Should You Buy Or Sell In A Buyer's Market?
When it comes to buying and selling property, there are many factors that can influence the price that a property will sell for – location, size, and presentation are just a few examples.
However, when a house comes onto the market can also be important. The timing of a sale can influence how fast the property sells, and whether it sells at, below, or even above the listed price.
A buyer’s market favours those who are looking to purchase a property, and can happen for a variety of reasons. Here is how to spot a buyer’s market, and how to make the most of one when it comes around.
What is a Buyer’s Market?
A buyer’s market happens when the supply of available properties exceeds the number of people that are willing to buy them. That leads to an increased number of houses on the market. Because they have more choice, buyers can spend more time looking for their ideal property, they can be choosier and can end up paying less for a property as sellers begin to get desperate.
When the number of people buying begins to climb and the number of available houses drops, the market begins to swing over to favour sellers.
When this happens, sellers find their property is on the property for a much shorter time, they get more views and interest at open homes, and buyers have to get in quick to be able to secure a property. It’s not uncommon for properties to sell at a higher price than what they are listed for in a seller’s market.
Playing the Market
The property market normally follows a cycle of falling house prices that encourage a larger number of buyers, until the supply begins to slow down and house prices begin to rise.
The key is not just selling at a high price and buying at a lower price – buyers and sellers who are taking advantage of the market have to hold on long enough to get the best deal, but not so long that the cycle begins to swing in the opposite direction again and they lose out on a favourable price.
Market swings in either direction can happen quickly, so buyers and sellers need to take care that they exercise caution when trying to take advantage of where the current property market stands.
It’s also important to note that the market isn’t at a single stable position across the country. Each suburb, city and region will go through their own ups and downs, and some suburbs will always be easier to sell houses in than others.
How to Spot a Buyer’s Market
A buyer’s market becomes obvious when you look at a few factors:
House inspections. When fewer buyers show up to house inspections, it probably means that there is more choice for buyers. Fewer buyers going to a wider range of properties means less panic to get a house. Fewer views tend to indicate a buyer’s market.
House prices. House prices tend to drop in order to attract more buyers and ensure a quick sale. When house prices slow down and start to fall, the market could be changing.
Number of properties. An increased number of properties on the market means a larger supply, which can turn the market in favour of buyers when it exceeds the demand for houses.
Time on the market. On the same token, if houses are spending longer on the market before selling, it indicates that they are easier to get.
Why Does the Market Change?
The market fluctuates all the time, and even financial experts have trouble predicting when and why it will rise and fall. That being said, there are some key factors that influence why the market might change to favour buyers.
More Property on the Market -
When there is an oversupply of properties, it can affect the market. Sometimes this shift is unpredictable, with a number of people putting their houses on the market at the same time but for unrelated reasons. Other times, the downturn can be more predictable, such as when new stock such as apartments or subdivisions are built, suddenly creating more choice for buyers.
Property developers can attract buyers that private sellers have troubling reaching through strategies like lowering prices (which hurts their bottom line a lot less than a private seller as they generally can spread the loss over a number of properties), waiving body corporate fees, using incentives like free upgrades to building features, and more.
While private sellers can find a buyer’s market a lot tougher, there are still ways to make the most of a time that might not be the most favourable to sell in.
Dropping Interest Rates - Yes It's A Buyer's Market
When interest rates begin trending down, mortgages become more accessible for a wider range of people – plus, many hesitant buyers scramble to take advantage of the low rates. Lower interest rates mean the cost of the mortgage is less over time, which gives buyers more leeway when it comes to choosing a property.
An increase of buyers with more money to spend and a wider range of properties to choose from can make it harder to sell a house at an ideal price, but is a great time for a buyer to get a bargain.
When a natural disaster hits a region, most people are not thinking about property prices – but it can be an especially hard time for sellers. While fires, floods and cyclones can reduce the amount of stock on the market, it can also be a time where many people find themselves in the same boat – ready to leave, but unable to find people willing to move in. Buyers become more discerning and drive harder bargains when there is more property to choose from.
Hard to Let Go - A Buyer's Market Where Sellers Falter
Reading the market is a hard task even for the most experienced professionals, so it’s not surprising that some people get it wrong. Coming off a seller’s boom market, some sellers get caught and leave it too long to list their property, hoping that the market will continue to rise so they get the best price.
Once the market has obviously turned in favour of buyers, some sellers start to panic and hurry to list their property before the market falls any further. The influx of new properties has the opposite effect and drives prices even lower, creating more options for buyers.
Working with a Buyer’s Market
For a buyer, waiting too long for prices to drop can be equally unwise – eventually, house prices or interest rates (or both!) will begin to rise, which could mean missing out on a bargain. The key to getting the best deal out of the market is research and a realistic outlook.
Having a clear idea of what a property is worth, what the market is doing, and how long you are prepared to wait can help you get the best deal, whether buying or selling, and remember - the market doesn’t necessarily have the final work on your house price. A desirable house will have a good chance of selling, no matter what the market is doing. The owners simply might have to wait a little longer, or expect a little less.
A buyer’s market means fewer buyers with more money and more properties to choose from, so from a seller’s perspective it can be trickier to get the house sold in a desirable time frame for the right price. It’s worth taking the time to understand the current state of the property market, but putting in the work to research and market your property will always increase your chances of selling, no matter what the market is doing.
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