Buyers agent and chief executive of Propertybuyer.com.au Rich Harvey has seen some “unfortunate horror stories” in the past two years,after prices were forecast to deflate as the pandemic hit. Instead,prices fell by single digits and then reversed.
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In one example,sellers two years ago thought they got a great price and could wait to buy back in,but ended up waiting too long and are faced with buying outside of Sydney or buying an inferior house in the same market.
“They’ve done themselves out of half a million to a million dollars of equity,” he said.
Rose&Jones buyers agent Stuart Jones remembered a vendor on a high salary who sold in 2015 and rented,banking on a correction.
“By the time the market corrected in 2017,he’d priced himself out,” he said.
“He’s still renting now… lots of people get it wrong.”
Property takes longer to transact than shares,as buyers usually need to get home loan pre-approval,find a home they like,go to auction or make an offer,and if they miss out to a competitor,repeat the steps. Within a few months of searching,prices might have turned.
For a long-term purchase such as a family home,likely to be held through a number of market cycles,Mr Jones urges clients to focus on the asset,not the timing.
“Buy the best possible property you can with the budget you have,” he said.
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For example,a home that is light,with an efficient floor plan,with parking,near amenities such as schools and parks,in a low- or medium-density neighbourhood that has hard infrastructure offering access to the city centre even from suburbs further afield.
Mr Harvey adds a vote for buying a home that will grow with a growing family,or a low-maintenance property for a downsizer. Avoid homes on a noisy main road or next to a petrol station,he said.
Mr McCabe recommends a home with strong underlying land value and a good orientation. For investors,he suggests a property that will suit the demands of renters,regardless of the owner’s likes or dislikes.
And what of the opposite risk:purchasing at the top of the market on a low deposit and being forced to sell shortly after into a falling market due to unforeseen hardship such as divorce or job loss?
Markets such as Perth,where house prices peaked in 2014 and have not yet recovered,are a reminder that property prices can fall. And banks now insist borrowers plan for higher mortgage repayments once rates rise.
“The best way to insure yourself against that risk is to buy well,” Mr Jones said.
For example,he cites the difference between a family home close to transport and one further away,or a five-bedroom home with four children’s rooms on one level and a master bedroom on the ground floor compared to a five-bedroom home with three upstairs and two downstairs.
“When the market capitulates,you’ve got a saleable product,” he said. “There’s always somebody who’s trading up or trading down.”