When Is It Best To Buy Property In Sydney
Buying real estate property is most likely the largest investment you will ever make. If you plan to buy real estate property in Sydney you will be buying one of the most expensive properties in the world. Investing in Sydney real estate is not just a question of “how much?” but also “when?”
Sydney property prices have been steadily rising since the new millennium. After a brief decline in 2009, property prices in Sydney have continued their upward trajectory. Presently, the median housing price in Sydney is estimated to be at AUS$ 780,900. This represents a 19.9% increase from 2015.
Despite modest economic growth at best, property prices in Sydney are expected to continue its ascent as demand continues to increase and supply in property remains tight. Market analysts have anticipated a property bubble burst since 2001. However, Sydney real estate property has remained buoyant.
So when is it best to buy real estate property in Sydney? Ideally with no near term target for property prices, tight-demand and lower interest rates, you could consider buying real estate property in Sydney now. Here are some factors you should consider in your decision:
1. Contract the Services of a Buyer’s Agent
Given the rise in property prices and tight demand, finding affordable property that meets your expectations will be a challenge.
Your best option is to contract the services of a Buyer’s Agent. He or she can assist you in the following ways:
- Draw up a short-list of properties
- Connect you with sellers whose properties are not listed
- Assist you during auctions
- Negotiate on your behalf
- Guide you through the process
- Attend to all required documentation
A Buyer’s Agent’s primary purpose is to protect your interest. As a real estate agent, he or she has been on the seller’s side of the transaction and can help you find the property you want at the price you can afford.
2. Review Your Finances
AUS$790,800 for a house is a huge investment for the average Australian. You will have to assess how much you can afford for a house.
Even if you have been working in the same company, you are never assured of permanent employment. If you own a business, how certain are you that you can sustain the current level of profitability? The equation becomes more complicated if you have a family and factor in work logistics.
Before finalizing your budget, ask yourself these questions:
- Will you reside in the house?
- Can you accommodate the monthly amortization?
- Do you believe you will stay in the house for more than 5 years?
The answer to these questions will determine your next course of action. If you don’t plan to reside in the house or if you don’t believe you will stay in the house for more than 5 years, you should opt for property in a more affordable part of Sydney.
If the projected cost of amortization is more than 30% of your monthly income, then perhaps you should put off buying property and rent an apartment instead.
3. Keep Track of the Interest Rates
In early May 2016, the Reserve Bank of Australia cut its cash rate by another 25 basis points. The cash rate currently stands at 1.75%.
This is obviously fantastic development for those with existing home loans and for those who plan to apply for one. The RBA cut rates in order to stimulate demand in an otherwise sluggish economy. Australia’s inflation rate is only 1.3%.
Thus, you should expect the rate to hold for some time until there are signs of life in the economy.
But again, you have to review your financials before applying for a housing loan. The RBA has tightened its policies on home loans to reduce the risk of loan default.
In line with this, you may also wish to consider hiring the services of a Mortgage Broker who can assist you in finding the best loan package based on your financial capacity.
In addition to these three fundamental factors, a fourth factor you may wish to consider is seasonal demand.
According to economists and financial gurus from Monash, Swinburne and Griffith universities, after studying 20-year data on real estate market trends, they have discovered that June is the best month for buying property in Sydney.
In their study, a home buyer can save AUS$ 36,000 by buying real estate property in Sydney in June. December also provides buyers with AUS$ 28,000 discount on property.
Fundamentally, Sydney represents a great property investment. It is considered the financial hub of Asia-Pacific with many banks and multinational companies located in its Central Business District. It houses some of the top universities in the world such as the University of Sydney and a few of the world’s best tourist attractions.
Thus, buying real estate property in Sydney is a sound investment. But just like other investments, test the waters first before you take the plunge. Despite the shortage of properties for sale, there will always be good opportunities for investment.