The 2022 federal election: What to expect for housing affordability
Unless a structural change to the Australian economy takes effect, greater housing affordability is not likely to happen...
Increased buyer demand is driving up property prices, allowing present owners to build equity and wealth, but experts have warned that the booming property market can also be a hotbed of costly mistakes for buyers.
According to Doron Peleg, co-founder of BuyersBuyers, a thriving market is frequently the moment when purchasers make the most devastating blunders, and property buyers must be cautious.
“When prices are rising quickly, such as we have seen in 2021, there can be a fear of missing out, and this leads homebuyers and investors to take shortcuts on their due diligence,” Mr Peleg forewarned.
In a recent study, more than a third, or 35 per cent, of buyers expressed fear of missing out (FOMO) as their motivation to buy a house.
Because of the pressure to buy on top of growing property costs, Mr Peleg said buyers are prone to faulty decisions and oversight.
“The media has reported in recent weeks buyers missing out on their dream homes due to errors and mistakes on settlement documents, but this is just the tip of the iceberg when it comes to the possibility of due diligence failures,” he added.
The property market’s massive growth is an opportunity of a lifetime that most buyers don’t want to miss.
For the third quarter alone, Australian Bureau of Statistics (ABS) data shows that housing prices in Australia’s capital cities grew 21.7 per cent in the year to September.
Looking closer at specific locations, Pete Wargent, co-founder of BuyersBuyers, said Hobart was the best-performing market in the September quarter, with a sharp 8.2 per cent price increase. Despite this, many of the big city markets had also seen significant advances.
These are figures that can fuel a sense of being left behind.
“When we see quarterly gains of this magnitude, buyers do tend to become panicked about securing stock more quickly, to avoid missing out on the immediate gains,” Mr Wargent said. “The mean price of dwellings rose $42,000 in the September quarter alone, to $863,700.”
While this word of caution was not meant to discourage buyers to miss out on property market opportunities, Mr Peleg has advised buyers to practice what can help them avoid the FOMO trap – due diligence.
He reminded purchasers to follow a systematic due diligence approach that includes hiring an experienced mortgage broker, a solicitor to assist with conveyancing, and a building and pest investigation to ensure the home is free of structural or repair issues.
Mr Peleg also noted that activity in the housing market looks set to remain elevated right through until Christmas, with high numbers of listings and buyers eager to make a purchase before the borders reopen and hundreds of thousands of visa holders become eligible to enter Australia.
And with that, he reiterated a quick reminder for buyers: “We only caution that purchasing a property is often the biggest financial decision Aussies ever make. Don’t make critical mistakes in the rush to buy something quickly.”
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.
Real estate is a type of real property that refers to any land and its permanent improvement or structures that come with it, whether natural or man-made.