For those sitting on their eggs, waiting for the housing market to settle, the change might not come as soon as you hope.
For this year, Consumer property advocate Kevin Young believes it’s a buyers market, with a slight dip in prices not predicted to last long.
“2013 could be the right time to buy your house or add a new property to your portfolio,” he says.
“Currently, affordability is good, supply is short and demand will soon be strong, which will lead to price growth.”
Buying now rather than renting is also a better idea he says, since the sky high price of rent already isn’t going to ease.
“Rents too will increase over the next two years due to the short-fall in housing construction. Making your next purchase now means you can get in before the masses catch on,” he advises.
Mr Young believes property prices will increase as Australia is experiencing a property supply short-fall as the current rates of housing construction don’t meet our needs.
He estimates that more than 40,000 more dwellings need to be built each year to accommodate the demand. He points that interest rate cuts should be used to boost the housing construction sector.
“The recent interest rate cuts weren’t just designed to ease the everyday living expenses of mortgage holders, they were also designed to boost a flagging housing construction sector, which the government is looking to stimulate to compensate for the downturn in the mining sector,” he says.
For those who want to enter the property market this year, here are a five tips to help you make the right financial decisions.
1. Know what phase the property market is in
The property market has four distinct periods; Boom, Slump, Stability and Upturn. The current phase is Stability, which is a short-term gap between Slump and Upturn when market variables rebalance. It’s also a good time to buy, as house prices are not yet increasing as they do during the Upturn and Boom phases.
2. Consumer confidence
Consumer confidence is said to be improving with the recent interest rate cuts, but is still relatively low, given other economic factors at play. A great barometer on consumer confidence is retail spending. In general when this goes up, people are said to see better economic times ahead. This makes early to mid-2013 an ideal time to buy, as property is affordable, while current house prices are soft and demand lags.
3. Supply and demand
Housing construction supply is low and the constraints on the residential construction industry show no signs of abating. “There is a first-home buyer’s grant in place for new dwellings, which will result in some housing construction improvements in select areas, but without significant overhaul of the funding and approval processes for the building of new dwellings, supply is likely to continue to fall short in 2013,” continued Kevin.
4. Interest rates
Further rate cuts are predicted in 2013. But while lower interest rates will be positive for consumer confidence, Kevin forewarns unlike years past, this factor alone won’t increase property prices in 2013.
5. Get help
Understanding the state of play in the property market requires expertise, as does making the right property investment. While there are many professional advice options to choose from, always look for people who have your interests in mind, like a buyers’ advisory group, who have a network of trusted specialists to assist you at each stage of the property purchase and be aware of those who represent property vendors.