When you are ready to settle down because you have a family or because you found the perfect area it almost always makes more sense to buy a home rather than rent one: as a tenant you might have more flexibility and freedom but what you spent on rent could have been spent on paying off a house and acquiring a potentially lucrative asset.
Home ownership is one of the easiest ways for people to accumulate personal wealth. If you make a well considered purchase this occurs as the value of the property appreciates over a number of years and the size of the outstanding home loan decreases month by month. There are also several relatively easy ways to accelerate this process, such as paying an extra amount off on your bond each month (see more about payment strategies here).
Home buyers can also maximize the possibility of value appreciation by buying in an area where their target
price is in the lower tier of current prices in that area. That way, the price will have less vulnerability during any
downturn, but higher-priced homes will help pull its value up during “hot” markets.
There are of course those who believe that the real estate market is not yet at the bottom of its current cycle and
that they should wait for home prices to become even more negotiable than they are at the moment. But the
truth is that even property experts can’t really time the market with any degree of precision, because there are
just so many factors to take into account.
The reaction to major economic or political events, improvements or declines in consumer and business
confidence, interest rate increases or decreases, crime, employment, supply, demand, migration, urbanisation
and densification vary literally from suburb to suburb, so consumers should rather set their own purchase agenda
and buy when the timing is right for them.
To those who are avoiding buying now because they know they are going to have to move again in a year or two,
our advice is to make maximum use of this time to save a substantial deposit for a home in their new location.
However, those who know they are staying put should, we believe, be buying as soon as they can possibly afford
to do so, because overall market conditions do favour buyers at the moment, in that there is a surplus of stock for
sale and that it is relatively easy to obtain a home loan.
We can report that the banks are currently keen to lend to home buyers, as evidenced by the fact that approval rates at Mortgage Max (our partner and one of the largest originators in the country) have reached 80% of the bond applications submitted across the last six months – and that almost two thirds of those applications are being converted now into formal bond grants (this means that the loan was both approved and taken up). This is a significant change from 2017 where approval rates were close to 50%.
Besides the general improvements in the market our year’s of experience and dedication as well as our ability to submit to multiple banks ensures that we are able to negotiate the best available interest rate for every client – and in the process enable them to significantly reduce the total cost of their home over the life of the bond.