Entering the property market in 2024 presents exciting opportunities for both homebuyers and investors. Despite economic uncertainties and rising interest rates, the year ahead holds promise for savvy individuals aiming to climb the property ladder.
At Haitch Conveyancing, we understand the complexities involved in buying property in Melbourne. To make informed decisions, it’s important to consider several key factors before making your next property move. Whether you’re upsizing, downsizing, or investing, here are six crucial things to know before buying property in Melbourne in 2024.
1. Understand your borrowing capacity
While property prices have softened, it’s important to note that they have not fallen significantly compared to previous years. Additionally, rising interest rates have reduced the average borrowing capacity for homebuyers by around 25%.
When determining how much to borrow, consider not only the purchase price but also additional costs such as stamp duty, body corporate fees, land tax, and building inspections. Utilise online calculators to estimate your borrowing power for your home loan and set a realistic budget.
It’s always recommended to consult with a mortgage broker to get a clear picture of your financial situation and loan pre-approval. Understanding your borrowing capacity is crucial in the process of buying a house in Melbourne. By doing so, you can confidently navigate the Melbourne property market and make informed decisions about your property purchase.
2. Account for upfront costs
In addition to the deposit, there are several upfront costs associated with buying property in Melbourne in 2024. Stamp duty, one of the largest upfront expenses, varies by state or territory and should be factored into your budget. Stay updated on the latest stamp duty regulations and use online calculators to estimate your upfront costs accurately. Being aware of these expenses will help you avoid unpleasant surprises during the purchasing process.
If you’re feeling uncertain or looking at a complex purchase agreement, conveyancing and property lawyers can also provide legal advice to help you navigate these costs.
This includes understanding your obligations regarding stamp duty, body corporate fees, land tax, council rates and building inspections. Properly accounting for these legal expenses ensures a smoother property purchase experience and helps you remain compliant with all relevant regulations.
3. Assess the market conditions
As interest rates continue to rise, there is a possibility of further property price declines in 2024. Monitoring market trends and seeking expert advice can provide valuable insights. While it’s impossible to predict the future, understanding the impact of interest rate hikes on property prices can help inform your decision-making process.
Staying informed about the Melbourne housing market and real estate news, such as median unit prices and rental vacancy rates, will help you make better-informed decisions.
Keeping an eye on property purchase trends, private sales, and the influence of council rates on overall costs is also crucial. Understanding the ongoing costs associated with property ownership, including home and contents insurance and the cooling-off period regulations, can further aid in making a well-rounded decision.
If you believe that interest rate rises may subside in the near future, it could be advantageous to wait before making a purchase. Additionally, analysing purchase price data on median house prices, the current median unit price, rental yields and demand for your specific area can provide a much clearer picture of the current market conditions.
4. Evaluate the timing of selling and buying property
Deciding whether to sell your current property before buying a new one involves careful consideration. Buying property first, then selling provides certainty of securing a home, but could also mean taking on multiple mortgages, which may not be financially viable. Whereas, selling before buying eliminates the risk of overextending yourself financially. Before making a decision, determine the value of your current property and consider your outstanding home loan balance to set a realistic budget for your new purchase.
Evaluating the timing of selling and buying is crucial in the Melbourne housing market, so consider the impact of the current median house price for the suburb when making a decision. Additionally, stay informed about private sales and the cooling-off period regulations.
Understanding the influence of the continued interest rate rises on both buying and selling should help you make a better informed choice. Monitoring real estate news, staying in touch with real estate agents and mortgage brokers, and watching the market conditions can all provide insights into the best times to buy or sell.
Finally, be aware of the settlement period and the settlement date, as these can affect your timeline for buying and selling property. Properly planning for these can help avoid any potential overlaps or gaps between transactions, ensuring a smoother transition come moving day.
5. Assess the investment property landscape
Considering an investment property? The current market conditions indicate low rental vacancy rates and a shortage of rental accommodation. This situation suggests that investing in a rental property could be favourable in the long term. However, it’s essential to focus on the economic aspects rather than emotional factors when making investment decisions.
Analyse rental yields, demand, and market conditions to ensure a sound investment strategy. Consulting with a real estate agent can provide valuable insights into the local market. Additionally, staying informed about private sales and private treaty transactions will help you understand the various options available.
As a buyer, remember to weigh up the value of ongoing costs you might need to pay, like property management fees and maintenance expenses. By carefully evaluating these factors, you can make informed decisions and maximise the potential of your investment properties.
6. Understand the impact of market fluctuations
Attempting to time the market and predict future trends is a challenging task. Selling and buying are often influenced by the same market conditions, meaning that high selling prices often correspond with high buying prices.
Homeowners who have held their properties for the past few years have generally benefited from favourable market conditions.
If you are selling and buying property in Melbourne simultaneously, consider the relative impact of prices to make informed decisions.
Conclusion
As you navigate the property market in 2024, it’s crucial to be well-informed and consider these six key factors before making your next property move. Understanding your borrowing capacity, factoring in upfront costs, assessing market conditions, evaluating timing decisions, analysing investment opportunities, and comprehending market fluctuations will empower you to make confident and informed decisions.
Remember, seeking professional advice from real estate agents and staying up to date with real estate news and trends will further enhance your property-buying journey; whether you are a potential buyer looking at the process of buying a house or an investor exploring residential real estate opportunities. Pay attention to the details such as pre-approval for loans, the deposit amount, and the settlement period to make well-rounded decisions.
Your journey in the Melbourne property market can be an exciting time, filled with opportunities when approached with the right knowledge and preparation. Need assistance buying property in Melbourne in 2024? Contact our team on (03) 8590 8370 to obtain legal advice from our expert property lawyers and conveyancers. We can assist you with our conveyancing services.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
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