The Vadium Monthly

PROS AND CONS OF BUYING A HOME OVER CHRISTMAS

While most home buyers and sellers are doing all they can to get their homes settled prior to Christmas, there might still be an opportunity for savvy buyers to make a purchase over the period.

Traditionally, home sales fall during the holiday season, but that doesn’t mean there are no opportunities out there for buyers. However, there are some things you’ll need to consider if you’re thinking about making a purchase during the Christmas break.

Advantages of buying a house over Christmas

Accelerated settlement

Sellers who list their properties during the holiday season are typically motivated for a quick sale. This is going to be even more evident if the property has been on the market for a while, as they would likely have been hoping to have it wrapped up earlier. This can mean there is a chance for a quicker settlement period and the sellers might even entertain more competitive offers.

Ability to negotiate

Given how close it is to the end of the year, most sellers would like to wrap things up quickly so they can go on holidays. This might mean there is more room to negotiate on price. A buyer who can present a competitive offer might just be able to get a deal done quicker this time of year.

Reduced competition

With many potential buyers deferring their search until the new year, the Christmas period presents a unique scenario with decreased competition. A lack of competition means your chances as a buyer improve.

Disadvantages of buying a house over Christmas

Limited inventory

The decision of some sellers to postpone listing their properties until the new year can lead to a reduced inventory during the festive season. This limitation may restrict the available options for buyers.

Potential settlement delays

Despite the shared motivation for a quick sale, the holiday season may add some challenges that result in settlement delays. Closures of businesses and offices during this period can extend the time required to finalise the transaction. This isn’t a deal breaker, but you will have to factor it in.

Holiday sacrifices

House hunting during the festive season may require buyers to allocate time away from holiday activities. While others unwind at the beach, prospective homeowners might find themselves busy searching for properties, which isn’t something everyone wants to be doing.

 DON’T DIG YOURSELF INTO CHRISTMAS DEBT

As the festive season approaches, many Australians who are looking to buy a home in the new year and saving hard can find their budgets getting overlooked.

While giving gifts and spending time with family is important, if you’re looking to buy a home, it’s important that you keep your finances on track.

When lenders look at your loan application, they will closely monitor your spending habits. They will not want to see extra debt and things like maxed-out credit cards. Typically, they like to see that you’ve got a good level of savings and that you can budget and manage your money well.

With that in mind, here are five things you can do to make sure you don’t dig yourself a Christmas debt.

Craft a budget-friendly Christmas plan

One of the key steps in saving money during the holiday season is to establish a well-thought-out budget. Begin by listing all your anticipated expenses, including gifts, decorations, and festive meals. Once you've set a realistic spending limit, consider creative ways to reduce costs. By creating a budget and sticking to it, you'll avoid unnecessary financial strain and keep your home-buying dreams intact.

Look for thoughtful and practical gifts

The spirit of Christmas is in the act of giving, but that doesn't mean you have to break the bank on extravagant presents. Consider thoughtful and practical gifts that convey your love without straining your wallet. Handmade gifts, personalised items, or experiences like a homemade coupon book for future favours can be just as meaningful as expensive store-bought options. This way, you can spread joy without compromising your financial goals for the new year.

Embrace the power of second-hand shopping

Christmas is a time for giving, and it's also a season rife with sales and discounts. However, these sales can often lead to impulsive and unnecessary spending. To save money without sacrificing quality, explore second-hand stores. You'll be surprised at the treasures you can find at a fraction of the cost.

Plan a festive staycation

Instead of splurging on a costly holiday getaway, consider planning a festive staycation. Explore local events, attractions, and activities that capture the spirit of the season. Whether it's attending community carol events, exploring holiday markets, or enjoying outdoor festivities, a staycation can be a budget-friendly alternative that allows you to experience the joy of Christmas without draining your savings. Redirect the funds you would have spent on travel towards your future home.

Start a Christmas savings fund

To proactively manage your finances during the holiday season, start a Christmas savings fund well in advance. Set aside a small amount each week or month throughout the year to accumulate a sum specifically designated for Christmas expenses. This way, when the festive season arrives, you'll have a dedicated fund to draw from, reducing the strain on your regular budget. Any surplus funds can then be redirected toward your home savings, bringing you one step closer to your homeownership goals.

HOME PRICES REACH A NEW RECORD HIGH

Australian property prices have officially recovered from the declines of last year, with CoreLogic’s national daily Home Value Index hitting a new benchmark. After reaching a peak in April 2022, national home values fell -7.5%, finding a floor in January 2023. Since bottoming out, home prices have risen by 8.1%, taking values to a new record high at the end of November.

CoreLogic’s Executive Research Director, Tim Lawless, said it took around nine months for home prices to move from record highs to the recent trough, then roughly ten months to recover from the short but sharp downturn.

"The 'V' shaped recovery may seem counter intuitive, given high interest rates, deeply pessimistic levels of consumer sentiment and high cost of living pressures, however the recovery can be explained by an imbalance between supply and demand," Mr Lawless said.

"From a supply perspective, advertised stock levels have held remarkably low through 2023.  Although inventory levels are now rebalancing as vendor activity picks up, listings remain 16.6% below the previous five-year average nationally. At the same time, demonstrated demand, based on the volume of homes sales, is trending roughly in line with the five-year average."

While the overall market continues to bounce back, there is still a divergence between the capital cities. 

Perth, Adelaide and Brisbane are all at record highs, with their regional counterparts regional WA, regional SA and regional Queensland also hitting new peaks.

At the other end of the scale is Hobart, where values remain -11.8% below their peak and regional Victoria, where dwelling values are -7.0% below their record highs. Sydney home prices are still 1.8% below their peak while Melbourne is also down 3.6%.

Mr Lawless said that he expects prices to continue to break new records over the coming months.

"While this is great news for home owners, for those looking to buy, affordability pressures are becoming more pressing amid rising values, high interest rates and worsening serviceability challenges,” he said.

"The good news for prospective buyers is that the pace of growth is clearly easing in some markets as advertised stock levels rise and purchasing demand remains fragile."

Queensland doubles first home owner grant to $30,000

Queensland first-home buyers have another reason to celebrate this Christmas with the state government recently doubling the first home owner grant to $30,000.

The grant has increased from $15,000 to $30,000 for first-home buyers purchasing or building a new home valued at less than $750,000. The grant is now expected to help about 12,000 buyers purchase their first home by mid-2025, when the grant boost ends and returns to $15,000.

To qualify for the grant, first-home buyers must be 18 years or older and it must be their first residential property owned in Australia. The home can be a house, unit, duplex or townhouse, or a granny flat built on a relative's land or modular home. It can be a new home, an off-the-plan purchase, a substantial renovation, a contract to build or an owner-builder transaction.

Demand for property in Queensland has been surging over the past few years, with an influx of people relocating from Sydney and Melbourne during COVID as well as a high level of overseas immigration. An extra 104,410 people moved to Queensland in 2021–22, more than twice the population gain in 2020–21.

Brisbane home prices have grown 7.36% to a median value of $773,000, according to the latest PropTrack Home Price Index, while home prices across the rest of Queensland were up 6.51% to $622,000.

Real Estate Institute of Queensland chief operating officer Dean Milton said the Real Estate Institute of Queensland (REIQ) welcomed the expanded grant but said the state still needs more new homes to keep up with the surging population numbers.

"We’re facing some significant challenges in the real estate and housing sector at the moment that can’t be solved by providing a cash boost to some buyers," Mr Milton said. "We’ve seen in recent times, especially in response to COVID-19, an array of new grants at both a federal and state level.

"While that’s great in theory from construction perspective, it’s brought forward high demand and put pressure on the cost of building supplies and the ability to access tradespeople.  

"We generally support initiatives that give first-home buyers a leg up towards home ownership, however at a time when the RBA is doing its best to tame inflation, we question whether now is the right time for more demand side stimulus.”

Three reasons why Christmas is the perfect time to buy a new car

While people are out doing their Christmas shopping and buying gifts for friends and family, December might also be one of the best times to buy a new car.

With people's attention elsewhere, it can be worth bringing forward your purchase and trying to find a good deal. Here are three reasons why Christmas can be a good opportunity to buy.

End-of-year clearance offers

As the calendar approaches the year's end, car manufacturers are keen to make space for the latest models set to hit the market in the new year. This eagerness translates into more incentives for potential buyers. 

Dealerships often offer significant discounts and promotions to clear out their remaining stock of the current-year models. While the differences between this year's and next year's models may be minimal, the financial benefits can be substantial. Taking advantage of these year-end clearance offers during the Christmas season allows you to secure a new car at a fraction of the regular cost.

Negotiation power

The holiday season, particularly the days leading up to Christmas and the period between Christmas Day and New Year's Eve, is a time when car dealers are more flexible and open to negotiations. 

With sales targets to meet and the awareness that many potential buyers are preoccupied with festive activities, dealers become more willing to make deals. This increased flexibility provides car shoppers with a unique opportunity to haggle for better prices or extra perks.

By strategically timing your purchase during the Christmas holiday period, you can harness this negotiating power and secure a more cost-effective deal on your dream car.

Less competition

Amid the holiday chaos of Christmas shopping and family gatherings, car yards experience a slowdown in customer traffic. This allows prospective buyers to explore and evaluate different vehicles without the usual rush and distractions. The quieter showrooms enable you to take your time inspecting and test-driving different models, facilitating a more informed decision-making process.

With a broader selection at your disposal, you can carefully assess the performance, features, and overall suitability of each car, ensuring that you make a choice aligned with your preferences and requirements. It also means you have more time on your hands to organise finance in advance with the help of a finance broker.

This is general information only and is subject to change at any given time.

Your complete financial situation will need to be assessed before acceptance of any proposal or product.