Should you sell or buy first Melbourne vendors struggle to decide in rising market
Melbourne’s rapidly rising property prices and the insatiable demand from buyers over a diminishing pool of homes for sale has left those looking to sell and buy in the same market with a very difficult choice.
Do they sell first, ensuring they know what they have to spend but take the risk they might not find another home before prices rise further?
Or, with so few homes for sale, do they buy first to ensure they have a home to move to and hope to sell quickly before they need bridging finance?
The buy-sell dilemma is not a new one, but it has come into sharp focus in Melbourne’s post-COVID-19 lockdown market, as buyers rush to upgrade or downsize their homes against a backdrop of rapidly rising prices and not enough stock.
Domain senior research analyst Nicola Powell said the property market had changed dramatically since last year.
“At the start of this year, really from the end of last year, sellers and buyers have been in a different position because the market is rising rapidly,” Dr Powell said.
“If you sell first before you purchase, what many may now be finding is that the market is running away from them and gaining in price.”
With house prices rising substantially sometimes in mere weeks, buyers now had to borrow more money to buy after selling or look at bridging finance they could not afford if they had bought first, buyer and seller advocate Wendy Chamberlain said.
She had already had to advise clients to either borrow more money or rethink where they wanted to buy because of rising house prices.
She advised one client, who had already sold their home and wanted to buy into a school zone in Ringwood, that they would need to borrow $300,000 more because the market was rising so rapidly.
Affordability was an issue for people who sold their home before finding another, especially if they had nowhere to go after settlement.
“Some people can’t afford to rent if they can’t buy a home,” Ms Chamberlain said. “And, if they have a 30-day settlement it can be too tight to find another property.”
Finding a home quickly was not always possible, buyer advocate Cate Bakos said.
“Some vendors are selling and getting on with searching and finding they’re not being successful,” Ms Bakos said.
Buying a house was taking longer than usual in the tighter Melbourne market. In a normal market, searches for the right property could take anywhere from three weeks to three months, she said.
It was now taking up to five months in Melbourne’s booming market.
Empty-nesters Alan and Melissa Wesson feel very lucky they have somewhere to live if they cannot find another property when they sell.
The couple listed their family home of 20 years, in Surrey Hills, in Melbourne’s eastern suburbs, this week.
They hope to downsize to a smaller house or townhouse — and while they are expecting stiff competition from other buyers for their next home, they also own an apartment in the area, too, which will take the pressure off having to house hunt in a rising market.
“We’re not overly concerned about it,” Mr Wesson said. “We’d like to get a reasonable price for our place and find another that ticks all of our criteria boxes. We would be prepared to wait for that.”
Barry Plant chief executive Mike McCarthy said not every seller was in a similar lucky position as the Wessons, and many were feeling the pressure.
“We are seeing nervous sellers, especially where they haven’t already bought and don’t have other arrangements of where to live after settlement,” Mr McCarthy said.
“People are looking to buy first, on longer settlement arrangements to give them time to find a home,” he said. “They buy something on 90-day terms rather than 60 and then call their agent straight away and say ‘I’m ready to go’ with a 30-day marketing campaign and 60-day settlement, they hope to be able to match up the timeline.”
But those looking to buy and sell shouldn’t lose hope.
Mr McCarthy said he expected there would be some relief for frustrated buyers and sellers.
He was expecting more homes to come to the market over the next few weeks, particularly after the Easter break in April.
“In the last few days I’ve heard from our offices there’s been a big increase in the number of [pricing] appraisals they’re being asked to do,” he said. “It’s doubled, so we’re expecting more homes to come onto the market.”
Ref: MELISSA HEAGNEY | SENIOR JOURNALIST (on 07 Mar 2021). Should you sell or buy first Melbourne vendors struggle to decide in rising market. Retrieved from https://www.domain.com.au/news/sell-before-you-buy-the-dilemma-facing-melbournes-property-market-1032085/.
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