When is the right time to buy a house? Is there a magical time to act? Are we asking too many questions?
What with Auckland houses selling for more than 10 times the average income and interest rates about to rise and who knows – maybe a crash ahead? – we thought we should ask: Is this this a good time to be getting into the property market? Do you grab the moment while you can? Do you wait for things to settle down? What’s the magic moment to act?
Actually, there is no right time, says Maria Slade, who’s just written Buyer Beware, A New Zealand Home Buyer’s Guide.
The right time to buy a house, she says, is when you’re ready to buy one.
She says people can get a bit hysterical about the idea that they’ll buy a house and then the market will crash. “Well, I personally think that’s unlikely, given the factors that we’ve got going on. We’ve got high immigration a shortage of houses and high domestic immigration as well – lots of people coming to Auckland and so forth.
“Historically what happens is the prices drop back a bit and then they bubble long for a while and then they come back up again. They never drop back to where they were.”
So if prices drop but you can keep paying the mortgage, you’re okay? Yes, just as long as you don’t have to sell your property, she says.
That can be the tricky bit. If you get into a situation where there’s been a relationship break-up or if you have to move for a job or something like that, you’ll have to take the loss. “If you get caught by that, then okay that’s an issue if prices have fallen back. But if you can sit tight, you’re fine.
“And the other thing to think about is: this is the reason the Reserve Bank has introduced the LVR restrictions [where banks now generally require at least 20 per cent deposit]. If you’ve got a decent chunk of equity in your home if prices fall then you’re still okay, you’re not going to get into a position of negative equity. And that is one of the whole reasons they’ve introduced this regime.
“You’ve got to consider your own life situation and what you want. If you want the security of owning a roof over your head, then take every step you can to make it happen, and I don’t think there is a right or wrong time to buy.
“As long as you research the market and take good advice from your lawyer and your broker and people like that, you’re not going to pay too much for house. A house is worth whatever people are prepared to pay for it.”
Maria Slade’s new book Buyer Beware, A New Zealand Home Buyer’s Guide, talks about the challenges facing home buyers. Published by Penguin Random House, RRP$30, available in bookstores or online here.
