Exploring the risks and benefits of each approach.
Deciding whether to sell your current home before purchasing a new one is a significant decision those looking to upsize / downsize or just for a lifestyle change. Each approach has its own set of advantages and challenges and understanding these can help you make an informed decision that aligns with your financial situation and market conditions.
- Financial Clarity: By selling first, you know the exact proceeds from your sale, allowing for a precise budget for your next purchase.
- Stronger Buying Position: By being a cash buyer with no conditions to purchase, you're often viewed as a more attractive buyer, potentially giving you leverage in negotiations.
- Avoiding Bridging Finance: Selling first eliminates the need for bridging loans, which can come with higher interest rates and additional fees, therefore avoiding adding more cost to the purchase process
- Temporary Accommodation: If you haven't secured a new property post-sale, you might need to rent temporarily, leading to potential disruptions and added costs.
- Market Fluctuations: The market may rise while you're between homes, possibly increasing the purchase price of your next property. The Adelaide metro market is expected to see month on month rises of between 0.5% and 1.%. An accumulation of these rises over 6-12 months will add to the purchase price.?
- Seamless Transition: This approach can facilitate a direct move from your old home to the new one, minimizing the need for temporary housing. If you are ready sell when you have found the place that you want to buy, you can negotiate a settlement term that will give you time to market and sell your property, and maybe even line up the settlement dates.
- Market Timing: If property values are on the rise, buying first can be advantageous, allowing you to secure a property before prices escalate further.
- Financial Pressure: Owning two properties simultaneously can strain finances, especially if your current home doesn't sell as quickly as anticipated.
- Bridging Loans: You might need a bridging loan to cover the gap between buying and selling. These types of loans are considerably more expensive that mortgages and other similar loans.
- Pressure to Sell: The urgency to sell your existing home might lead you to accept a lower offer than what you might like.
Current market insights for the South Australian market
As at the end of 2024, ?the South Australian property market reached unprecedented heights, with median dwelling prices hitting record levels:
·?????? $768,000 across the state and
·?????? $850,000 in metropolitan Adelaide.
The median house price in Adelaide is now more than that of Melbourne
(Source – REISA Jan 2025).
?This consistent market growth over a sustained period underscores the market's resilience. The ongoing imbalance between the relatively low number of properties being offered for sale at any one time vs the number of buyers actively looking to buy at the same time presents both opportunities and challenges for buyers and sellers alike.
?Consider the following factors when deciding your approach:
- Determine your own financial situation: Assess your own financial readiness to handle potential overlaps in ownership or the need for temporary accommodation.
- Understand the market conditions: In a seller's market, selling first might be advantageous with a quicker sale and favourable prices. Conversely, in a buyer's market, securing a new property before selling could be beneficial.
- Know your tolerance to risk: Evaluate your comfort level with potential risks, such as holding two mortgages or facing temporary housing arrangements.
- Seek Professional Advice: Consult with real estate professionals to gain insights tailored to your specific circumstances and the current market landscape and financial professionals to guide you on your financial options
There is ?no “black & white”” response as to whether or not you should sell your home first before buying your next home.
·?????? by carefully evaluating your financial situation,
·?????? understanding your current local real estate market conditions,
·?????? considering your personal preferences, and
·?????? monitoring the market and seeking professional guidance
you will make yourself better informed to make a decision that best suits your needs.
