Ok, not sure if everyone on this forum is so bullish about property that any time is the right time to buy, but just looking for some thoughts…
I have been dealing with a house and land packager in WA and have gotten to the stage where in the next month i will be submitting my finance application for a 4 bed/2 bath $330,000 package… I have paid a $1000 deposit on a block of land (i'm pretty sure if i don't get finance i can get this back) and have paid $750 for plans to be drawn up for the house and would lose this if i backed out… So the decision to pull out would cost me def $750 but maybe $1750 if i pulled out now, but while a pain i figure it is small change compared to repayments and opportunity costs of making the wrong decision… The plan by the way is to build this one and I am not sure whether to rent it out for a period then live in it or sell it, live in it and get someone to come in and share it, or sell it if i can make a decent profit shortly after completion and use this to invest in one or two properties… so could be short or long term plan… It could also be a mixture of these options but would eventually like to get an IP once i have enough equity/savings etc…
Anyway, just saw these three stories today and have put a little excerpt from them below and just wondering if now is really a good time to buy into the market? And also maybe if housing does take a down turn will such house and land packagers or builders in general be throwing in extras/inclusions or reducing prices in the next 6-12 months to attract business?
This is apart from the fact that even if property seems to take a bit of a level off or downward turn in Australia, Western Australia is maybe 'different' to other property markets in Australia in terms of land supply, mining booms and other issues, but then if China falls on its rear end (one or two worrying signs) it could hit us even harder here. If house prices are going to be down, it might be a bit harder, but maybe i should shift from building one to buying an existing property if their prices will be falling and new home builders/land developers won't be dropping theirs? So thoughts anyone?
Perth house prices weakest in Aust
Figures released by the largest property database in Australia have revealed the value of homes in Perth fell 2.1 per cent in the three months to May. Overall the RP Data-Riskmark Hedonic Australian Home Value Index rose by 0.6 per cent in May after rising by 0.2 per cent in April. Perth was the only capital city to record a price fall in the last quarter. The index also showed home prices are up 12.1 per cent on a year ago. In Perth the cost of a house has increased 6.1 per cent compared to 12 months ago.
New home sales down 10.7% in WA
Sales of new homes in Western Australia were down 10.7 per cent in May, as rising interest rates continue to dampen demand for housing, a peak residential building body says. Overall sales slid to a three-month low at a seasonally adjusted 6.4 per cent to 8,024 units in May following a 6.2 per cent rise the month before, the Housing Industry Association (HIA) said. It was the lowest number of new homes sales since February 2010. Private house sales fell 5.9 per cent in the month while sales of multi-units slid 11.6 per cent. HIA chief economist Harley Dale said new home sales had flattened recently as interest rate rises started to crimp demand.
WA business confidence takes a hit
A new survey has found the confidence of Western Australian employers has taken a hit for the first time since the beginning of last year. The latest Commonwealth Bank – CCI Survey of Business Expectations found that although confidence in the WA economy has deteriorated, it remains high. The June quarter survey has revealed that fewer than half of the 520 survey respondents expect economic conditions in WA to improve over the next year. This is down from a record high of 63 per cent in the previous quarter. Higher business costs, including higher interest rates and wages have made employers more pessimistic.Personally, and I’m no expert or even close, I believe the super profits tax kerfuffle has affected the real estate and business markets. Confidence has plummeted as we all know WA is hugely influenced by the resources industry. Twiggy’s tantrum will pay off though, as it will lead to negotiations for a win/win situation. I work in the mining industry and can assure you business is booming, there’s more jobs available than people to fill them.
Whether or not you go ahead with THAT purchase raises many questions, and would need more details to give advice. But in answer to one of your questions, I am very confident about the WA property market and am currently looking for our next purchase. I think now is a great time to buy as there is less competition and more to choose from.
If you’ve done your due diligence and still have doubts you should probly walk away, as peace of mind is a lot more expensive than 1750!
Good luck!
HeatherThanks Heather, yeah there were a few questions i was asking there and i know no one has a crystal ball to answer all of them… For people with different strategies no time might be the right time to buy a house and land package as they use renovate and sell strategies or commercial leasing strategies etc… and if i go for a short term strategy a downturn will have more impact than if i was going to hold for 10 years… Was just wanting to get some thoughts though on people who may have been through these potential down turns before rather than just listening to HIA and REIWA spin about no matter what happens its always a great sign… but yes can be a good time to buy as long as you aren't the last mug to buy before the market starts falling…
Its good about the strength of the mining industry, sounds like i may need one of those mining jobs going begging, as the house and land package, while further out from the city than i had really hoped for, seems to be the most affordable option for me to get back into the market after not owning a house for quite a while… a stepping stone up to more properties and/or a home closer to the city, but have to take the baby steps first…
One thing, i was overseas for 6 weeks and have come back and see some homes around the southern suburbs on REIWA site being advertised and they don't even have a price range, just "Offers"??? not even "Offers above $300k" etc… that to me sounds a little bit desperate and not exactly putting a potential buyer in the right frame of mind, almost like the owner is asking people to do them a favour and say a figure???
I think some first home buyers are experiencing mortgage stress as interest rates have gone up, so a great time to enter the bottom end of the market. And because there is so much available vendors are a bit desperate. I looked at a property a few weeks ago and flippantly told the RE agent it was over priced and it was advertised 21k cheaper within 3 days! It is a buyers market so I’m rubbing my hands together!
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