When is the right time to buy a house?

For most Australians, owning property is high on life’s list of priorities, but when is the right stage to take the plunge?

Michelle May, a Sydney-based property flipper-turned-buyers’ agent, says it all comes down to personal circumstance. She says there’s no perfect time to buy a property and no such thing as being too young or old.

May explains the fundamentals that come into play when deciding when to buy.

1. Income now and in the future

A history of a stable, regular income, with the prospect of the same in the future is a must-have.

May says without it, the banks simply won’t lend to you, or (they will, but) at a much higher rate than desirable.

2. Your life stage

If the need for stability is rising, buying might be a good idea, May explains.

Having your own place means you can have that purple bathroom you’ve always dreamt of. When you’re a tenant, you are at the behest of the landlord, who may up the rent regularly, stop you from making changes and also turf you when it suits them, May says.

3. Growing family

The imminent arrival of children can have a big impact on buying desire. “(It’s about) the need to create that family home for their child, where memories are made and pictures are hung on the wall.”

Don’t try to predict the market…

Never choose to buy because of what someone says, which may or may not happen with the market.

Even the experts cannot agree on what is going to happen and trying to predict the bottom of the market is a waste of time. This is about buying your home.

If you are ready to buy, then buy today, as having your own home is a long-term exercise and any short-term rises and dips in the market really don’t matter. If you find the right place, do your research and buy it.

The most important factors for potential buyers to consider are their ability to actually pay a mortgage and a willingness to compromise, which is almost always required. Be realistic and honest with your budget; not giving your broker the full picture of your lifestyle habits and expenses will only come back to bite you, as you will end up eating baked beans for the next 20 years. No home ownership is worth that. 

It’s usually the case that your rent can afford you a nicer and bigger place than your mortgage will. This is sometimes a hard pill to swallow for people who first enter the market to buy.

So, be prepared to concede on some things.

While every buyer and situation is different, May offers advice for people at different life stages, from single millennial to retirees.

The single millennial

May says the sooner you can get on the property ladder, the better, as it can set you up for life. Her advice is to go at it alone if you are in a stable job and you can perhaps get help from your family. Every dollar you sink into your property now will reward you in the future, and while it may sound boring and responsible, if you are a person wanting a family for the future, you will probably never have as much free time or free cash as when you do prior to having kids.

The couple buying a first home

Be conservative and go for quality rather than quantity.

If you have to choose between a house on a main road or a townhouse in a quality street, I would choose the townhouse, as they will perform better in terms of capital growth and will give you more options for the future if you decide to upsize. Also carefully consider the impact of losing one income if kids are part of the plan.

The retiree

Being a retiree means borrowing from a bank will be restricted and you will probably only be able to use the money from your last property sale. 

“In which case, I’d say, enjoy it! Buy what you want, but think about the fact that this property needs to also work for you when you are perhaps less mobile. Think about strata levies too. 

Source - Re.com.au