Posted by : Uma Mahadeva 25 August 2015.
I find the best way to find out the information I need on this topic is to ask questions:
1. When is a good time to buy?
While property prices are the highest Australia has seen in a long time borrowing for owner occupiers and first home owners has never been easier. Among the incentives are:
- Lower interest rates (some around the 4.1% mark).
- Higher Loan to Value Ratios
- LMI capitalisation.
- Parental assistance options for deposits.
If you contrast this in the early nineties property prices were $150000- $250000 but interest rates were 18%! Put in this perspective now seems as good a time as any to buy for an owner occupier. Investors may want to think about keeping their investor portfolio the way it is and upgrading their principal place of residence.
2. Where to buy?
Inner City apartments.
Usually can be cheaper than landed properties in the suburbs especially if it is a one bedroom apartment but factors to consider are:
- Size of the apartment (lenders typically do not favour properties smaller than 50 square metres).
- Age of the apartments (you may be up for a significant maintenance levy for older apartments that seemed cheaper when you bought it).
- The number of apartments in the block (there are often LVR restrictions for anything over 10 apartments.)
- Also recent regulatory changes make “off the plan” buying a big question mark as to whether you will get finance when the time comes.
- Traditionally lender valuation of properties in hotzones have fallen short of expectations for investors.
- Body corporate fees.
You can usually get a decent sized house and land especially in the western suburbs. Factors to consider here are:
- Price (higher and might be out of reach for most first home buyers).
- To build or to buy?
- Established suburb or emerging suburb?
- Distance to work (usually the city).
- Amenities locally.
- Usually lenders are more favourable to these properties (with a few exceptions) as there is a land component to it and it is not in a property hot zone.
For those wanting a tree change or sea change this may be the place to be. Factors to consider are:
- Lower population density and how it may affect your property appreciation.
- Less pollution.
- Fewer amenities. Lesser infrastructure.
- Distance to city ( if you are going to commute).
- There are interest rate and LVR restrictions imposed by lenders depending on where in a country area the property is located and what size it is, and whether it is connected to utilities.
- Industry – single industry locations attract more lending restrictions than multiple industry locations- contrast Kalgoorlie (commodity price dependent) with Bendigo (multiple industries such as healthcare, realestate, education etc).
Lower property prices.
Other things you might want to consider are property type, environmental sustainability (which may translate to lower energy bills), property zones and titles. More information on this here:
Note that as far as lenders are concerned proximity to a capital city, size of the property (up to 8Hectares), type of property , is it in a hotzone ( multiple apartment complexes in a suburb or history of inflated property prices) and condition of the property will determine what restrictions will be imposed on it.
This article is general in nature and is not intended to replace the advice of a qualified professional such as a real estate agent or buyers advocate. If you wish to discuss your finance needs in relation to a property purchase please contact us on the information provided below.
Objective Financial Solutions Pty Ltd ATF Mahadeva Family Trust.
Credit Representative number: 474831 Licensee of Connective Credit Services.
Australian Credit License: 389328