Buy for life?

Buy for life?

Enough people made serious money out of Sydney’s last real estate boom to fuel a buying frenzy. But all of the stories of those lucky punters who bought low and sold high -“ sometimes in the space of one or two years -“ are drying up.

The situation now is quite different, particularly for first home-buyers. The generous discounts available on stamp duty on properties that sell for under $500,000 are only available once, as is the $7,000 first home buyer’s grant. So realistically, you’ll need the house to increase in value by at least that much to justify a fast sell-off. That’s not factoring in the interest you’ll pay on the loan amount in that period. The strong message coming through is, buy in Sydney now and sell in a couple of years, and you’ll probably find yourself worse off than when you started.

With the current flatness of the market, it’s difficult to imagine many property values increasing by significant enough margins to justify picking up a bargain. Unless you’re a mad-keen fixer-upper who can do most renovation work yourself, it’s a tough way to make money.

It might be worth asking an investment advisor about other markets. Savvy buyers who invested in Perth real estate have come out of the other side of an incredible boom, and those who bought at the right time have made money.

The smart thing to do in Sydney at the moment is look for a property that will both suit you for at least five years, and be easy to sell eventually. Analysts suggest five years will be long enough for the market to properly bottom out and start rising, and it should be long enough to make a good dent in mortgage repayments.

But even if you buy with the view of staying in a property long-term, it’s vital to look at the potential re-sale value. Check that the neighbourhood is not on the slide, and that there are no major works projects planned for close by. Often those bargains you see are bargains for a reason -“ a highway is planned for the end of the street, a service station is about to open next door, or your tiny row cottage is about to stand next to a five-storey apartment building.

When buying, think not just about your own needs but those of the potential future buyers. You might be happy with one bedroom and two bathrooms, but such a layout will limit your selling options to singles or childless couples. And if you are planning to stay in a place short to medium term, make sure any renovations you do will suit other people’s taste.

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