When is the best time to buy a house?

The best time to buy a property hinges on a number of elements – driven by personal, financial and market circumstances.

Buying a home is one of the largest investments most people make in their lifetimes. It pays to ensure the timing is right, so you can select the optimum property.

The optimum property will vary widely depending on someone’s budget, property preferences, life circumstances and long term investment goals.

Having said that, across the board, there are a number of fundamental factors that must be considered for all prospective buyers as they plan their purchasing strategy. Here is a list of things to consider.

1. Forget ‘timing the market’: Property is a longer-term investment

Investing in Australian residential property isn’t like trading stocks. Some people who invest in the stock market try to ‘time the market’ – buying undervalued stocks they think will rise in the short term and selling them at the first sign of a price rise. Property, however, is a long-term investment, as the biggest gains are usually seen the longer you hold on to it.

The stock market can fluctuate wildly on a daily basis. However, while residential property in Australia has been through slumps over the last decades, the market has been on a strong long-term growth trajectory on the whole. CoreLogic shows that robust property market conditions from 1993 to 2018 saw median house values rise by 412% or $460,000.

And this long-term growth trajectory does not seem to have been impacted by COVID-19. While Australian housing market values had a small dip in 2020, property values have risen by 12.2% through the first six months of 2021.

Jumping at shorter-term market movements can be unhelpful. Working out what is the best time to buy should instead be based on the buyer’s personal situation and needs.

2. Financial timing: Do your personal finances stack up?

It’s crucial that your finances are in order before you take the plunge. While home ownership brings huge financial rewards over the long term, there’s no doubt it also presents risks for those who overstretch themselves financially.

When buying property, don’t borrow beyond your means, and ensure you have reliable income streams to service the loan over the long term.

Financial stability often comes a little while down the career path. For younger buyers that may mean they have to wait a little longer before jumping into the market, until they receive a pay rise, or job permanency, for example.

Conversely, those at the opposite end of their career journeys will need to determine whether their reduced income streams will be sufficient to support any costs associated with buying property once they retire.

Meanwhile, those planning a family will need to factor in the range of increased outgoings that come with raising children.

There are also added expenses to consider when taking on a property, which must be factored into your personal finances. For example, there are a range of fees that need to be paid when buying a house or unit, as well as ongoing maintenance costs and fees.

Explore: Upfront Costs of Buying a Home in each Capital City

Professional advice is often helpful to determine whether the time to buy is right – and if not, strategies can be developed to help you get there.

3. Have you given yourself enough time to prepare?

Research and due diligence are key to successful property purchases. You will need to give yourself an ample window of time to prepare. It may take time to find a suitable property in your price range – and competition can be fierce for good-quality homes in sought-after areas.

In a rising market it’s vital buyers are able to accurately assess a property’s accelerating value to ensure they aren’t overpaying, or conversely missing out by going too low.

There are three typical methods to assess the value of property – the capitalisation, the summation, and the direct comparison approach.

Once a potential property has been identified, it’s vital rigorous due diligence is conducted.

This includes property viewings, building inspections, conveyancing, financial arrangements and any other issues that may require attention before putting forward an offer.

In strong markets, it’s common for buyers to take multiple attempts before buying their eventual property – so don’t make rash decisions based on fear of missing out (FOMO).

As mentioned, the Australian property market has been on a strong upward trajectory for decades and will remain so for the foreseeable future.

Whether you buy now or in a few months time, the overall long-term value difference could be marginal.

Having said that, if you do find a suitable property in your price range, be decisive. Good properties are hard to find, and rise in value, so buying sooner rather than later is always optimal.

4. Have you found yourself a timeless asset?

While timing is important from a personal, financial and market perspective, a good-quality property is ageless – both from a livability and an investment standpoint.

While buying a property is naturally driven by personal preferences, it’s important to realise purchasing a home is like any other business transaction.

Demand and values for some properties can increase significantly over time – conversely other property purchases don’t age so well.

A good property purchase achieves capital growth over time.

These are typically properties that have a degree of scarcity value, underlying land value, multifaceted demand; and for investment purposes, a strong rental yield.

Typically these are established homes or units in the middle ring suburbs of major cities, which due to the factors above, have proven their ability to attract strong demand and capital growth over time.

While a new inner city apartment or rural home may make a great lifestyle choice, history shows over the longer term they may not perform as well from a value perspective.

When is the best time to buy property?

While good properties are available all throughout the year, Spring is when market activity typically peaks, and in turn when many vendors choose to go to market. This gives you a greater selection of properties to choose from. While buyers may face increased competition in Spring, the higher volumes give you a greater chance of finding an optimum property.

However, like most major life decisions, the best time to buy a property should be driven by your personal circumstances and the opportunities available to you. Taking the time to assess your financial and life situation, as well as carrying out the necessary research and due diligence, will help ensure you get the timing right.

Cover image source: Rawpixel.com/Shutterstock.com

About Jarrod Mcabe

Jarrod has more than two decades’ experience in the property industry, across valuations and investment advisory. He commenced with Wakelin Property Advisory in 2010, where he took up the role as manager of the property advisory team. In 2011 he became an Associate Director of the company, and in 2018 a Director.

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