Buying: when is the right time?
Do you mean, when is the right time to buy, for you? Or do you mean, when is the right time to buy, for everyone? The fact is, these questions get different answers. First thing’s first: what is your personal situation? Are you in a position to buy? If so, is there a time of year that will work in your favour?
Your situation when buying:
Before you buy a house, how is your financial house looking? Clean as a whistle? Or more like that share house you partied at once and thanked your stars you didn’t actually have to live in?
- Read about all the sticky questions a buyer may have. This will give you an idea of the sorts of things you need to have in order before buying. For instance, how much do you want to put down as a deposit? 5%, 10%, 15%, 20%? Anything less than a 20% deposit often requires taking out Lenders Mortgage Insurance. Remember this insures your mortgage provider against defaulted loans, it does not insure you against any outstanding fees you owe insurance companies.
- Once you have your deposit sorted, you then need to factor in all other costs associated with moving. These include consultancy fees (solicitors, surveyor, financial planners etc.), home insurance if you choose to take it out, stamp duty costs and application fees.
- If you have your deposit sorted and you have the costs of moving factored in (and literally, the cost of moving all your stuff). The next thing to consider is whether you can afford your lifestyle once you’re all moved in. Can you afford mortgage repayments, new appliances, food, bills and any unforeseen costs such as repairs to the building? Will you want to renovate in the future? If so, account for 5% of the cost price for renovations.
If all of these things are going to outweigh what you can afford, then that’s ok. Renting in the short-term has still been shown to be just as good an option, leaving you with more capital to put in other short-term investments. But if you have budgeted for these things and you’re ready to go, then when should you do it?
A buyer’s season
What month is best to buy? It depends on the state and city as well as larger market trends on whole.
A 2015 joint study by three universities looked at the best times in the year to buy and the best times in the year to sell. One example of their findings was that buying in Melbourne (for both houses and units) was cheapest in May. With prices 2.52% lower, this was a saving of over $20,000 on median house prices for 2015. It isn’t wise to assume that these figures will stay the same. The study acknowledged that the market is more unpredictable than it was before the Global Financial Crisis. Yet buyers can look at universal trends that may give them a financial edge. Think about buying in June when sellers are trying to clear houses before the end of the financial year. This also goes for the period before the summer holidays for the same reasons. Weather is also a driver of fluctuations between clearance rates and property values. Spring is traditionally the busiest season for both buyers and sellers, allowing buyers to make the most of quieter periods.
More important than what time of year it is or what the weather on auction day might be is whether or not you know the market. The property market is ever changing and, as a buyer, it is something you need to know like the back of your hand. This does not mean a tertiary-level awareness, it simply means staying on top of the news about markets both nationally and in the areas in which you are looking to buy. National trends are always reported and can give you a strong idea of the best time to buy, while real estate agents can give you the most valuable information about your local markets and whether they are favouring vendors or yourself.