Experts are saying property prices might fall over the coming year, but it’s always hard to pinpoint exactly when they’re going to start trending back up again. Property prices in the capital cities are showing mixed results. So if you’re interested in taking advantage of the dip, it could pay to start preparing now.
Earlier this month, Corelogic’s Home Value Index showed national property values were starting to slightly dip, especially in Sydney and Melbourne.
And ANZ economists are predicting a 15-20% drop by the end of next year, before starting to recover in 2024 (prices never seem to dip for too long!).
So how can you prepare to take advantage of lower prices if you’re in the market to purchase a home?
Here are our top five tips to help you get ahead of the curve.
Related articles:
- A 5-Step Guide to Getting a Home Loan
- Single and Under 30? You’re a Likely Candidate For the 5% Deposit Scheme
- 10 Household Money-Saving Tips For That Home Deposit
1. Start researching the market now
Think about what you’re looking for in a property. What location to you want to be in and what features are you looking for in a home? What can you realistically afford?
Then start researching market prices on Soho.com.au so you can find and compare similar properties in your preferred locations.
This gives you a benchmark to aim for while you’re saving your deposit, and when the time comes, you’ll be able to tell if the home you’ve set your eyes on is a great deal or not.
2. Keep your tax returns up to date
Having your tax returns ready to roll is a vital step in the mortgage application process.
Before a lender can approve your application, they need to know all about your income and ability to meet repayments.
Your financial situation helps lenders to understand the risk of lending you money and what your borrowing capacity is.
Some accountants have a four to six week lead time on completing tax returns – not to mention the time it takes for you to get your paperwork together and get an appointment – so if your tax returns aren’t up to date, best to get onto it now.
3. Start reducing unnecessary expenses
Lenders also like to see whether you’re a big spender or penny pincher. It’s all about assessing the risk of lending you a large amount of money.
Go through your expenses and see where you can cut back. Excessive streaming services, too many takeaway meals, unused memberships and such can add up.
You don’t have to become a full-on minimalist. But adjusting what you regularly spend on can make you look good to lenders.
And the savings you unlock can go towards your deposit, which brings us to our next point…
4. Build up a deposit with genuine savings
Now that you’ve got an idea of market prices, you can work out how much you’ll need for a deposit.
Generally, a 20% deposit is regarded as a great savings goal, but there are certainly ways to get into the market with as little as a 5% deposit, such as the federal government’s First Home Guarantee. Here’s more information on how to apply for the First Home Buyer scheme.
Whatever deposit amount you’re aiming for, don’t forget to factor in a little extra to cover purchasing costs beyond the deposit such as conveyancing fees, building inspections, and stamp duty.
Lenders will look for a portion of your deposit to consist of genuine savings – at least 5% of the purchase price. Some of the more commonly accepted examples of genuine savings are:
– Accumulated funds or regular deposits in a savings account in your name for at least 3 to 6 months.
– Term deposit savings accounts held for at least 3 months.
– Shares or managed funds held for at least 3 months.
– Rental history for the past 6 months.
5. Assess your borrowing capacity or obtain pre-approval
Knowing your borrowing capacity or getting your finance pre-approved gives you a great insight into your borrowing limit.
After all, you likely won’t know what kind of home you can afford to buy if you don’t know how much you can borrow.
And that’s where Soho Home Loans comes in – we can help you assess your borrowing capacity or obtain finance pre-approval.
So if you’ve got your eye on buying during the predicted dip over the next year or so, reach out today and we can help you start planning ahead.
Need more tips on financing your home purchase?
Browse our finance category. It’s chock full of hacks and advice from industry professionals. And remember to download the Soho app for quicker browsing and property matching. It’s getting you into your dream home faster!
