With significant increases in property prices being recorded across capital cities many of us question whether prices are too high, and if so when will they fall and return to “normal levels”. It also raises fears for some home buyers that they will be priced out of the market. So on the one hand home buyers do not wish to pay too much, while on the other hand they do not want to miss out. This can create enormous tension and stress.
We get asked about this a lot. When considering what to do home buyers should remember a couple of important points. Firstly, in the long run property prices track increases in average weekly earnings of a 2 person income earning household. If property prices increase at a faster rate they inevitably fall back to track this benchmark. History shows that this time frame could be months and even years. Secondly, each generation believes that they will be priced out of the market, however when prices do fall and return to pre-boom levels those that have been patient get the opportunity to buy in and bargain levels. So remember sometimes it is best to hold your nerve and wait. This can be very difficult to do when emotions are at play. Thirdly, over extending yourself in boom periods may lead to difficulties in future years in paying off the mortgage, if there is an unexpected life event. At a simple level if most of your income goes to paying off the mortgage it may mean that you can’t enjoy life and go on holidays, or those dinners that you enjoy so much.
If the above resonant with you and you wish to discuss your situation, please call us on (02) 9233-1111 for a free consultation.
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WealthMaker Financial Services
Contact:Phone: (02) 9233 1111