When it comes to buying and selling property, everyone naturally wants to buy at the bottom of the market and sell at the top. However, for many of us, the state of the market shouldn’t be a high priority. Why? The easiest way to explain this is with an example.
When you are selling one property to buy another, as long as you buy and sell at virtually the same time under similar market conditions, then the state of the market doesn’t make much difference to the outcome. In fact, you could find yourself saving money if you upgrade in a slow or falling market.
Let’s say the property market has fallen 10%. This means your home, which was valued at $550,000 when the market was stronger, might now only sell for $500,000. But the same is true for the home you plan to upgrade to. If that home was worth $770,000 before, it will now sell for around $700,000. So the outcome is that you will actually be $20,000 better off by selling and buying in a slow market. It’s all about perspective. Don’t look at it as losing $50,000 in the sale. Look at the complete transaction.
Right now in Perth there are fairly clear signals that we have seen the bottom of the market and it is beginning to turn after a prolonged downturn.
So what can we expect?
To answer that question, we need to consider the current facts. The number of properties on the market is 25% lower than levels seen 12 months ago. In fact stock levels are at their lowest levels in many years. At the same time, rental pressure is starting to emerge and incentives are in place to help first homebuyers. This may encourage more tenants out of the rental market and into home ownership. Once this happens, the market will begin to rise.
Right now many buyers are in a holding pattern. It seems many of these buyers are hesitant to commit to a purchase because they think the market may fall further. The message from the Real Estate Institute of WA is clear – while no one can predict the market with 100% certainty, upgrading buyers in particular ought to proceed with more confidence at this time. Why? Because in a rising market (which seems to be where we are currently headed) people gain confidence to buy.
Once this happens:
- Stock levels fall as demand increases; and
- Choice becomes constrained.
This results in some buyers feeling forced to buy a property inadequate to their needs.
REIWA President, Damian Collins has the following advice for today’s buyers: “Sure, be choosey, take your time and re-visit homes on your short-list more than once but with good, quality stock currently being snapped up the fastest it has since December 2017, don’t wait for the market to turn and for your choices to lessen.”
Give us a call and we will be more than happy to discuss your options with you and walk you through the process to ensure you achieve the best possible outcome with the sale of your existing home and the purchase of your next home.