A common question asked by prospective and existing home owners is: what if property prices drop?
It's no surprise to hear some buyers are concerned about the future value of their property – especially those who are buying in certain ‘heated markets', like Sydney and Melbourne where values have risen by 16% and 15.3% respectively over the last 12 months, according to CoreLogic1.
Everyone likes assurance that they have made the right decision with their purchase.
No one wants to buy a property when the market has reached its peak and then watch on as the value of their home falls.
Unfortunately, no one has a crystal ball and despite what the media and various experts say, no one can say exactly what will happen with the property market in the future.
This may sound discouraging, but the most important thing to remember is that property is a long-term investment.
Don't look at short-term outcomes as these will only cause you to want to stay put and not make a move.
The property market moves in cycles so prices will rise, fall, stabilise and then rise again.
So what does this mean if you've bought property as either an owner-occupier or investor?
If you're an owner-occupier who bought in a boom and you decide to sell during a downturn, remember that you will also be buying in a downturn.<
Even if the price of your property falls, you should be able to buy another home that has similarly reduced in value.
Alternatively, you can stay in your chosen property and wait until the market improves again (which it inevitably will in the long run).
If you're an investor, you generally do not have to be reactive when the market changes and there are fluctuations.
You can hold onto the property and wait until the time is right for you to sell, especially if you can easily afford the mortgage repayments and any expenses relating to the upkeep of the asset.
Property investment should always be viewed with a long-term 10 to 20 year perspective.
Whether you're looking to buy a property now or have concerns about the market, make an appointment to speak to your local broker.
They can provide advice and answer any questions you may have about your property goals.