‘It’s too expensive to buy now, I’m going to wait’
‘How much longer can this growth keep going?’
‘I should have bought 3 years ago’
These are comments we are hearing again and again. Whilst demand for property is currently high, we are starting to see some buyers scared off by the current market, deciding to wait out this rapid growth period until prices ease or go down. This decision can ultimately cost buyers more in the long run. After two consecutive years of circa 15% growth per annum in Sydney and 5% in Brisbane it is understandable that buyers might assume that this rise has to stop.
Property professionals believe that this period of growth in Sydney is playing catch up for minimal growth in the near decade prior to 2012. Whilst we are all waiting for this intense period of growth to slow down, the indicators of low interest rates, lack of stock and high demand signal that whilst the market may ease, it is unlikely growth will stop completely.
To put the current boom in perspective, Sydney house values have increased 38.8% since May 2012. This compares to the previous Sydney boom which experienced house price increases of 60.2% in the 3 years following 2000. Whilst for a 5 year period following 2000, Brisbane house prices increased by an average annual rate of 13.6%.
Recently we have seen clients come back to Prosper Group to commence a property search after previously putting the purchase on hold. This delay has been an expensive decision as currently every month not in the market is costing you money.
Let’s look at the cost of delaying your property purchase in the hope that prices ease. According to CoreLogic RP Data Home Value Index the Sydney property market experienced an increase of 5.8% during the first quarter of 2015. Therefore if you were looking to purchase a home or investment property for $1 million in January but decided to wait, by the beginning of April this property was worth $1,058,000, so waiting just 3 months had a cost of $58,000.
The current market is showing that you are better off trying to purchase your property now and enjoy the capital growth period for as along as possible, as each month that you procrastinate is costing you money. If you wait another year to buy, you will most likely be paying more for the same property, miss out on the capital growth and the rental return (if it is an investment property).
As the saying goes ‘it’s better to have more time in the market’ than to try to ‘time the market’.
If you have been procrastinating or simply struggling to find the right property, contact Prosper Group to arrange an obligatory free meeting to discuss how we can assist.