So when is the best time to buy?

It’s a well-accepted theory that buyers shop in spring right through to Easter – and then the cooler months in Melbourne take hold and buyers slow down – but is this really what happens?

The correct answer is that the season is only one tiny factor in what dictates property buyer and vendor behaviour. Economic outlook, suburb, location, government grants, government change/elections, sporting seasons and holiday periods all play a part in determining market sentiment. Sometimes the perceived sentiment is quite different to reality too – so this article aims to dispel the myths and give readers insight into what really constitutes a good time to buy.

Unlike the market many buyers have faced over the last seven years, the general state of the Melbourne market is arguably quite stable. Over the last three years we’ve witnessed generous state and federal first home owner grants, experienced the GFC (and the tightening on lending policy that accompanied the ripple effect of the GFC), we’ve ridden the lows of interest rates and we have all seen Melbourne’s record breaking growth for 2009/2010. But for some, the strong growth during 09/10 was not a welcome period. Buyers were bidding strongly against each other, first home buyers were determined to buy before the deadline, and properties seemed to be snapped up before they even got one week on the market.

Was there any wonder why buyers dreaded buying?

If we fast forward to today – we have relatively stable interest rates; and based on historical levels, today’s interest rates are not considered high – they are actually close to average. We have a property market now that, in comparison to a year ago, is presenting opportunities for buyers all around Melbourne. There are considerably less buyers; hence less competition. To compound this – we have rising rents, a much publicised housing shortage and a steady flow of migrants into the country. What’s more – we have low unemployment, strong incomes and a slightly more relaxed lending environment when it comes to maximum LVRs.

If it hasn’t become apparent yet – now is the best time to buy. Take advantage of low buyer competition, good stock levels, lower auction clearance rates and a steadily increasing prospective tenant outlook. Don’t make the mistake of waiting until the market picks up speed again to make your move. When it comes to securing quality property, the time is now – 2011.

As we say to anyone who is carefully considering property ownership (whether it be owner occupied or investment property), if you are truly concerned about property values holding in the short term, you should consider these two points:

Look at Melbourne’s historical capital growth trend for the past 30 years. Any property purchase should be made with ‘buy and hold’ firmly in mind given that the medium to long term trend is very positive. If you are concerned about micro/short term capital growth contraction, remember that the value of the property at any stage is on paper only while you hold that property. The price you have paid for the property has taken into account your affordability, loan repayments and rental vacancy rates (for investment properties). And for buyers who have concerns about exposure to interest rate movements we always advise them to talk to their mortgage broker about fixing their loan(s).