We often hear the phrases “buyer’s market” or “seller’s market”, but the reality is that homes are bought and sold all year round, whether it’s a great economy or a highly unstable one. What is more important, however, is understanding when you are ready to buy or sell, and realising that every situation is unique.
Buying a home
Perhaps the most exciting yet nerve-racking experience in the property-buying game is the purchase of your first home. This is also when many of us see ourselves desperately wanting to understand what makes it the perfect time to take the leap. However, even if a purchase is not your first, there are still some essential factors to consider when deciding if the time is right.
- Deposit: Knowing how much money you have to work with can be a very clear indicator of not only when you are ready to make the leap, but what you can expect to purchase. The process of saving for a deposit can also be a great test run for the discipline and commitment that will be required once you make your purchase.
What can I afford? Regardless of how great the market may be for a buyer, if you cannot afford the mortgage repayments, it’s not a good time to buy. It’s important to be realistic about your financial capabilities, and while it may be tempting to include future earnings such as expected raises, bonuses or promotions, until they happen they are not guaranteed, even if they have been promised to you.
- Long-term plans: Being ready to buy also means having a clear idea of your plans for the future. If, for example, you are planning to start a family, consider the impact a reduced income could have. It’s important to also factor in potential interest rate rises.
- Consider capital growth: Purchasing a property with the potential to improve can give you a chance to offset future interest rises. An increase would not mean lower repayments, but it could assist if you were required to sell and downsize.
- Home owner skills: Consider whether you have the necessary skills for owning a property. Even if it’s not your first purchase, consider the features of the property and how you will adapt. A home with land, for example, may require different skills than owning a strata unit or townhouse.
The reason behind your decision to sell is a primary factor in determining when to sell. It not only gives you a required time frame, but also has an impact on your next purchase.
• Career change: New location, or perhaps a lower rate of pay.
• Change in relationship status: The start or end of a marriage.
• Cash requirements: Selling due to financial need.
• Property upgrade/downgrade: A growing family or empty nest.
• Location changes: Your neighbourhood no longer meets your needs.
By looking at the facilities and lifestyle your location offers potential buyers, you can determine the best time of year to sell. Does your area lend itself to the warmer holiday period? Can it be marketed as an investment property? Look at selling when your location’s assets are most on display.