June 24, 2018 | The ABCs of buying a house in Melbourne
With the current state of the real estate market as it is, buying a house in a city like Melbourne is increasingly difficult. Whilst population growth continues to increase in Melbourne, according to experts housing prices have slightly dipped for the past few months prompting them to dub the market as being “flat”. The head of research at CoreLogic (the largest provider of property information and analytics in Australia and New Zealand) states that although the prices of homes in the real estate market in Victoria have seemingly dipped, the market still remains resilient and affordability is still a concern. However the experts claim that becoming a home owner in Melbourne is still far more achievable than it is in Sydney.
Here are the ABCs of what you need to consider before buying a house in Melbourne.
A – Area code
The first important question that you need to think about is where do you see yourself living the next chapter of your life? Are you someone who wants to live amongst the hustle of the city life or would you prefer the calm and homeliness of the suburbs? You will need to consider the proximity of your home to your workplace, your extended family and your children’s place of education. It is also important to look at the distance to public transport, hospitals, shops and amenities as well as supermarkets.
B – Property Budget
One of the most important aspects of buying a house you need to consider is your budget. You need to set your ideal and absolute maximum budget. Quite often you may have a picture of what your dream house should look like, in reality what you can afford is a completely different story. You are about to make a life-changing decision so be realistic about what you can actually afford. Once you have chosen the location that you are thinking of buying in, have a look at the median prices in the area so you are confident that the area you have chosen is within your budget.
C- Costs of buying a house in Melbourne
When buying a house in Melbourne, there are a number of costs that need to be considered. The largest of these is the deposit which is usually a minimum of 20% of the purchase price. It is possible to purchase a property with less than 20% deposit, however this would require mortgage insurance which is an additional cost to consider. Other buying costs includes stamp duty, agent fees and settlement fees.
Stamp Duty is a one-off payment of state tax which is made on all home purchases, based on the property price, location and type of home loan you have. Agent fees if you are using a Buyers Advocate to purchase your property and settlement fees related to lawyer fees involved in settling the deal.
Once the property is purchased, there will also be a cost for moving all your belongings to the new property. Get quotes from a few different moving companies, or hire a truck and ask your friends to help you with your big move. You will also need to add council rates and bodycorp fees into your budget depending on the type of property you are purchasing. Bodycorp fees are usually only relevant if you are buying an apartment or unit. Ask what these are before purchasing the property so you can factor this in.
D – Do your research
Remember to research well before buying a house in Melbourne. Ask around and make sure you research the area and look at comparable sales for the houses you have shortlisted. Don’t always take the seling agents word on how much they think it will go for and do your due diligence to find out such aspects as the vendor’s motivations for selling. This will help you set the right value for the property and with your negotiation.
E – Expert opinion
Specialists suggest that first home buyers should obtain legal advice prior to signing the contract of sale. Your contract of sale (section 32) contains everything that you would need to know about your property so having a lawyer go over the documents is essential. These are important points that you would want to know BEFORE you sign the contract.
F – Fault inspections
Experts say that up to 30% of homes that are inspected tend to have serious issues that include, structural faults, cracks in the walls, plumbing and electrical issues and even mould and rising dampness. Make sure when you are choosing your home that you conduct both building and pests inspections. Find out the costs that you would incur to repair these faults before you even consider making an offer. It is better to identify any faults before making an offer.
G – Getting approval for loans
Once you have identified your budget, the next thing that you need to determine is how much you can borrow. The amount that you can borrow will vary from lender to lender and nowadays many home loan companies also offer online calculators that allow you to calculate your borrowing limit. If you are buying a house in Melbourne and you’re looking at home loans, you will also need to learn about the different types available and range of interest rates on offer.
H – How will you be buying a house – auction or private sale
There are many methods of sale of property that are available to those buying a house in Melbourne. Majority of properties go to auction, however there are still agents that do use the private sale method. Your first step is to determine the method of sale for your shortlisted houses so that you can prepare the relevant property buying strategy.
If your property is not going to auction you are definitely saving yourself from the stress of auction day – but this leaves you faced with the overwhelming question of “How much do I offer?” In the case that you are buying your house via private sale make sure that it is clear to the vendor and selling agent that you are serious for the right price, however do not be overenthusiastic about it. Set a low value on the property and back that value up based on the results from your inspections and other comparable sales in the area.
Buying a house can be a stressful and timely process. You can do the research to make sure you are as prepared as you can be, or you can contact an experienced advocate to help manage this process for you and be confident that the decision you make is the right one for your situation. Speak to the team at Beckett Property to obtain a free consultation today.