House prices in Wellington have risen 8.2%, but brokers say there are many risks associated with buying before selling
Wellington’s strong property prices are tempting homeowners who are considering upgrading their current home, but local broker Pope & Co. Mortgages is advising homeowners to take caution before rushing into bridging finance.
According to QV data, house prices in Wellington have risen 8.2% from March 2017, with the average price being $644,567. Mortgage advisers are receiving increased interest from homeowners keen to capitalise on the strong market and climb another rung on the ladder, but director Craig Pope says this could become a costly decision.
“The risks and costs of buying before selling can be easily overlooked,” says Pope. “You will need bridging finance to cover both mortgages until you sell, and this type of finance can be tough to get.”
There are various risks associated with choosing to buy and then sell, fluctuating house prices and natural disasters being key among them.
“What if your home sells for less than what you want?” says Pope. “What if it takes longer to sell – can you cover all the associated costs? Wellington is prone to earthquakes – if one was to hit, are you covered for both properties and will earthquake damage affect the sale price?
Pope also advises homeowners to pay attention to the rate of sales as homes aren’t selling as quickly as they were a few months back, and the right rental market means very tight competition.
“Our advice is to consider if you need to move, or are you just being tempted by high sales prices? Put a plan in place with an independent mortgage broker. Extending your current house, or renovating it, is also a good option, particularly if you’re happy with the neighbourhood you’re in.”
“It’s a very big decision,” Pope told NZ Adviser. “There’s a huge amount of paperwork involved, and we encourage people to be realistic about what is or isn’t the right move for them.”
