Should you wait for the market to drop further to buy your first home?

The Australian housing market has been in a steady downturn over the last year. CoreLogic data shows that it’s seen a cumulative 1.9 per cent value fall since September 2017. While some experts are warning that the market could continue to worsen, first-time home purchasers may be wondering if these conditions make it a good time to buy.

One obvious benefit of buying in a dipping market is that prices are lower and there’s less competition. Plus, for first home buyers, there are current government benefits like the First Home Owner Grant and the First Home Super Saver Scheme, making the climate even more appealing.

But is it smart to invest in a home when things could get worse? Here’s a look at key considerations in today’s housing market.

Property value: Location is everything
Home buying may decrease overall when the market sees a downturn. Potential purchasers may become worried that their home will decrease in value after they buy it, instead of increasing and thus becoming a worthy investment. Keeping this in mind is a good idea before making the decision to buy a first home.

However, Smart Company suggests that the more important consideration is to factor in location. Do your research on how the neighbourhood and city you’re looking to buy in has performed and what experts are predicting. Get as specific as possible about what individual markets are doing, not necessarily the entire country.

For example, Melbourne and Sydney have largely driven down the overall market with their declines this year. Hobart, on the other hand, has seen growth in its market since January 2017, CoreLogic reports.

Lending climate
While home buyers may believe that it’s easier to obtain a home loan in a falling market, there have been regulations instituted over the last year that may make it harder to get approved in some cases. Investigations into spotty lending practices in the country have begun, and borrowing might see major cuts because of them, Bloomberg says.

However, Business Insider reports that more people in Australia are getting loans from non-banks, a growing trend after the Australian Prudential Regulation Authority (APRA) implemented restrictions on interest-only loans in 2017. So, there are still options even with the increasing bank regulations.

Don’t try to time the market
Perhaps more significant than timing the market is timing your family’s own personal needs. The market is always going to fluctuate, as is any investment you make. So, ensuring that you are fully prepared to buy a home is more important that springing into action when prices fall.

To better understand your home loan options, speak to a member of our team today.