Source: Sue Williams, Domain Reporter
t's the million-dollar question facing buyers across a range of price brackets: should you buy in winter or wait until spring?
From September, there'll be a lot more properties on the market but there could also be more competition against a backdrop of rising prices.
We asked some of our favourite experts for five reasons to act now.
Prices are expected to rise
Analysts are saying we're close to the bottom of the market, if not there already, with prices set to rise again from spring onwards.
“The seasonal high for prices isn't far away, in October and November each year,” says Matthew Hassan, Westpac senior economist.
AMP Capital head of investment strategy and chief economist Shane Oliver agrees. “If prices go up from here, that's an argument to get in early,” he adds.
Domain economist Trent Wiltshire is already predicting a 2 per cent growth in prices for both houses and apartments from the end of June 2019 to December 2019. He's predicted a 3 to 5 per cent rise for houses in 2020, and one of between 2 and 4 per cent for apartments.
“We're not expecting a big rebound, but there will be modest price growth, and it'd be good to buy before that kicks in,” he says.
Borrowing has become cheaper
The Reserve Bank's second cut in as many months to the official interest rate, to a record low of one per cent, means mortgages are now cheaper to service.
“Buyers will also potentially be able to borrow more too now that APRA [the Australian Prudential Regulation Authority] has reduced the serviceability requirements for borrowers,” says Mathew Tiller, head of research at LJ Hooker. The change means banks will test customers' ability to repay at 2.5 percentage points above the current rate, rather than the previous 7.25 per cent.
“Together with the price declines, it means Sydney property is more affordable than it was 12 to 18 months ago.”
There is less competition
While there's less stock on the market in winter, there's also less competition for it. “If you can get the right price for a property, then that's always the right time to buy,” says Justin Doobov, managing director of mortgage broker Intelligent Finance.
“In spring, we see a lot more people coming into the market to buy which can help push prices higher. This year, we could also see investors coming back in, knowing they can earn a rental return of 4 to 5 per cent rather than 1.5 per cent from cash sitting in the bank,” he says.
And, points out Oliver, “While there is less stock now, there are still lots of new apartments still coming onto the market”.
Vendors are extra keen to sell
Sellers know the winter market is traditionally sluggish so if they are selling now, it may mean they have to. “You stand a good chance of picking up a bargain,” says Hassan. “Sellers might be much keener to meet you halfway on price.”
A strong negotiating position could be a huge advantage. “You might know that something similar sold before for $600,000 but you might be able to knock them down to $550,000,” Doobov says.
“We always advise sellers to sell before they buy, but some didn't do that and ended up selling well below the price they expected because they then needed to sell quickly. In those kind of circumstances, buyers can pay 10 to 20 per cent less than market value.”
More market certainty
Tax cuts are on their way and election jitters are over. If you study price trends, then you can be ready to pounce on an opportunity.
“Even if you're not sure you want to buy in winter, start looking now so you're ready,” says Doobov. “If you get to know the market and educate yourself, you can jump in quickly whenever you find something that's right, and know it's good value.”
If you're looking to upsize, downsize, purchase your next investment property or first home, please contact our team today on 02 9960 1066 or enquiries@pkproperty.com.au.