After a crazy few years of price growth across the country, home prices are slowly starting to drift lower.
While this is a normal part of the property cycle, there are some things you can do to capitalise on a softening property market.
For most people who own their own PPOR, this can be an excellent time to look at upgrading their home. The great thing about buying your own home as your main residence is that all the money you make on the property is tax-free. There’s no other asset class in Australia that lets you keep all the money you make.
The capital gains tax exemption for your PPOR is a fantastic way to not only build up equity but also keep all of it.
At the moment, we’ve seen prices fall by around 10 per cent in some locations. While this might mean that your home has also declined in value, it also means that the next home you want to buy has most likely declined by even more.
For example, if you’re looking at moving out of your $700,000 property and into a $1.4 million property, you’re actually having an easier time getting into that better property. The first property might have declined by around $70,000, but it also means the new home will be $140,000 lower. You’re ahead by $70,000.
In the current market, you’ll also be up against less competition when you’re trying to buy those better-quality assets and you can potentially purchase a property in a superior location that will have more growth potential in the future.
At the same time, buying assets that have the potential to be improved or renovated, or even subdivided can be an excellent way to dramatically ramp up your equity during a slower market.
By looking at creative ways to continually upgrade your owner-occupier home, you’ll be building equity all along the way and best of all able to keep it.
If you’re not in a position to invest at the moment, or if you don’t want to add to your portfolio, it might be worth considering an upgrade to your PPOR.
If you are in the market, and looking for a buyers agency to assist with your search, feel free to reach out today for a free discovery call!
