Owning your home allows you to put your touch on it, feel like a good little worker ant contributing the hive mentality of "owning your own home", and generally feel happy about a bricks and mortar investment you can see growing over the decades to come (ignoring the interest you've paid).

    Once you can make the distinction above, the choice becomes clear.

    As an investor, google "global housing affordability 2015" then click on the first image that comes up.
    That graph doesnt make sense… but its the truth. No way Sydney and Melbourne should be so high up the ranks.

    Plenty of other investment vehicles to invest in if return is your only goal.

    If you are after your 'first home', then investment logic goes out the window. But what you can afford, enjoy it for what it is, and forget about the 'naysayers'. That house will be yours (well, the bank's… but you know what I mean), and over the long term it can provide security and something no one can take from you (well, with exception of the government or bank).

    But you need to make that determination first. Investing or Home Buying?

    • Ughhh on 05/10/2015 - 22:36
      -1

      Home buyer, but having the possibility of turning it into an investment would be ideal. Being able to rent out a room to help with mortgage would be great, but if the house is in a bad area, who's gonna rent? In addition, certain suburbs attract certain people who I certainly don't want in the house or on my street. The easiest way to avoid this (or reduce the chance) is find a better suburb, but this comes at a cost.

    • ProspectiveDarkness on 06/10/2015 - 01:54

      not that renting is a bad thing, but their head has been filled over the years by people around them telling them that "rent money is dead money"

      You disagree with the notion? It's a bit hyperbolic, but I've always felt the underlying message to be true.

      • arescarti42 on 06/10/2015 - 11:53
        +3

        It's misleading to the extent that it implies that interest on a mortgage isn't dead money.

        Bottom line is you either rent your house, or you rent the money to buy a house (interest). In many cases, it's substantially cheaper to just rent the house, than it is to rent the money to buy it (e.g. pretty much all of Melbourne and Sydney), and that's even with interest rates (i.e. the cost of renting money) at record lows.

        • UFO on 06/10/2015 - 17:02
          +2

          Exactly.

          There are many examples where renting can make you money (on the proviso you put that extra cash into a managed investment of some sort).

          If you want a good example, look at banks. They dont own hardly any of their branches anymore. If real estate is such a good investment, why do all the banks now 'rent' their premises? Because from a purely financial perspective, and in the right circumstances, renting is BETTER than owning.

          It's the older generation 'advising' children that buying a house to live in is the way to go.
          But speak to any professional in the field, and the advice is the opposite (if financial gain is the main motive).

          You have two bites of the cherry (or at least its very rare these days). A sound investment and a house to live in do not go hand in hand. Not anymore.
          Property values in Australia are already at crisis point. You dont 'double in value' like you used to.
          In other countries you can though ;).

    • tomleonhart on 06/10/2015 - 10:04

      How's about home owner, "doesnt want to rent anymore" due to land lord have been kicking tenant out every year so they can move back in ? Not fun when you have a <12 months old.

      • UFO on 06/10/2015 - 17:15
        +4

        Business is business.

        Its up to you to negotiate yourself into a property (and property owner) where that is less likely.

        Legitimate property investors want to hold on to premium occupiers. It's up to you to make yourself that perfect tenant, where the prospect of losing you makes the owner second guess the idea of finding someone as good as you.

        I have 3 under 5yo…. so I'm hearing you, believe me.

        But instead of running to the landlord for every little thing, I ask for permission to fix it myself or arrange someone at my cost. I treat the place like its mine, and the landlord loves it. Establish yourself and then on rent review ask for 2 or 3 years instead of 1. Spend money on the place. Not a lot, but enough for the owner to realise you are the dream tenant.

        The house feels like its yours, you make those little changes that improve the value or ammenity of the place, and in return you get security.

        I consider myself a professional renter. I have no intention of buying property at this point, and instead enjoy all that money spread across different asset classes all over the world. I pay what I need to for a comfortable home, and the rest of my money goes into investment.

        It costs no more to do this, but its a massive mind set change to realise that 'rent money isnt dead money'.
        It takes more control and effort to put that money that otherwise would have gone to the bank into the investment pool, but if the banks can make billions of dollars renting, then maybe so can I :).

        Oh… and one more point that may make some readers heads spin. Banks dont give a crap whether your security is bricks and mortar or an investment portfolio on a piece of paper. They will lend on both… so the leverage on a managed investment portfolio can equate or exceed traditional property.

        And unlike buying and selling houses, it doesnt cost tens of thousands of dollars to change investments, and the ability to change investments when the need arises quickly is where you can make (and save) the most money. Property is the opposite.

        It's just a different way of thinking that most mums and dads out there havent even considered, because its all they know.
        And banks love that!

        • tomleonhart on 06/10/2015 - 17:46
          +1

          I hear you. However I don't know where you live but it's pretty impossible to ask for rent review every 12 months in Sydney let alone 2-3 years. They raise my rent every 6 months where I used to live in the inner west and I didn't have any problem with that.

          However We got asked to move so often although we never missed a day rent nor asked the landlord to fix anything, 4/4 times its because the land lord wanted to move back in.

          We were sick of finding a different Childcare, changing bills address etc that we threw our hand in the air and bought a place.

          Guess what I want to say is there are people out there who buy a place not because they think "rent money is dead money" which you didn't include in your original list of home owner.

          And my money in Hong Kong / Vietnam is doing really well ;-)

  • phr0 on 05/10/2015 - 21:55
    +3

    Good question. The short answer is: it depends.
    Assuming you are looking to buy to live, then my suggestion is not to worry too much about what the market conditions are - but to look at your current situation and whether or not it's the right time for you. Look at these factors:
    1. Employment stability
    2. Income capacity.
    3. Budget decipline.
    4. Relationship stability.

    Then when you believe you tick all these boxes, go for it and look for value at the time.

    • Ughhh on 05/10/2015 - 22:48

      Employment stability and income capacity would be my main concerns and is probably the most important!

      • phr0 on 06/10/2015 - 00:07

        Definitely the most important. If they are current concerns, I.e there is some uncertainty, then buying a house now can be a disastrous decision that could set you back further. Ignore the market cycles, be smart and buy when it's right for you. Hope this helps.

  • Dollarsandsense on 05/10/2015 - 23:04

    By buying the right property it can actually generate income for you. I.e. Air BNB.

    You can buy the house that you want to live in and be an investor at the same time!

    I agree not to buy your Dream home straight away but you should buy something that you won't grow out of in a year and need to sell.

    Stamp duty is a killer and do you best to avoid paying it more than you need to. Aussies are penalized for moving houses!

    Our property mortgage is triple the last one but the interest after air bnb earnings is not much more.

  • Cluster on 06/10/2015 - 01:47
    +2

    I bought my first house (off the plan) in 2011 and it was ready in 2012. At the time there were many forum posts, doomer websites, and other sources stating that it's a terrible time to get into the housing market as the market is about to crash.

    Over three years later, the crash isn't here, my house has increased in value (confirmed), and most importantly, I have a place to live.

    My message is that there will always be someone out there telling you that you're an idiot for buying into the market right now and that you should wait for the market to fall. Apart from niche markets here and there, these people are almost always wrong.

    • tomleonhart on 06/10/2015 - 10:07

      This. I bought my first home not giving a crap if the market is going to go up or down.

      We simply wanted a place to live in where REA won't inspect the place every 6 months and landlords don't kick us out every 12 months.

      10 years of renting / house sharing are more than enough for me.

  • Rocket on 06/10/2015 - 06:57
    +4

    The time to buy is when you can afford to. Start small and build up, don't expect to buy your dream home at the beginning.

    The market will change ( up or down) over the period of ownership, but long term property has been proven to be a good investment.

    Even if the market goes down, you don't lose money unless you have to sell, but that usually is impacted by other factors. If you choose to sell/upgrade the house you buy will also be cheaper.

    Do your research, don't rush in, don't get caught up in the hype, set a budget, get the home checked out by an expert (this could save you thousands) and know the market better than the agents.

    Disclaimer: I am a commercial real estate agent in Melbourne (shops, offices & factories). I am also a home owner.

  • Hiroko on 06/10/2015 - 08:38
    +3

    If you are in a comfortable position, buy as soon as you can.
    This might come across a little harsh but I know a lot of people in your shoes who just sit there and procrastinate time and time again, only resulting in missed oppurtunities and all thats stuck in their mind is regret and people reminding them with "I told you so".
    Do your research, find a place you can call home, which you cant put a price tag on. Theres a good buy in every market, be it high or low.
    Happy house hunting.

  • zealmax on 06/10/2015 - 09:06

    This is my opinion only. When it comes to first home/owner occupied. The best time to buy is when you can afford it. Everyone needs a roof over their heads. You only make or lose money when you sell. If you can service and hold onto your property until the next peak, then you will make money. When do you know, when the property cycle has reached the peak? Nobody knows, people only realise where the peak was when property prices start falling. As for when is the best time to sell? As with the best time to buy, is when you are ready, and sell for the price you want.

  • Tarnos on 06/10/2015 - 09:25

    Your decision to post a question with far reaching circumstance here instead of under a finanicial/investment website and forum sounds like you have made up your mind and just want some "random" person to make you feel better about your decision. In that case you know what the answer is - do whatever your gut feel says.

    I'm not sure if you are only reading the financial headlines or you have dug a bit deeper into the stories. This is not financial advice, I'm just a home owner still paying the mortgage. A few things that have become sharply apparent these few months:
    - The global economy is doing badly, not just Australia. Might be a good idea to lock your money away into something concrete like a house.
    - The population rate of the world is stabilizing and no longer booming. This will affect vacancy rates, supply-demand, appreciation, etc.
    - Australia has relied their whole economy on iron ore and real estate. Iron ore has gone down badly and I don't think it's over yet. Real estate "needs" to stay afloat somehow otherwise we are headed for a serious recession. If you bet on this, good to put your money into a house.

    I'm not going to fool myself and anyone else into thinking I know where the market or economy is exactly going, but the above points should give you a better idea about your decision.

  • joshykins on 06/10/2015 - 09:56

    I'm from adelaide looking into Nth East suburbs, too.

    TTG, St Agnes, Redwood Park are the areas climbing the most in price that interest me (close to TTP public transport, beautiful trees etc), but Ingle Farm is the cheapest place to buy if you want CBD proximity (plus potential to turn into the next Lightsview, Oakden).

    Adelaide housing prices only really rise slowly or stagnate…the 'bubble' doesn't seem to exist here- though there of course if always potential to snap up a bargain if the market is cold and someone is desperate to sell.

    MY goals- buy a standalone, torrens title with 3 bedrooms and enough yard for a few rabbits and cats. No bells and whistles. In Council of TTG, as close to Ansteys hill as possible.

    All for under $300K! Entirely possible in this beautiful city :)

    • Ughhh on 06/10/2015 - 11:40

      All for under $300K!

      Just had a look at the map, the suburbs surrounding Ansteys Hill would be Newton, Athelstone, Rostrevor and Woodforde? If so, none of those suburbs are cheap! It would be a miracle to find a decent cheap place in those areas, a small land would be $300k alone!

      • joshykins on 06/10/2015 - 13:18

        anstey hill rec park is top of nth east rd, opposite the (newly refurbished and aus-wide award winning) Gully hotel.

        for 300k mark look north of NE rd (heading towards Banksia Park). These are beautifully green places with good demographic and great bus services.

        • Ughhh on 07/10/2015 - 00:08

          Yeh I think I was looking at the wrong park too. I dont go up that way often so I'm not too familiar with that area, but it sounds like I should check it out, for the view at least. However, it seems a little far from TTG interchange.

      • Rerh on 06/10/2015 - 14:05
        +1

        I reckon you must be looking at Morialta park area! Anstey's hill is where North East road goes into the Hills!

  • JimB on 06/10/2015 - 10:48
    +3

    Some good advice here. Melbourne Home and Investment Property owner for disclosure.

    Adelaide, if you wish to live there long term, then go for it.

    It's cheap enough to buy in there unlike Melb/Sydney. The repayments aren't going to be much more than rent anyway.

    Adelaide hasn't gone up enough to drastically drop. And if it did drop 20% or say $80k, it will bounce back in future.

    Property will always go up and down, but over the long term, it will be higher than what it will be today.

    If you were in a dying city/state like Tassie, then that's a different kettle of fish.

  • The Gent on 06/10/2015 - 11:05
    +2

    If you do, my advice is avoid ANY strata-titled property. It really sucks paying extortionate amounts of money for basically nothing.

  • centrelink on 06/10/2015 - 12:11

    Why don't you move further out for cheaper homes?

    • joshykins on 06/10/2015 - 13:20

      In adelaide? why bother! Can live 20 mins from the CBD for great prices

  • JayCeeJay on 06/10/2015 - 12:11
    +1

    If buying Sydney, you are competing with the crazies… the topped up overseas investors, the wealthy to middle class savvy investors and the desperate home buyers.

  • Powershopz on 06/10/2015 - 14:13

    Don't buy now (pretty hot markets). April, June, July generally have less people buying houses but also a lot less available properties. If you're lucky and do enough scouting you can find desperate sells and pick up properties for a reasonable price.

    There are so many factors to consider and you need to do lots of research before you even consider it.

    Age, job, future jobs, future schooling, dual income?, current income, current savings, home expectations, budget, kids?, lifestyle demands and expectations… the list goes on and on.

  • Kempe on 06/10/2015 - 14:22

    If you are going to wait till the time is right you will wait forever

  • Lancerx on 06/10/2015 - 18:59

    very good time to buy now if you got the money ready, the property price dropped so much this year (at least in Perth). You could easily knock 10% off the price for any established house. Overall in Australia, housing has been slow ..

    • ITveteran on 06/10/2015 - 19:59

      That may be true in Perth. You should check other places. Like a lot of people mentioned above, in Sydney there are still full of fools, desperately pour their life time finance into mortgage trap. When the bubble broken I will not show even a tiny bit of sympathy to them.

      • Lancerx on 06/10/2015 - 20:53

        You're right..Sydneysiders are crazy with their house price. Even melbourne is crazy now. I don't even dare to touch the market even during low times like this lol..You might earn big or lose big…too much of a gamble for me…as for Perth, it's just normalizing itself, standard property cycle with the significant drop in mining activities..it will pick up again eventually..I just bought myself a new lot on a bargain in fact ;)

    • Powershopz on 07/10/2015 - 06:21

      Do I really wand to buy in a place with 5 year projected growth of 0% … (profanity) no. Perth is a very bad investment at this point in time. It's going to take many many years for it to start regaining decent growth.

  • drfuzzy on 06/10/2015 - 21:06
    +2

    You should buy your first home as soon as you can afford one and not try to "time the market". A few of the many reasons:
    * You are buying a lifestyle, not a trading commodity.
    * There are significant tax advantages to owning one home (CGT exemption).
    * Housing is a long term investment and you will not be revaluing it daily. What is key is if you can afford the mortgage payments.

    Choose an investment grade property in the best location you can afford. Consider it's rental potential even if you plan to live in it yourself. You will likely eventually want to move and the best approach is likely to be to hold and rent.

    Adelaide land values are quite affordable at present, probably due to the economic situation in SA.

  • neilpatrickharris on 06/10/2015 - 21:07

    I bought a 2 bedroom apartment off the plan this time last year for 500k in Bankstown that hasn't even settled. I was shocked to find out today that developers are now selling 1 bedroom apartments near that price in the same area. I won't be surprised if prices start falling.

    • StewBalls on 06/10/2015 - 21:55

      How much are they now selling the 2br units for?

      • neilpatrickharris on 06/10/2015 - 22:13

        My one will now fetch between 575 to 590.

        I'm sure there are cheaper alternatives nearby, but people are willing to pay the premium for newly constructed apartments. I made sure to buy a new one just so I can save 35k upfront (15k gov grant + 20k stamp duty exemption).

        • StewBalls on 06/10/2015 - 22:37

          That's a pretty decent bump in value given your scenario.

          Do you mind if I ask why you think prices are actually going to start falling?

        • neilpatrickharris on 07/10/2015 - 08:16

          @StewBalls:

          I work in investment banking. Our real estate team compiles a lot of data and it seems to be pointing to the peak of the housing cycle. Auction clearance rates are down significantly, all whilst historical data suggests that growth rates of this magnitude are likely to hit resistance levels amongst other factors.

        • StewBalls on 07/10/2015 - 21:16
          +1

          @neilpatrickharris: Fair enough, a lot of that is pretty common knowledge anyway.

          Just be mindful that a natural slowdown in growth does not necessarily equate to price drops, just the kind of self-correction plateau that we are more used to in Australia…all things being equal, we don't generally get the boom & bust cycles of other economies.

    • [Deactivated] on 07/10/2015 - 12:07
      +1

      Congrats. Lets just hope it doesnt increase too much to the point your developer will take advantage of the sunset clause and cancel your contract, to resell at market price.
      That happens here and there.

      • neilpatrickharris on 07/10/2015 - 13:21
        +1

        Yea, I read an article about a woman in Surry Hills who lost her apartment because of that. My place is 99% complete and just needs council approval and some fire safety approval. Sunset clause date is in 2017.

  • StewBalls on 06/10/2015 - 21:10
    +2

    I wouldn't be asking for serious investment advice on OzBargain, do some proper research with people who have been actually out there doing it rather than those just postulating (read:whinging) online here. The majority of these assclowns shooting their mouths off are essentially clueless kids still living at home whilst studying. I'm sorry to break this to you Gen Y, but google just won't give you the complete story.

    You can guarantee they will be singing a very different tune in 15-20 years when they have a bit of life experience to base an actual opinion on.

    Your own individual circumstances should be driving your decision, not the extremely biased (and often misinformed) opinion of anonymous people on the interwebz!

    • Ughhh on 06/10/2015 - 21:44
      +2

      Indeed, any advice read on the internet/public forum should be read with caution and not taken 100% to heart. Every advice I've read is worth reading (including yours) and with each advice, I see how it relates to my individual situation now and in the future. Gaining insight from different people is probably better than keeping it all to myself, it can reveal issues that one may not have thought about before hand.

      • StewBalls on 06/10/2015 - 21:59
        +2

        That's a good philosophy…just bear in mind though, a couple of the regular members (no names mentioned) giving property advice nowadays have done a complete 180 degree turnaround with regard to their views on property ownership just in the last year or two.

        OzBargainers can be a very mercurial (read:fickle) bunch; The advice they give you today can often be markedly different to what they might offer in the very near future, and they won't even bat an eyelid over the backflip!!! ;)

  • usmanyousaf on 07/10/2015 - 01:54

    As you mention, it will be first home.
    I was on the same boat till July and I decided to buy a place. Reason being I am buying first home to live in.I have no plans to move away from Melbourne near soon and therefore, I bought it.
    Secondly, is it a good time to buy or not??? It becomes irrelevant to some extent when you decide to live in. It is not an investment mate. It is a basic necessity what we should have. I know you still want your own home property grow and i hope it will.

    Also, when you buy house, I felt I can save more money. Atleast have the satisfaction of not paying someone else mortgage.

  • 777 on 07/10/2015 - 08:38
    +7

    Having bought and sold nearly 10 residential and commercial properties and currently own a few and spent nearly 10k on real estate courses in last - my advice is to Buy when you are ready and it never too late or soon.

    I remember my first property I was so nervous if my brother wouldn't have pushed me would have never been able to buy it or . As matter of fact I have friends which were in same boat, nayers are still renting , no commitments imo still confused and some of the doers are multimillionaires and nearly most of them have paid of their principal place of residence.

    My advice

    Rule one - Never get emotional

    Do you research

    Make a list what is must, like mine tops the is less than 1k from railway station

    Check rentals ideally for residential look at 3% + return for rental and double for commercial

    When possible go for brick houses than weather board

    Is subdivision possible

    Location is really important, close to universities and colleges, hospitals, shopping centres, factories and anything that attracts masses on daily basis, you will never go wrong on rentals

    Understand the taxation system how banks operate and the deal you can get

    See your affordability, having working spouse helps a lot. Speak to your family for assurance if things go pear shape. Have insurance for peace of mind

    Always remember houses have high growth and less return than units and townhouses.

    I am phone can talk for hours pm me if interested

  • seedy on 07/10/2015 - 10:41
    +1

    I'm a baby boomer and my opinion is do not buy now, at least not in Sydney. I have never seen such as massive escalation in property prices in my life that I have seen over the past few years (even the late '80's early '90's were nothing like this. It is showing strong signs of slowing down and I believe when interest rates head northward it would not require much of a trigger to crash. Also, if you look on the horizon in Sydney at the moment all you can see is Tower cranes building apartment blocks there must reach a point of oversupply some stage soon.

    If it was me, and I really really wanted to buy a property (house + land or unit) I'd be looking at an interstate rental investment property in an are where the property prices are lowish and vacancy rates are also comparatively low. And I'd keep renting myself.

    Finally, my other bit of naive ill informed advise would be buy a house + land if possible. The real value is in the land this is the limited resource and must only ever increase in value. They can still keep stacking units higher and higher and make the units smaller and smaller but you can't change the size of the land.

    A few years ago my wife and I bought an unlivable dump. We were going to knock it down and build a new house but needed to rent it for a while. I think we spent $3000 to make it habitable rented it out for 18months then changed our minds and sold it for a really tidy profit.

    There are other options than the Holy Grail of the little suburban house with the white picket fence.

    However and as @777 said, you must do your research. Buy magazines like property investor and know what you are doing.

    • snook on 07/10/2015 - 13:33

      Seedy, I am a late boomer and I disagree.

      Talking about the western suburbs of Sydney:
      House prices doubled in 1988-89. By 2003, 14 years later, they had doubled again. 2015, another 12 years later, they have doubled again … or not.

      I buy a house for 90k in 87. In 89, it's worth 250. I sell it for 590 in 2003.
      I buy a house in 1998 for 260. In 2003, I'm offered 500 for it. I don't sell it. I value it at 450. It stays at that price until the last 2-3 years. In 2011, the house next door sold for 550. Same land, same house - an increase of 100k in 8 years!? Today it's worth maybe 850-900.

      I don't consider the suburbs to be a massive escalation at all. They have only jumped, in 2003 and 2015, because the city areas became too expensive. This seems to be the pattern. City peaks out, price hikes spread to suburbs. I have been watching city prices since 98. They have constantly risen each year, very unlike the suburbs which peak out and then totally stagnate for 10 years.

  • overlook on 07/10/2015 - 17:01

    I say if this is your home, you buy whenever you can afford. It is not like if price go up 20% in 2 years and u will sell and move away. You call it home. Chances are u probably won't even need to upgrade for next 5-10 years anyway

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