The big relocation question
Once you've made the decision to move to a new home, you're faced with a question of house-sized proportions.
To sell, or to rent, that is the question.
The benefits and risks of each can depend greatly on your own personal situation as well as the overall sentiment of the residential property market at any given point, so it's important to understand your options and act accordingly.
Remember that it's not a decision that you have to make alone, as any number of real estate agents or mortgage lending establishments are full of useful advice and knowledge for making these big life changes.
Selling your property when you buy a new one is a common move for most home owners. The main reason for this is financial, as the equity from one home transfers to the next to secure a mortgage.
This option can sometimes cause issues if home hunters aren't taking an interest in the property for sale. The problem with a slow sale is that it can impede the purchase of the new property and cause a financial headache for the time in between.
RP Data researcher Cameron Kusher highlighted the contentious point in a recent article when he said: "One of the greatest challenges for vendors is whether to accept an initial offer on their property or whether holding out for a better price is a better strategy."
His article focused on the time a property spent on the market in relation to the eventual discount the vendor applied to ensure a sale.
Mr Kusher found that homes selling in less than 30 days over the past five years recorded an average discount of just 3.9 per cent on a monthly basis. When the time frame was increased to 30 to 60 days however, the average discount was 5.2 per cent.
For periods of 60 to 90 days, the discount was 6.5 per cent, and for 120 days or more, the average discount was 10.1 per cent.
This data suggests that starting with a fair price when selling a home means that you may be more likely to sell the home sooner, rather than starting high and offering large discounts further down the track.
The other option to selling is to turn your previous home into a rental property.
If this is something you're thinking about, it's important to look at current vacancy rates in the area, which can be obtained by looking at local real estate institute media releases or talking to your real estate agent. These rates will give you an idea of how many properties in the area are currently sitting empty.
If the number is high (generally over 3 per cent), then you may find it more difficult to find tenants. If the number is lower than that, then it may be an indicator that demand in the area is currently high and there will be a better chance of finding tenants. Three per cent is considered to be a healthy balance between supply and demand.
Rental properties can be a great way to earn some extra income. Extra work may be required to manage the investment but the rewards can be significant when you get the balance right!