Wollongong Buy now or rent

Hi

My wife and I moved from Sydney because of sky rocketing house prices and moved in with our in laws last Feb and have saved our deposit and will be ready to buy in Wollongong this Dec 16/January 2017.
Our budget is buying a property for Max $650,000 hoping for a 3 Bed house/townhouse in these areas Balgownie, Keiraville, Fairymeadow, Woonona, Gwyneville, Mangerton, West Wollongong and Figtree (closer to Mangerton side). Reason being these areas and not further south are we both still work in Sydney and travelling each over an hour 20mins and don't want to keep adding to the journey, we also have family in these areas and like being close enough to walk into town/the hospital where I also work on occasions.
Our issue is, we started looking at properties in March with houses selling in these areas in low 600's but now we see them over 750 with town houses selling close to 600-650.
I would like to know should we rent for another 2-3yrs and wait for the possible prediction of house prices to drop or just go ahead and buy now?
We would pay nearly $100,000 rent over 3yrs so I'd hope house prices would come down more than that?
We are first time house buyers with professional jobs and on our budget we can cope with interest rates heading up to 8.5% if they go over well probably just more overtime for me.

 

Calling on @BuyersAgent he should be able to help you guys out.

 

Welcome Chris.
Just a couple of thoughts...
What if the prices continued to rise? Could you afford to save as well as paying rent? Could you hold out at the in laws longer to save more?

 

Hi
Thanks for reply. Depending on rent cost we could maybe afford to save 200-$300 a week and we initially intended to stay at in laws for 6months but extended as initially had a guarantor lined up but that failed so stayed longer to save more. We also have a toddler and living in 3 bed apartment so we would need to have left by feb/March as the toddler is out growing the area with 5 people in an apartment.

 

Yes if prices would continue to rise we would of wished we had bought and now we are ready but just trying to find out if this bubble that's so often in the media will happen and when but at end of the day it's always a gamble either way

 

Hi @josh123 thanks for the mention. The Original Poster may or may not want a buyer's agent's help, or opinion for that matter. But for what its worth - hi Chris - I will do the tough love bit so forgive me if I sound harsh.

Stock levels in the suburbs you mentioned are at lowest point in 7 yrs. This is the supply half of the supply/demand equation. What is the basis for believing there is a bubble? How many people like you have or will move "from Sydney because of sky rocketing house prices"? If the market is driven by people like you who have "professional jobs" and are willing to commute "an hour 20 mins" then on what basis do you think the market will drop 100k? This is the demand half of the supply/demand equation.

Most people would argue I am biased but I don't see any actual data pointing to a bubble in the Illawarra. If you have some, or have media articles that actually use some, I am interested to see them. Most media is written by journalists who are not property market or data experts but are on a wage to write words that sell ad spots. Calling for huge crashes sells papers and it does happen sometimes (I just watched the big short - great movie) but on what basis at this time in this market?

Your tone sounds like you want to buy, but are looking for encouragement. I would spend less time trying to second guess the market but advise that you need to think really hard about what you want most for the next few yrs. It is tough making decisions and managing toddlers and assessing affordability. I feel for you. If you really want to buy, and feel the need your own place for your family, you should do this but don't over stretch on affordability or this will add to stress.

If location is key - then accept a smaller property and buy what you can afford in the suburbs you want.

If size is key - get a bigger place in Unanderra or Dapto. Both have express train stations to Sydney. You will probably scrunch up your nose at this point but that's an obvious choice given your commute at present.

If none of these options sound good, consider renting and investing for the medium to longer (5-10yrs) term. This is how many investors (including myself) got their start. The theory is to build some equity on one or ideally several properties in more affordable markets and keep saving until you have enough equity to convert into a home. This locks you into renting for a longer timeframe though so be sure you are happy with it.

 

Lived here for 50 years and been in the local house market for the last 15 years and apart from a few little troughs, some longer term slowdowns and some massive rises I have never heard a "pop" unless your talking high end properties or some of the apartments where the market has a bit of an oversupply problem.

In the short term I don't think you could save enough (@$300/wk or $15K/yr) to out save the market based on your current target price of $700K so I wouldn't hesitate buying now rather than waiting.

In the longer term, who knows where the market goes but if you plan is to stay in the Wollongong area long term then I don't see much downside to a decision to buy now.

A house I paid $125K in 2001 an sold in 2012 for $292K recently sold again for $432K and my current house has gone up roughly 50% in the last 4 years alone. It's outrageous but Wollongong has a land shortage issue especially in the areas you looking at and with no development land available thanks to the lovely escarpment and beautiful ocean I don't see prices plunging (pop) if you want to live around or north of the CBD.

 

Hi,
Yes you pretty much worked me out! It is mostly the media articles and speaking to other older generations who lived through the high interest rates in the 90's and getting their opinions. I was wondering what the ripple effect that Sydney will have on Wollongong in the future and definitely needed some encouragement. I just wanted to see some other opinions if we were jumping into something we shouldn't be but as I said we have budgeted for interest rate peaks to 8% and can go higher if needed but just by working more not smarter.
Thanks for the support people.

 

Also do you think there would be much difference in prices or what's out there buying between Dec/Jan to feb/March?

 

Farmers who wait for perfect weather never plant. If they watch every cloud, they never harvest.

 

Dec/Jan is generally quieter as people go into holiday mode. There is less stock on the market to choose from but the flip side of that is that those who we selling are more motivated. (want to get a sale before Christmas, move to the next place, get the kids into a new school etc )