Finding the perfect time to buy and sell is difficult, says REIWA president

Stock image.
Stock image.

THE old adage is to buy when the market is low and sell when it is high, so with the market showing signs of improvement should buyers act quickly, and on the other hand, should sellers wait for prices to rise?

REIWA president Hayden Groves said in an ideal world, it would be crystal clear when the bottom had arrived and primed buyers could act immediately to secure their dream home, content in the knowledge they had purchased their property at the absolute lowest possible price.

“The truth is, it’s virtually impossible to tell whether the actual ‘bottom’ has hit until it has passed and we’re on the upswing again,” he said.

“The best we can do is observe trends in the market and make an educated guess.

“In Perth, signs over the last quarter suggest our local market is beginning to stabilise, with all key indicators (median house price, sales activity, listings for sale, average selling days and discounting) recording little or no change in the three months to June 2017.

“Historically, one of the earliest signs of a change of momentum in the market is a period of stability.

“Although no one can accurately ascertain the future of the property market, the signs are there that we have finally found, or are very close to finding, the bottom.”

The suggestion that the market is improving might imply that sellers wanting to achieve the best possible price should wait before putting their home on the market, however Mr Groves said in most cases they would be better off selling when the market is relatively stable.

For example, if you sell your current home for $500,000 in today’s market and upgrade to a home worth $650,000 you will be extending your investment by $150,000.

If you ignore settlement and selling fees, but take into account government fees, including stamp duty, of $25,375.40 the cost to upgrade would be approximately $175,000.

If the market improves by a reasonable 5 per cent, your home would sell for $525,000, while the home you want to purchase would cost $682,500.

The difference between the two is now $157,500 and with government fees of $26,901.15, the approximate expenditure would be $184,400.

The decision to wait has cost an extra $9400 plus the additional longer term costs related to taking out a larger mortgage.

“If you’ve been thinking of buying or selling a home, but have been holding off for the ‘right’ moment to strike, I’d advise you to take action sooner rather than later,” Mr Groves said.

“With the signs there that we’re heading into a period of stabilisation, now is a good time to buy and sell.”

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