I can't afford to jump

I should’ve upgraded, but now I can’t afford to jump. 

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One of the things that have been evident over the last couple of years has been the difficulty for those who want, need and can afford to upgrade to an often larger home to make happen. 

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High rates, tight borrowing capacity, renovation concerns on new property, limited enticing property listings, and overall market fear had led to people sitting on their hands when it made sense to consider upgrading. 

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Better value for money due to lower-end properties holding prices better, less competition at higher price points, and overall prices being held back due to the current market dynamics. It made sense but humans are herd animals and often they took what felt a safer option and delayed it. 

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However, what we have seen in recent months, but more so recent weeks, is the return of upgraders. While those transacting now are still capturing a good outcome, perhaps better last year, we could easily see a situation where the gap between what people currently own and what they desire to own runs on them and begins to be too much to make happen.

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If you’re in a home that doesn’t suit you long-term and you need to move in the next few years, it would make a lot of sense to consider doing this before the market picks up more speed as more rate cuts lead to borrowing capacity increases while consumer confidence to take on large mortgages in correlation also increases. 

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The tricky part is how you make it happen and what’s possible. Most will have to sell to upgrade. However, selling first is not without its dangers, and buying before selling is often better but scary. 

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Bridging finance, which rarely but sometimes works, could be an option to allow you to have time to sell, but you need to know if it’s possible for you.

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Last week, we had almost two identical situations, which made me reflect on the journey families go on. 

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Both clients purchased their first home a few years ago with our team and bought houses in the Inner West of Sydney for around $1.5-$2.0m

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However, since then, careers progressed, multiple babies have arrived, and while the original homes could’ve worked, there was a desire for something that offered a more extended timeframe and could be a true forever home for their family after falling in love with different parts of the Inner West suburbs. 

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While it felt scary to take on a lot more debt, making the jump happen emotionally, now they have made it happen; what they bought in terms of value for money in the $3-3.5m range made more sense than the current assets now worth around $2-2.5m. 

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Both clients bought on 3 to 4-month settlements and are now listing their current homes for sale after making them sell-ready over the previous months.

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If you don't have a long-term plan for your family home, don't keep kicking that can down the road without regularly considering options.

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