Purchase House in The Current Market (WA)

Overclocked91 on 07/09/2021 - 07:27
Last edited 07/09/2021 - 11:12

Hi Oz,

My partner and I are looking to purchase our first home. We are currently renting paying around 350pw with the usual bills etc. We have pre-approval for 500k and are looking for a smallish home but no smaller than 3x1, 3x2 would be ideal. We can move back to the rents for a year or so if needed but im torn with virtually paying someone else's mortgage when I could be paying my own regardless of covid tax and prices, we would still be paying that same amount. And, with the amount per year 18K odd for rent.

Questions for OZ:

Is it worth waiting till the market slows im thinking after 2022? (Projected)
Are my concerns justified with fear of overpaying? or will it cancel out if I wait a year or so due to rent costs?
Should I move back into the rents and re-evaluate in a year?
Are there any decent projections for the market? I found it will definitely slow but still increase by 7ish%

Let me know if I've missed anything or alternative ways of approaching this?

Areas of purchase would be: Dianella/Morley area and surrounding suburbs

Financial

Comments

  • vinni9284 on 07/09/2021 - 07:39

    Is it worth waiting till the market slows im thinking after 2022?

    Yep
    IMO once we live in a covid normal, interest rates will rise and the government will try to claw back their job keeper/seeker money back. Its a boom now so worst time to buy as they're are too many FOMO people spending ridiculous money in fear of losing out.

    It seems that many people are cashed up and spending like crazy. Look at the price of used cars? 60% more than last year and not slowing atm

    • colin5000 on 07/09/2021 - 08:14
      +7

      No one knows what's going to happen. You need to do what's right for you. I remember in 2007 people saying just wait, the market will slow/drop and people have been saying it every year since. That was 14 years ago, in the meantime life gets away from you.

      • vinni9284 on 07/09/2021 - 08:16

        Agree; we don't know. Regards to property, if you are paying rent then its best to get into your home as quick as you can. But I'm sharing my opinion although it may be wrong.
        Edit. In 2008; the GFC property prices did drop so not sure what you mean here?

        • colin5000 on 07/09/2021 - 16:27

          Yeah great point - and I said this in a response below, but I'm just saying there are some people I know who've been holding off for a long time and over a 5, 10, 20 or 30 year horizon, it kind of doesn't matter if buying is right for you at the time.

      • Drakesy on 07/09/2021 - 13:49
        +2

        But in 2013/2014 in Perth the market did drop, quite significantly.

        • netjock on 07/09/2021 - 14:14

          Was that the mining bust?

          • Drakesy on 07/09/2021 - 14:17

            @netjock: Si,
            We may see a repeat if iron ore tanks again.

        • colin5000 on 07/09/2021 - 16:25

          You're absolutely right. I'm just saying no-one really knows what's going to happen you can't worry about the noise, you need to look out for what's best for you otherwise you put your life on hold.

    • p1 ama on 07/09/2021 - 09:16
      +2

      IMO once we live in a covid normal, interest rates will rise and the government will try to claw back their job keeper/seeker money back.

      2 year fixed rates are still below variable, so the banks still think that rates will actually go lower in the next two years.

      It seems that many people are cashed up and spending like crazy. Look at the price of used cars? 60% more than last year and not slowing atm

      This is likely because car supply chains have been completely disrupted, so it's hard to buy a new car now as well. Obviously this will push people towards the used car market. On top of that, with people looking to WFH more and avoid public transport due to public health concerns, that will drive people towards cars as well.

      Don't doubt that people are cashed up and spending, but I don't think this is the only reason why things are priced the way they are.

      • vinni9284 on 07/09/2021 - 09:20

        There are other factors, Silicon chip shortage, boredom at home locked up, spending online etc..
        It wont be interest rates that will be an issue … you need a job to service your loan.

    • netjock on 07/09/2021 - 14:14

      IMO once we live in a covid normal, interest rates will rise and the government will try to claw back their job keeper/seeker money back.

      No chance.

      Interest rate rise + tax rise = double hit on disposable incomes. Government will be paying more in interest on debt. Government and tax payers will go bankrupt together.

      Look at 2009/10 crash. Interest rates went to zero and central bank rates hardly got to 1% before the stock / bond markets had a stroke.

      • vinni9284 on 07/09/2021 - 16:43

        Lets see.
        Do you think they are going to claw back via income tax only? Covid has assisted in the massive acceleration of the cashless society.

        Are you a tradie and want to do cashies? Hurry up before you're taxed before it's on the books.
        Mobile phone, GPS, location services, speed cameras, drones etc.

        … Sorry you are fined! Pay us now . We have thermal images of you using your mobile and drinking coke whilst travelling 106kms on the motor/freeway.. with no repudiation.

        Placed a garage without a permit! Pay up a fine as the council drone has taken an image.

        Parking with car sensors. Don't use PayStay and pay only cash? 0.21 seconds over 1 hours parking and pay up! ~ $120 fine.

        .. and the list goes on with as more and more tech increases via Moore's Law

        It's happening now however in time they will refine and make it impossible for you not to pay up and contest

        • netjock on 07/09/2021 - 16:51

          Sell up and move to Thailand. I am surprised not more people do. The country is getting seriously over priced.

          • vinni9284 on 07/09/2021 - 16:52

            @netjock: My brother used to go there every year and loves it! Jumps over to Laos, get another Visa and back to Thailand!

          • thrillhouse on 08/09/2021 - 07:29

            @netjock: Ah yes, perfect Thailand. Just don’t get caught with cannabis or disrespect their King and Queen!

            • netjock on 08/09/2021 - 12:01
              +2

              @thrillhouse: Goes without saying. Don't do drugs and don't insult your hosts.

              • thrillhouse on 09/09/2021 - 08:15

                @netjock: More-so using those examples to highlight some of the draconian laws imposed in Thailand, and other SEA countries that people love to rave about (ie Indonesia).

                Sure; fun place to visit (eh, personally I didn't like Thailand), but to even consider Australia in the same ballpark from a quality of life perspective is ridiculous. Affordability is one element, and I suppose as the adage goes, "you get what you pay for".

                • netjock on 09/09/2021 - 15:30

                  @thrillhouse:

                  More-so using those examples to highlight some of the draconian laws imposed in Thailand

                  Don't like the rules don't go there. Simples. Nobody is forcing you to go into your neighbour's house if it smells like cat piss.

                  • thrillhouse on 10/09/2021 - 08:59

                    @netjock: Genuinely curious to why you are still living in Australia and not Thailand? You yourself are surprised not more people are making the switch. I'd love to hear why you haven't, yet.

                    • netjock on 10/09/2021 - 11:19

                      @thrillhouse: Still working to pump up my super and once I can access it I'm off, not necessarily to Thailand. Not at age where I can access my super yet.

  • johnno07 on 07/09/2021 - 07:42
    +12

    I found it will definitely slow but still increase by 7ish%

    My first piece of advice is that if someone is telling you that a market is "definitely" going to do something, they are talking out of their ass.

    So, given that no one can pick the market, just buy what is right for you at the time - or don't. If you're buying a place to live in and your plans are long term anyway (I.e 10+ years) overpaying by 10% isn't really going to matter. You'll have achieved a significant return by having a place to live and be happy!

    Finally, only buy what you can comfortably afford - not the absolute limit of what the bank will lend you. You be significantly less stressed if you're not handing over ever last cent of your pay checks to meet minimum repayments.

    • vinni9284 on 07/09/2021 - 07:45

      My first piece of advice is that if someone is telling you that a market is "definitely" going to do something, they are talking out of their ass.

      Lets see this time. Last year, the covid cash went to businesses. Now its the individual. Things have changed. If you can't afford it then you don't spend. Everything else follows

      overpaying by 10%

      More like 50% in some places

      • Overclocked91 on 07/09/2021 - 07:56

        It was one of those REIWA style articles and was only a projection, regardless it probably will go up again the next year as apparently interest rates are on hold till 2024. I was just aiming at a rough scenario and so I come to OZ for brainstorming lol

        • vinni9284 on 07/09/2021 - 07:58

          Lets see. I'm not an expert however lets see if the pundits are wrong this time. This can be true however do you think ~50% price hike in a year is normal? However, if you can get into a property right now and not pay rent is always good thing; and if you are keeping long term, then the above poster is giving you good advice.
          I'm predicting 2023 is when you start seeing change and market correction. WA will be the first and the rest will follow

          • netjock on 07/09/2021 - 14:19
            +1

            @vinni9284:

            if you can get into a property right now and not pay rent is always good thing

            If OP is paying $350pw which is about $1400 a month in rent. Preapproval for $500k (assume loan is $400k) then likelihood mortgage payments about the same as rent. If talking about the same area and similar house then go for it.

            If market goes down and you still need somewhere to live.

            • vinni9284 on 07/09/2021 - 16:51

              @netjock: Agree! That's a no brainer. Own your own home for the same price as paying someone else's mortgage. That's for sure!

        • Drakesy on 07/09/2021 - 13:51
          +6

          Lets not forget this is REIWA which is a lobby group literally there to boost demand and FOMO for real estate.
          This is also the group that penned an article saying Perth will run out of habitable land in 10 years.

          They're just media releases with an agenda with some fudged numbers.

      • SnowDragon on 07/09/2021 - 09:00
        +2

        I was waiting for the market to slow down this year and instead prices rose nearly 30% in a year
        I paid $80k more than "asking" (which was undervalued in this market) and my house had 18 offers on it on the same the day.

        johnno07 has hit the nail on the head.

        • vinni9284 on 07/09/2021 - 09:09
          +1

          When the government is giving a cash splash 15 times more than Rudd's GFC handouts, what do you think is going to happen? At the end of the day, it's a decision you have to make whether to buy or wait. I agree its a hard one .. when will it drop? etc. I am waiting to buy a car that is now worth 50% more than 12 months ago however I am willing to wait. it's only a car and not a house so no big deal.
          No more early $10K super withdrawals (actually $20K pre and post EOFY) per individual and Job Keeper/Seeker payments. Just Covid disaster to individuals. When Australia is 80% vaccinated, the cash taps are turned off. They may offer some more incentives as time goes on but cannot pay forever … This time it's different.
          Lets just wait and see if I am another person talking out of my ass …

          • brendanm on 07/09/2021 - 10:33

            @vinni9284: What "cash splashes" have been given to individuals?

            • vinni9284 on 07/09/2021 - 10:55

              @brendanm: Where did I say cash splashes to individuals? This is a predominant reference to 'businesses'
              https://www.news.com.au/finance/economy/australian-economy/a…

              • brendanm on 07/09/2021 - 12:41

                @vinni9284:

                Lets see this time. Last year, the covid cash went to businesses. Now its the individual.

                Where is this cash?

                • vinni9284 on 07/09/2021 - 12:44

                  @brendanm: Obviously you didn't receive? Sorry if that's the case and you deserve it.Try to claim

                  • brendanm on 07/09/2021 - 13:17
                    -1

                    @vinni9284: Again, what would one claim for? Or are you just making wild accusations?

                    • vinni9284 on 07/09/2021 - 13:19

                      @brendanm: What's your point? I think we all know what's going on regarding the covid19 government payments, lockdowns etc. We hear about it 24/7. So please tell me what you are trying to say?

                      • brendanm on 07/09/2021 - 13:36

                        @vinni9284: I've said it twice. You said they are "splashing cash" for individuals. I asked how. You said I have to make "a claim".

                        A) what "cash splashes" are available for individuals

                        B) what "claim" are you referring to?

                        • vinni9284 on 07/09/2021 - 13:41
                          -4

                          @brendanm: Do you own research and stop asking rhetorical questions. You know whats going on. If you are bored, go for a walk or keyboard warrior another poster.

                          • brendanm on 07/09/2021 - 13:42

                            @vinni9284: So you are just making random claims with nothing to back it up. Well done old chap

                            • vinni9284 on 07/09/2021 - 13:52

                              @brendanm:

                              A) what "cash splashes" are available for individuals

                              • Job Keeper
                              • Job Seeker

                              B) what "claim" are you referring to?

                              • if it is referring to my recent post I am referring to covid disaster payments
                              • brendanm on 07/09/2021 - 16:54

                                @vinni9284: Oh yes of course, people will be living it up on the old jobkeeper and jobseeker, that $700 a week when you lose your job will really prop up the housing market. Sorry I didn't realise.

                                • vinni9284 on 07/09/2021 - 16:57

                                  @brendanm: Really?
                                  - Job Keeper is a top up from the employer to keep you employed. For example, if you're on $1000 p/w, your employer will give you $300 + $700 job keeper. In theory anyway but many employers were rorting the system
                                  - Job Seeker - $620 p/w with rent assistance.
                                  - Superannunation = claim $10K before + $10K after EOFY = $20K pp. Couple = $40K

                                  How much is the dole? $545 per fortnight = ~ $272.50 per week.

                                  So what pays more? Job seeker or the dole?

                                  There is a reason why that housing is pushed up!
                                  Do the math

                                  • brendanm on 07/09/2021 - 17:33

                                    @vinni9284:

                                    For example, if you're on $1000 p/w, your employer will give you $300 + $700 job keeper

                                    Yep, so you are still earning exactly the same amount as you were before.

                                    • vinni9284 on 07/09/2021 - 17:36

                                      @brendanm: Yep. That is the purpose … keep your job by giving your employer government assistance by continuing to employ you and not make you redundant = Job Keeper. … i.e keeper of the job .. not lose job

                                      • brendanm on 07/09/2021 - 17:38

                                        @vinni9284: Yes, but it is not a "cash splash", the employee does not have extra money to spend, pushing up the price of housing. They have exactly the same amount to spend, with exactly the same buying power. Not sure how this is difficult to understand. Neither job seeker nor job keeper.and increasing housing prices, and neither are "cash splashes".

                                        • vinni9284 on 07/09/2021 - 17:46

                                          @brendanm: Job Keeper - Also factor - People working from home, don't pay petrol, wear and tear on car. Insurance is reduced (if you call to drop the kms/per year)
                                          Job Seeker - Increase from $620 p/w from $272.50 per week
                                          Super payments. Withdraw super early and have $20K in your bank account per person (pre and post EOFY)

                                          • brendanm on 07/09/2021 - 17:48

                                            @vinni9284: None of those things affect house prices. People on job seeker aren't buying houses mate. Wear and tear on the car doesn't cost money.

                                            House prices are going up because interest rates are low. House prices are going up outside Melbourne and Sydney, because people from Melbourne and Sydney are trying to get the hell out of those places, and buying in places like Queensland sight unseen.

                                            • vinni9284 on 07/09/2021 - 18:13

                                              @brendanm:

                                              Wear and tear on the car doesn't cost money.

                                              Petrol is free?

                                              • brendanm on 07/09/2021 - 18:14

                                                @vinni9284: Wear any tear is not petrol. Petrol is petrol.

                                                • vinni9284 on 07/09/2021 - 18:17

                                                  @brendanm: Lol. Ok .. so lets talk about wear and tear. Car servicing is free? Tyres are free?

                                                  • brendanm on 07/09/2021 - 21:33

                                                    @vinni9284: $300 a year is making house prices go up 25%+? Insanity!

          • netjock on 07/09/2021 - 14:23

            @vinni9284:

            When the government is giving a cash splash 15 times more than Rudd's GFC handouts

            Jobkeeper to those in need (not 100% true as companies have banked it and given it out in dividends which is again spent by those who can afford to invest). I am pretty sure in the GFC not many people lost their jobs in Australia.

            I am waiting to buy a car that is now worth 50% more than 12 months ago however I am willing to wait. it's only a car and not a house so no big deal.

            Problem this time is $60bn people aren't spending on overseas travel. With the amount of lock downs I am surprised people are actually racing to buy cars.

            Biggest problem is those people who are buying in the fringes of the big urban centres in newly released land that may not be titled and years from being built. If things do go wrong they can't sell it as it isn't titled and they might not be able to settle because financial circumstances have changed.

    • pharkurnell on 07/09/2021 - 14:02

      My first piece of advice is that if someone is telling you that a market is "definitely" going to do something, they are talking out of their ass.

      APPLAUSE!!!!

      • vinni9284 on 07/09/2021 - 14:12

        So tell me … do you think a price rise by up to (and if not more) than 50% for a house in one year is normal?
        So you think there will be no market correction?

        • pharkurnell on 07/09/2021 - 14:17

          yes

          … if someone is telling you that a market is "definitely" going to do something, they are talking out of their ass.

    • porkflossbun on 08/09/2021 - 12:31

      I reckon you can start by asking yourself if this is a long term home where you plan to expand your family or investment property. If it's your forever home then are you planning to buy within a good school zone. On another note, good properties are snapped up by buyers before they hit the market so even if you want to buy the process could take awhile. My opinion is to start doing your research now and when opportunity presents itself, you have done enough homework to know it's a good deal / home you can live in.

  • [Deactivated] on 07/09/2021 - 08:55
    +1

    If you're happy with it for the price then there's nothing wrong with buying it and it doesn't matter which way the market goes. It's better than hoping it'll fall only to be priced out and paid tens of thousands in rent.

  • Stalker on 07/09/2021 - 09:15
    +4

    Tomorrow never comes… if you find the right place and can make it work financially, then I say do it.

  • rektrading on 07/09/2021 - 09:40
    +1

    People should wait to buy so that they can pay more for it later.

    History shows that real estate prices always go up to the right.

  • slow on 07/09/2021 - 10:03
    +6

    My friend has been waiting 15 years for the market to crash so that he can buy a house. In the meanwhile the house I bought 15 years ago has tripled in value

    • vinni9284 on 07/09/2021 - 10:15

      House prices fell in 2008 GFC and that's within 15 years so maybe he wanted more of a crash?
      Has your wage tripled in 15 years?

      • brendanm on 07/09/2021 - 10:35

        House prices fell in 2008 GFC

        Did they?

          • brendanm on 07/09/2021 - 13:41

            @vinni9284: You didn't read that very well did you. House prices dropped by about 3% prior to the GFC, because of high interest rates. When interest rates dropped due to GFC, house prices rose again.

            • vinni9284 on 07/09/2021 - 13:48

              @brendanm: Do you mean interest rates or house prices dropped by 3% during GFC (not prior) … 'ol chap? Are you reading it all correctly? Hmm
              .. Interest rate were at 7.35% prior GFC hit in September 2008

              • brendanm on 07/09/2021 - 17:45

                @vinni9284: Read the article. In the months prior to the GFC, house prices dropped approx 3% due to increasing interest rates. Then during the GFC interest rates dropped, and house prices went back up.

                I literally wrote this exact thing just above.

                Why would you link something you haven't even read?

                • vinni9284 on 07/09/2021 - 17:48

                  @brendanm:

                  House prices dropped by about 3% prior to the GFC

                  This is what you have written. What does that say? House prices or interest rate?

                  House interest rates dropped 3% during GFC to recover from 7.35% prior GFC

                  • brendanm on 07/09/2021 - 17:50

                    @vinni9284:

                    This is what you have written. What does that say? House prices or interest rate?

                    Read the article. House prices dropped 3% in the months leading up to the GFC.

                    Again, read the article that you linked.

                    You said house prices dropped during GFC, they didn't, they actually rose, as interest rates dropped.

                    • vinni9284 on 07/09/2021 - 17:51

                      @brendanm: They did. That's why they had to stimulate the economy by reducing the interest rates to 3% for the housing market to recover. Maybe it's written in latin?

                      • brendanm on 07/09/2021 - 17:52

                        @vinni9284: Read.
                        The.
                        Article.
                        You.
                        Linked.

                        • vinni9284 on 07/09/2021 - 17:53

                          @brendanm: Can you highlight, copy and paste the part where is said that the house prices dropped by 3%?

                          • brendanm on 07/09/2021 - 18:03

                            @vinni9284:

                            In the June quarter it fell 1.4 per cent, before falling another 2.1 per cent in the three months to September of that year.

                            It's actually 3.5%.

                        • vinni9284 on 07/09/2021 - 17:54

                          @brendanm: In that time, the Reserve Bank of Australia raised interest rates thrice, reaching 7.25 per cent and holding at that level until just before the crisis hit in mid-September 2008

                          As the central bank slashed interest rates to contain the emerging crisis – falling to 3 per cent by April 2009 – house prices started to pick up again.

                          Sept 2008 = GFC
                          April 2009 is post GFC
                          Interest rate pre GFC = 7.25%
                          Interest rate post GFC = 3%

                          • brendanm on 07/09/2021 - 18:15

                            @vinni9284:

                            Sept 2008 = GFC
                            April 2009 is post GFC

                            • vinni9284 on 07/09/2021 - 18:29

                              @brendanm: You're initial sh*t test question was this:

                              House prices fell in 2008 GFC

                              Did they?

                              Yes they did. During GFC Regardless of 3 months before or after GFC. During GFC they fell and had to lift the interest rates to stimulate growth.

                              Therefore to answer your original question YES! The house prices fell in 2008 GFC

                              Enough of taking the p*ss and enjoy your keyboard warrior exercises with another. Regardless of your rhetoric, curve-ball questions.

                              • brendanm on 07/09/2021 - 21:30

                                @vinni9284:

                                During GFC Regardless of 3 months before or after GFC

                                Haha ok, the economy was going so well they had to reign in inflation by increasing interest rates. Truly terrible.

                                had to lift the interest rates to stimulate growth.

                                They actually drop interest rates to stimulate growth.

    • mskeggs on 07/09/2021 - 10:46
      +2

      Since OP is in Perth, and prices did crash there…

  • Austin 316 on 07/09/2021 - 10:23
    +4

    Since you are buying to live in and not as an investment, the time is right when you are. No need to try and time the market as it could be years before you make the plunge. Imagine paying $18k an year in rent and if you buy a house in 3 years when the market drops (may be, may be not), you've already spent $54k in rent.

    WA is also still at the very bottom of its growth so my advise is to buy if you are ready and not wait on future predictions. As other people have rightly said, no one gets that right.

  • mskeggs on 07/09/2021 - 10:48
    +3

    Lot’s overlooking the Perth market isn’t Sydney or Melbourne.
    I think you won’t find much back tracking as the market was pretty morbid before COVID.
    I’d buy a place to live rather than rent without hesitation, if I lived in WA.

  • MarsTitan on 07/09/2021 - 10:52
    +4

    Buy. Time in the market beats timing the market.

  • tsunamisurfer on 07/09/2021 - 11:08

    Is it worth waiting till the market slows im thinking after 2022?
    Are my concerns justified with fear of overpaying? or will it cancel out if I wait a year or so due to rent costs?
    Should I move back into the rents and re-evaluate in a year?
    Are there any decent projections for the market? I found it will definitely slow but still increase by 7ish%

    No one knows what is happening in the future.

    The only thing is you can control your own circumstances?

    Can you buy a property and maintain the subsequent commitments? These are the things you need to consider.

  • pharkurnell on 07/09/2021 - 14:00
    +1

    Is it worth waiting till the market slows im thinking after 2022? (Projected)

    Hasnt this been projected for the last 35 years?

  • Falcon5856 on 08/09/2021 - 04:47
    +1

    I was in the same boat the end of last year, we just pulled the trigger. You'll never buy if you keep waiting for a downturn. A few "experts" were saying that the property market would crash after job keeper ended yet here we are.

    We had a similar budget to you in Perth and paid 490 when we maybe would've got it for 460ish 12 months ago.

  • Jbob on 08/09/2021 - 05:09
    +1

    You missed the bubble, I know people who bought in 1999 and sold in 2009 for 5x or more

  • Waltervp on 08/09/2021 - 12:33
    +1

    There is always a better time in hind sight. I say do it while you can or you'll postpone forever. Living in your own home is pretty important in Australia where tenancy is never protected or guaranteed, and sin rents will be more than your mortgage by a large margin.

    Check out the mortgage payments versus the rent and decide if you can afford it now. Remember with your own home you will have more bills like rates, insurance, garden, improvements and unexpected repairs, insurance premiums etc… but in the end it's all worth it if you are actually planning to live there.

    I even take the 5 year fixed mortgage rates (and annual phone plans…) just so I know what I will be up for, and some would never do that because interest rates aren't always in your favour. I just know that I was caught in the 20% mortgage interest rates of the 90s and lost a house, and a fixed mortgage would've prevented that. Look at the extra cost as an insurance premium and if interest rates do go up you have an unexpected bonus.

    After you buy anything that you want, never keep looking and comparing!

    Wally's words of wisdom….
    ;)

  • idjces on 10/09/2021 - 13:34

    im torn with virtually paying someone else's mortgage

    Don't be. Mortgage payments aren't the cost of owning a home, just like loan payments aren't the cost of owning a vehicle.

    Everyone I know who own's a home, constantly dreads all the time and dollar's we throw away on upkeep. The house itself is a depreciating object. Any tangible object has a useable lifespan.

    That's not to say either renting or owning is the better position. Just remember that rent vs mortgage payments, is nothing more than a marketing gimmick.

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