The first few months of 2020’s clearance rates have shown that buyers don’t intend to sit on the sidelines, and why would they? With interest rates at historic lows and possibly further rate reductions to come, the cost of owning your own home has become significantly more achievable for most.
Victorian auction clearance rates recently tipped over 80 percent, compared to 55 percent this time last year. A massive change in market conditions and sentiment. Understandably, there is a level of excitement amongst buyers and sellers alike in this dynamic marketplace.
Of course, every seller wants prices to rise, but clearly some buyers are unhappy with price increases. But weren’t most sellers buyers once? Doesn’t every buyer want their property to rise in value after they have bought the property? We believe so.
Nevertheless, because prices are rising again the media has rolled out its old tune like clockwork – the old chestnut of housing affordability. There was a media report last week that suggested that in certain areas of Melbourne it was cheaper to buy a property than to rent one. This is likely to be the case in most capital city markets in Australia right now.
The answer to that question is not that difficult to understand. In these times of general affluence, the aspiration of many buyers is to live where their parents reside, or certainly nearby.
Many buyers, and in particular first home buyers, are over 30 years old. The suburbs where many want to buy were unlikely to be as trendy and expensive 30 years ago. Massive population growth especially in Melbourne and Sydney and to a smaller extent in Brisbane has seen the development of the cities push further out from the city centres and property prices closer to the city centres rise substantially.
Larger cities anywhere in the world have inner-city property prices at levels unaffordable for most new entrants to the market. It is the aspiration to live in one of these areas and in the type of property that the purchaser clearly desires which is the problem with housing affordability.
As the recent media report suggested, it is cheaper to buy than rent some properties in Melbourne. If you want to live in central Melbourne at an affordable price then an apartment is likely to suit you. And those types of properties are affordable, at least for most couples on average incomes.
If you want your own block of land and have a three or four-bedroom home with two living areas and a two-car garage, couples on average incomes can also afford those properties. It is just that those properties will be further out of town. Most likely in new estates that circle Melbourne. Unless you are extremely wealthy the purchase of a property for your home has always been about compromise.
The reality is that individual homes on their own blocks of land in inner Melbourne will not be affordable for most people. Unless you have family wealth, or you have a high income, these types of properties are aspirational. Something to work towards later in life, and not a first home.
Choosing the right type of property and their locations require a lot of thought and research. When buying any property, especially your first home, some compromise is usually required.
Before you start looking, speak to us.
We will help you to take the emotion out of the decision-making process. Our guidance will help you to avoid buying just because the kitchen and bathrooms look nice. It is important to slow down and consider more carefully the aspect, ventilation, natural light of a property and the existing or upcoming infrastructure upgrades of an area.
It will not cost you one cent more to buy a brand new property through Specific Property. If you choose to buy an established property, then we will act for you as a buyer’s advocate. The fee for this service is minimal compared to the investment you’re making.
We know most people will benefit from our experience, care, and attention. We will walk you through the process to buy. If you are not ready yet, we will help you to understand what you need to do so that you will have the confidence to move forward when the right property becomes available. This is not a race and we will not hurry you.
Remember that every property that is bought will eventually be sold and only then will you really know if you have maximised the potential returns.
At Specific Property we will help your purchase decision becomes clearer and easier.
So where should you start?
Contact us to have a chat. Come in and visit us at our office, or we can organise to come to you. There is no obligation and at the very least we will help you to prepare for what is one of the most important financial decisions you will ever make.
For information on the recent clearance rates Click Here
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