Is it too soon or too late in buying a property in Canberra?

Holden Caulfield said :

prhhcd said :

on average: property prices double every 10 years. The general advice given is: buy as early as you can.

+1

Also buying land yourself, rather than in a house and land package could be a good option. We did this when building our first house in Nicholls back in the day (mid-late 1999) and by getting the land first we only had to pay stamp duty on the cost of the land. However, I’m not sure if you can actually buy land now without being locked into a builder first, or of that small loop hole still exists, so double check that.

The other saying a friend of mine often says also generally rings true, “if you think real estate is expensive now, just wait 5 years”. The inference being, of course, that real estate rarely gets cheaper.

When we bought our current place in the inner north in 2004 a few people raised their eyebrows at the price we paid (mid 400s), now most people just say we were so lucky to have bought then for such a cheap price. And I suspect the same applies for most suburbs of Canberra.

Good luck!

Where is Pottsy these day anyway?

Pottsy is still with Independent. Hasn’t seen the light yet…

Eternal renting could be a great thing but you have to be disciplined. The mortgage equals forced savings cause you have to pay it. If you didn’t have to pay a mortgage would you definitely invest that money elsehwere week in and week out or would you fritter it away?

MissChief said :

…Or are you saying people will be paying close to a Million dollars for a run of the mill house in 10 years…

Seen what $1M gets you in Canberra these days?! It’s pretty depressing really. More often that not it doesn’t go as far as you might think.

VYBerlinaV8_the_one_they_all_copy said :

…If I had to go back and give the younger me advice, though, I’d say buy the best you can afford as soon as you can afford it. Make sacrifices, because the quality it will add (in both lifestyle and finance) to your life after the first 8-10 years will be huge.

Good advice IMO.

astrojax said :

don’t discount the option of eternally renting – do the figures and see what you think. that is, using some of the funds you might have kept paying for the mortgage for other investments, not just rent vs mortgage…

Given the cost of housing these days I’m surprised this theory doesn’t gain more traction. Over 10 years ago Paul Clitheroe, among others, was recommending want-to-be homeowners at least consider this option to see if property really was the right move for them.

There’s very little chance of there being a genuine crash. You basically have a few options:
1) Buy the most expensive property you can afford (only you can work out what you can afford), and struggle under the loan for a few years until inflation and/or income increases reduces the relative proportion of your income being spent servicing the loan.
2) Buy a cheaper property than you’d ideally like, live in it for a few years, then ‘trade up’ to something better once you have some equity to work with.
3) Rent, as per Astrojax’s comment. It’s not a crazy idea. Try to put some of the savings over owning into an investment to benefit you later.

I would expect prices to stabilise, even stagnate, over the next several years. I suspect that there could be another big property boom sometime between 2023 and 2035 (due to demongraphic factors), and this boom will push many into eternal renting.

If I had to go back and give the younger me advice, though, I’d say buy the best you can afford as soon as you can afford it. Make sacrifices, because the quality it will add (in both lifestyle and finance) to your life after the first 8-10 years will be huge.

prhhcd said:
on average: property prices double every 10 years. The general advice given is: buy as early as you can.

So given that house prices have almost quadrupled in the past 10 years, there’ll be no rise for the next 10? Or are you saying people will be paying close to a Million dollars for a run of the mill house in 10 years? Realistically, who’ll be able to afford that?

I think there’ll be a correction and a lot of people will get caught buying at the tail end of the upward cycle.

don’t discount the option of eternally renting – do the figures and see what you think. that is, using some of the funds you might have kept paying for the mortgage for other investments, not just rent vs mortgage…

A full on crash would require large numbers of baby boomers to either want to sell or be forced to sell, coupled with a substantial drop in immigration numbers.

That said, I still wouldn’t buy at the current prices on principle. Buying requires handing over massive amounts of money to speculators (sellers) in exchange for them having done relatively little. I’d rather live in a converted bus (hypothetically) than reward the speculators.

prhhcd said :

on average: property prices double every 10 years. The general advice given is: buy as early as you can.

+1

Also buying land yourself, rather than in a house and land package could be a good option. We did this when building our first house in Nicholls back in the day (mid-late 1999) and by getting the land first we only had to pay stamp duty on the cost of the land. However, I’m not sure if you can actually buy land now without being locked into a builder first, or of that small loop hole still exists, so double check that.

The other saying a friend of mine often says also generally rings true, “if you think real estate is expensive now, just wait 5 years”. The inference being, of course, that real estate rarely gets cheaper.

When we bought our current place in the inner north in 2004 a few people raised their eyebrows at the price we paid (mid 400s), now most people just say we were so lucky to have bought then for such a cheap price. And I suspect the same applies for most suburbs of Canberra.

Good luck!

Where is Pottsy these day anyway?

Register yourself to the Village Building Company website. There is going to be a release in Watson of units and townhouses in early May 2010. Prices will be starting from $300,000. You may be able to get a package under the Affordable House and Land Package (AHL) scheme.

http://www.villagebuilding.com.au/

Wraith said :

…its a round-about you just have to get on and ride…

Agreed.

My wife and I bought a very small house with the intention of getting on that round-about, and a couple of years later, we were able to use it to build a larger house as we started family etc. That worked for us at the time, but then (about 12 years ago), the bottom end of the house market was sub $100K. Prices in Queanbeyan have gone up (probably more, by %, than Canberra). Whilst we built our ‘new’ house (around the time GST was introduced), we rented in Quenbeyan, in a place we could have bought for $23,000 (conveniently located near to KFC, Macca’s, Hungry Jack’s – and a gym). You’d have been hard pressed to find a similar place for under $80K just 12 months after that. Our house sold for $109K at the time, but 12 months later, we’d have got $150K+ easy… we got some *really bad* advice from our really bad Real Estate agent.

If I was to start all over again, I’d be looking for an affordable (for me) apartment. I don’t think the rise in prices is sustainable (but then I said that to people years ago too)

Prices are unlikely to ‘fall’… They are likely to ‘stabilise’ (where the amount prices go up slows, and even stalls) whilst wages continue to increase.

If buying land in Canberra, work needs to start within 12 months, or fines can begin to take effect ( http://www.actpla.act.gov.au/topics/design_build/begin_project/responsibilities ). Generally it would work out better to build at the same time though, because housing prices may go up considerably in the meantime.

I would highly recommend getting independent financial advice – definitely don’t seek advice from Real Estate agents, banks or builders – because they all have eyes on your money. A Financial Advisor will be able to work with you to help you work out what you can afford. Work out what you’d like (yard, ensuite, open living or seperate etc) – and look around work out what you like/hate. And you’ll need to be realistic in your first purchase. Most people don’t get a 5 bedroom house, with four car accommodation in central Canberra as their first purchase…

on average: property prices double every 10 years. The general advice given is: buy as early as you can.

This might be of some use over the course of time the article is stated to run, but I think the answer might be in the end, its a round-about you just have to get on and ride.

http://www.smh.com.au/business/home-truths-on-the-whys-and-wherefores-of-the-property-market-20100418-smlf.html