A record number of Australians had been planning to buy a new home before the COVID-19 pandemic hit, new research from one of the world’s largest banks has revealed.
Nearly one-third of those surveyed had been considering upgrading, downsizing, shifting location or getting into the property market for the first time, according to Rabobank, in what would have provided a massive boost for the economy.
And experts advise that, if potential purchasers aren’t too adversely affected by the coronavirus crisis, now could be an excellent time to continue with those plans.
Prices are falling and supply is increasing which creates more opportunities for bargains, as interest rates remain low and dissatisfaction with current homes is rising as a result of prolonged isolation time spent in them.
Glenn Wealands of Rabobank said the bank had been conducting its financial health barometer of the country for over a decade.
“But in the poll, we conducted in the first quarter of 2020, we found a record high number of Australians – 29 per cent – citing the intention to buy a new home in the next two years,” he said.
“That eclipsed the previous high of 24 per cent in 2016 when house prices went up by 15 per cent.”
The engine room for much of that confidence, the report found, was Generation Y, with 32 per cent of people of those surveyed aged 24 to 37 considering swapping homes or buying one for the first time. Wealands said no one yet knew how that position would have changed with the coronavirus crisis and so many losing their jobs.
“But I think there’s definitely a lot of people exhibiting really good financial management leading into the pandemic and having a sizeable deposit saved so were aware of what they could afford,” said Wealands, head of client experience at Rabobank. “People are now seeing good opportunities in the market and perhaps also feeling FOMO.”
With so many people previously ready to pounce on the market with deposits put away and research on what to buy completed, then there’s still room for them to act if their finances haven’t been derailed by coronavirus, says Nerida Cole, managing director of Dixon Advisory.
She reports a lot of inquiries from people ready to buy, but asking if now is a good time. “That all depends on someone’s job security,” she said. “People have to be honest with themselves about their jobs and their industry and be a little bit cautious about making a huge commitment if there is concern around their jobs.
“The good thing now is that it is a buyers’ market and if vendors aren’t coming to the party on price, then they can walk away as there’ll be another property around the corner. A lot of people really want to sell now, whether investors wanting to get out of the market or people under financial pressure themselves, so there are good opportunities.”
Many buyers can now negotiate with banks for better terms or rates, especially if they already have a good deposit saved. Cole recommends always having 20 per cent as, if the market falls further, and worst-case scenarios being outlined of a 20 per cent fall in price, buyers don’t want to be out of pocket.
They should also consider moving deposit savings to cash to enable them to seize opportunities quickly.
“Purchasers are definitely now in the hot seat,” Cole said. “Particularly when the eviction moratorium ends, we’re likely to see even more property coming onto the market for sale. As long as you do your due diligence, you’re the one in control.”
Justin Doobov of Intelligent Finance agrees that now is a good time to buy, and especially to upgrade to a more expensive property.
“People have spent a lot of time in social isolation in their homes and are now realising the shortcomings of their homes, and want to move into something better,” he said.
“Now is a good time to be ready to buy because there’s going to be a lot of property coming onto the market that people need to sell as they’ve lost jobs or are under financial strain and will be ready to make discounts. But my advice is always to sell before you buy, so you don’t end up one of those desperate sellers.”
The Rabobank research points to reassuring signs of pre-COVID-19 financial health within the community. It found that 73 per cent of people said they lived within their means, 66 per cent had a long-term financial plan and 62 per cent regularly reviewed their finances. Eighty per cent said they were financially comfortable – up from 2019’s 79 per cent.
“With perceived demand having been at an all-time high, now is definitely a great time to take stock and review how circumstances currently are, and whether there are opportunities,” said Wealands. “It’s always important to be on the playing field and actively reviewing finances rather than a spectator just wondering when the pandemic will subside.”
Ref: SUE WILLIAMSDOMAIN REPORTER (on 05 May 2020). Why now could be the right time to buy a new home, according to experts. Retrieved from https://www.domain.com.au/news/why-now-could-be-the-right-time-to-buy-a-new-home-952600/
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