When to buy?

Posted on 12 FEB

Q: I am looking for a new property and I’m not sure whether to buy now or to wait until after Christmas. What’s your advice? Barry V.

A: Interesting question Barry. I’m assuming you’ve been reading how the Auckland market has slowed: Fewer people through open homes, not as many bidders at auctions, and more properties being passed in at auction. The ‘fizz’ certainly appears to have gone out of some sectors of the market and that could certainly suggest that it’s a good time to be buying property right now. I’m not sure that anyone can really identify why this is.

The Reserve Bank says that its slow-down measures are working, others say that the Chinese are out of the market, and still others think it’s the result of investors having done all their buying before the October rules came into effect. And maybe it’s a bit of all of those, together with many people just having other stuff on their minds rather than buying property. What with Christmas and the holidays looming many people just don’t have the mind-set to go looking for property. Of course no one knows what will happen to the market after Christmas so in my opinion, if you are in a position to buy now, then the time is right.

With fewer buyers in the market you will at least avoid the auction fever that we have been seeing over the past 12 months (although there has been no real indication, as yet, that prices have been affected). And of course you have the added bonus of being able to go away on holiday knowing that you have a new home all sorted for when you get back.

As always, what we do know is what the market is right now, and what we don’t know is what it will be like in the future. We can be sure though that the fundamentals affecting the Auckland market have not changed: Money is cheap and housing is in short supply. Good luck with your house-hunting!

Q: Now that our children have all grown up and left home we want to downsize from our current property in Parnell to a smaller property. We are worried though that if we sell we won’t be able to find anything we like. What options do we have? Margaret B.

A: This is a very common question these days Margaret, especially with the shortage of houses on the market in Auckland right now.

Obviously you have two choices: Sell first then buy, or buy first then sell. If you buy before you sell you won’t really know what your budget is (you can’t be sure how much your home will sell for) and you may very well need bridging finance to get you through the period between when you have to pay for your new home and when you settle on (and get paid for) your current home. (The length of settlement is the time between unconditional date, often the auction date, and the day the new owner pays and takes possession). You can minimise this by asking for a long settlement on your new home, and then be ready to go straight to auction on your current home as soon as you have an unconditional agreement on your new home. This may enable you to get sold and settled before you settle on the new home, but what if your purchaser wants a long settlement too? Either way you do run the risk of being forced to get bridging finance. In the very worst scenario you may have trouble selling your home and end up owning TWO properties – not always ideal!

Alternatively you can do what most people seem to be doing these days: Sell first and then buy. Of course as you’ve said, the risk here is that you can’t find anything to buy once you’ve sold. However, what we have found is that people who have sold get very focussed very quickly on finding their new home, and they become a lot less fussy! And if it takes longer than you expect there is always the option of renting while you search.