Navigating a Sellers’ Market
It’s no secret that we are in the midst of a property boom, and that means that the pendulum has firming swung in the favour of sellers, making it a sellers’ market, driven by strong demand from first home buyers, established homeowners, and investors alike, creating a deficit in the supply demand/ratio.
Australia’s leading property data, analytics, and information provider, CoreLogic, estimates that in the three months to May, there were around 164,000 dwelling transactions nationwide; with just 136,000 new properties added to the market in this same period. So, despite this number of new listings being higher than previous few years, the uplift in sales volume, has absorbed the stock. See below chart:
Buyers are wondering whey there are few sellers in a market so conducive to securing not only a quick sale but also optimum price. The reason for this is two-fold. Firstly, it’s FOMO-driven (fear of missing out); sellers are delaying their decision to sell, worried that if they sell ‘too soon’ and the market keeps escalating, they will miss out on the opportunity to reap maximum gain.
Secondly, if they are selling and buying in the same market – then they are aware (and may be reluctant to) that their next property is also going to cost them top dollar, as they will be competing with other buyers to secure. It’s only really downsizers that benefit the most clearly in this situation.
How does a buyer ready to purchase navigate their way through this current market?
Despite the temptation to perhaps purchase in areas with higher stock on the market; you still should focus on what your property goals are, and pay attention to the booming suburbs/regions, as there is generally a reason for this. You want to ensure your purchase is in a location that will provide strong capital growth via sustained demand over time; thus, rather than looking for a ‘bargain’, you should still focus on purchasing the best property you can afford.
It’s also a good idea to engage with local agents in the area(s) you wish to purchase in, as in a red-hot market like this, there is an increasing number of off-market sales, as agents have a database of homeowners they can contact directly. Once they know what you are looking for, and that you have preapproval to buy, sometimes a few phone calls are all it takes to find something for you.
You may also look into engaging the services of a buyers’ agent – this is a trend that is really coming into its own in these current buoyant conditions; this is particularly useful for time-poor buyers or buyers purchasing from other locations far from where they are looking. Please keep in mind there are fees involved in a service like this, but you will also benefit from the negotiation skills a good buyers’ agent will have, when it comes to making an offer – the selling agent should be working for the sellers to secure optimum outcome, a buyers’ agent is working for you to secure you a fair deal.