I read quite an interesting article about the property market recently. As our regular readers will know we have recently renewed the lease on the property we are renting but I think it will soon be time to for us to finally get on the Australian property ladder and buy our first house.
The thing that worries me though is the uncertainty I have about whether or not this is really going to be the right time to buy.
The article I read looked at the market boomed in 1988 when the greater majority of investors purchased in the last months of that cycle and as a result paid the highest prices.
It seems this phenomenon reoccurs every time the housing market experiences a ‘spike’.The biggest issue is disbelief and an unwillingness to accept that the prices are capable of rising to the extent that they invariably do at the top end of each cycle.
The old tried and tested method of buying in gloom and selling in boom is one that has been proven time and again but is this a time of gloom or boom or are we somewhere in the middle? Goodness knows.
Historical records show that the real estate market here in Western Australia goes through predictable cycles and that they last between 5 to 8 years whereby the market goes from being strong, interest rates increase, building approvals decrease, buyers hold off, the market then slows, prices plateau or drop (usually only slightly) interest rates are then lowered, and the market again begins to climb, buyer activity increases substantially and then peaks and so it goes….
Unfortunately in a peaking market there tends to be a rush on property with a larger than normal percentage of would be investors wanting to cash in on rapidly rising prices and the latest boom in the Western Australian market has been just another example of what can only be described as ‘sheep mentality’.
As a consequence of a boom market it is common for folks to start talking about affordability and to state categorically that prices cannot be sustained. We’ve seen a lot of this kind of talk in the papers and on the TV. The government has been slated for letting the housing market get into its current state.
However, time and time again the cycle continues!
When the average house price of a Western Australian home was $100,000 in the nineties, people were screaming about affordability and stating that the great Australian dream of buying a home was dead forever.
The screaming didn’t stop several market peaks since the nineties or the latest boom which has seen properties in Perth and WA rise to a average price of $460,000!
Is this the right time to start looking at buying a house here in Perth. God knows! What I do know is we need to look at doing something over the next six months otherwise we’ll just sit here and watch our chances of buying the kind of home we once could afford slowly slip out of our grasp.
Even though we have lived in Perth for only 9 months now, house prices in some suburbs have continued to rise with some increasing by more than 15%!
I really wish we had planned the purchase of a property sooner. We still don’t know all of the suburbs that well but I think its time that we seriously look at buying. Even if we buy with the intention of only living in the property for 3 – 5 years at least we’ll be on the property ladder.
I’ve already written about some of the land prices here in Perth so I’m unsure if the new build route is going to be the right route for us. It would be nice to buy a more modern house but some of the ‘more mature’ suburbs also have some beautiful properties for sale.
Watch this space, we’re going house hunting :)