With the 2016 auction season well underway, agents are frequently being asked when is the best time to buy, or invest in, property.
With interest rates at record lows and banks competing aggressively on home loans, first home buyers currently have an excellent opportunity to get that first foothold on the property ladder.
For those looking to purchase an investment property, it’s never been more affordable to borrow money and rental demand in Victoria has been stable for some time.
Buying a home is undoubtedly one of the biggest financial decisions you’ll have to make, and as such requires a plan and a substantial amount of market research.
It’s best to begin by establishing a budget and deciding what locations and property types suit your needs and are within your budget.
Where do you want to live?
While we often look to buy in the areas where we grew up, rent or work, budget considerations sometimes mean suburbs a little further out might need to be looked at.
It’s also a good idea to make a list of your priorities – all the things you want from your home and location, noting what are non-negotiable and which ones you would be willing to compromise on.
Research suitable homes online, attend open for inspections and local auctions and find out what these properties are selling for.
Local agents are another good source of information as they are knowledgeable about the areas they work in and can provide you with information on other available properties within your budget.
Compare the prices of the homes you view and note the differences between them – often prices will vary considerably depending on proximity to public transport, infrastructure and schools.
If your budget doesn’t stretch to include your preferred suburb, perhaps your family may be able to help you raise a larger deposit. Or you might like to consider buying a property with siblings or friends.
Investment or owner-occupier?
For those renting, it’s worthwhile finding out the purchase price of the place you are living in and if you can afford it. If your rented home is out of your budget but you have enough for a deposit in another suburb, then it makes sense to buy your first property and begin accumulating equity.
The latest REIV data shows there are still affordable suburbs, both in Melbourne and regional Victoria, with some median house prices under $350,000 in Melbourne and below $250,000 in regional Victoria.
If you’re not interested in living in a suburb where you can afford, then you may want to consider purchasing for investment.
Studio and one-bedroom apartments are an ideal way of getting that first step on the property ladder and, depending on their location, are often more affordable than houses.
An investment property is all about numbers so it’s important that you know what the gross rental yield is likely to be – that is the rental income as a percentage of the property’s value.
The ideal yield combines a low purchase price with a high weekly rental. A local agent will be able to advise of rental demand in the area and the likely rental income.
Whether you are looking to buy as an owner-occupier or investor, be sure you do your own research and take into consideration additional costs such as stamp duty.
About the author: The Chief Executive Officer of realestateVIEW.com.au, Enzo Raimondo is an authoritative source of information for the Victorian property market and is now the vision of the industry owned real estate listing portal – realestateVIEW.com.au