4 Risks Of Waiting For The Bottom
In This Weeks How's The Market | Edition 31
4 Risks Of Waiting For The Bottom
Agent’s Say We Are ‘Back In Full Swing’
First Home Buyers Purchase On Christmas Day
4 Risks Of Waiting For The Bottom
Many potential buyers are contemplating whether to purchase a property now or wait for the market to drop. Some believe that by waiting, they will be able to avoid overpaying in the current market. Others believe waiting is the right move as times are currently so uncertain and maybe it’s better to know when interest rates are at their max for this cycle. However, it's important to understand that there are risks associated with waiting for the market to drop.
The Risks Of Buying In A High Demand Market
As more buyers decide to wait, the competition in the market decreases, giving buyers who make a purchase now a greater advantage. However, once the market starts to stabilise, a large number of buyers may enter the market at the same time, increasing competition and potentially driving prices up. This can make it difficult for buyers who waited to find a property that meets their needs and budget, as they may have to compete with a large number of other buyers for a limited number of available properties.
We see this time and time again. As soon as the mainstream media here that prices have started to go up you will see headlines again like ‘The Biggest Property Boom On Record Is Coming’ and ‘Why Houses Will Never Be Affordable Again’.
2. You Only Know When The Bottom Was When It’s Too Late
If the market conditions are favorable, property prices can rise quickly, even while you're waiting for them to drop. This means that buyers who wait may end up paying more for a property than they would have if they had purchased when they first had the opportunity.
Generally, even the professionals data companies can only tell when the bottom of the market was in hindsight, because by definition, the market has to have increased in order to work out where the bottom was. And as most data on the property market is lagged, you will only hear about when the bottom was when it’s too late.
3. The Past Predicts The Future
In real estate, the best predictor of future performance is past performance. Past events can provide insight into future market trends. There have been only four phases since the 1990s where capital city house prices dropped prior to the 2022 correction - from 1995 to 1996; 2008 to 2009; 2011 to 2012; and 2018 to 19. In a recent report conducted by Domain, they also found that the average upswings spanned 2.75 years, with a 32.7 per cent price rise, from peak to trough. And, on average, downturns experience a 3 per cent price decrease, over 0.75 years (or just several months).
While no one can predict the future with certainty, it's important to consider past market trends when making a decision about when to purchase a property. By understanding the market trends and patterns, you can make more informed decisions about when to enter the market, helping to avoid potential risks and capitalize on opportunities.
4. Your Borrowing Power Is Dropping With The Market
As interest rates rise, banks may re-evaluate their lending capacity for home buyers, resulting in less money available for borrowers. This could prevent buyers from purchasing within their desired price range and may push buyers out of the suburbs or properties types that they may be able to purchase now.
Conclusion
While it's understandable to want to wait for the market to drop, it's important to consider the potential risks and opportunities associated with this decision. It may be beneficial to consult with a professional such as a buyers agent to navigate the market as a buyers agent can provide expert guidance on the current market conditions, help you understand the risks and opportunities, and assist you in making a decision that is best for your specific needs and goals. With the right guidance, you can make a confident and informed decision about when to enter the market and buy a property that meets your needs and budget.
What The Agents Are Saying
“Back in full swing”
Many agents I’ve spoken with this week have said that they experienced numbers much higher than expected at opens over the weekend. With some photos showing long lines of buyers waiting to get into properties across Melbourne and Sydney.
It will be interesting to see if these numbers slow down this weekend as this is the week when many agents will be listing a lot of properties after the Australia Day break.
Looking online in the portals at properties posted a week ago, you can see that buyer demand is very high with some popular listings getting over 6000 views in the last 5 days.
The Wow Factor!
One of Sydney’s best.
6 Cabarita Road, Avalon Beach, NSW 2107
Often times designing a property around an amazing view creates the biggest wow factor.
This property is no exception.
In The Media
Melbourne real estate agent sells property on Christmas day from beach in Barcelona
Well, this definitely shows that first-home buyers are hungry and willing to do anything to get into the property market.
In this deal, whilst the agent was overseas negotiating technically on Christmas eve, the buyer was signing the contracts and getting the deal done ON Christmas day.
That certainly speaks volumes about the state of the market.
Final Thoughts
It’s clear that there is still pent-up demand in the market left over from the covid boom. Whilst interest rates and inflation are doing a great job at squashing it and prices are dropping. It’s important to remember that when the market starts bouncing back, it can happen fast and the only way to tell when the bottom of the market was is in hindsight.
If you’re thinking about buying this year, my advice is to do it in the first half of the year when competition is low.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
