The burn­ing ques­tion on buy­ing or sell­ing

The Advocate (Perth) - - NEWS -

THE old adage is to buy when the mar­ket is low and sell when it is high.

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 buy­ers could act im­me­di­ately to se­cure their dream home, con­tent in the knowl­edge they had pur­chased their prop­erty at the 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.

“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 was 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.

“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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