Upgraders must be wary of rising market: Smartline
Upgraders, our largest buyer segment in the Australian market currently, could lose tens of thousands of dollars if they delay their plans in a rising market.
While much of the attention is on first home buyers, investors, renovators and even downgraders, those aspiring to own a better home should be the focus, said Joe Sirianni, executive director of Smartline.
“Chances are, most families will look to upgrade their home at least once in their lives – if not several times – as their needs change and financial situation improves," said Sirianni.
“This very substantial group of property buyers is likely to be significantly impacted by the turnaround that seems to be taking place in most property markets around the country.”
Financing an upgrade can be tricky, with a number of options needed to be considered.
Currently, there are three activities common within the upgrader group:
1) Selling first, buying later
2) Holding both properties
3) Using a bridging loan option
Those buying later, may find the market rises during this time, costing them significantly more.
Smartline's calculations bring the total cost of buying now and then upgrading from a $450,000 to a $600,000 property at $185,490, when considering agent's fees, stamp duty, conveyancing fees, transfer duty and associated costs. After a 10% price rise, looking at the same factors, this cost balloons up to $204,090, with transfer duty, agent's fees and the property price additional cost adding up.