Regional property values are declining, but buyers holding off purchasing in an attempt to time the market and buy when prices are at their lowest are being warned their plans could backfire.
Cate Bakos, buyers agent and president of the Real Estate Buyers Agent Association (REBAA), said that picking the bottom of the market was notoriously difficult.
“Timing the market is challenging because even those at the coal face, or those with breaking economic data at their fingertips can’t pinpoint when a market bottoms. We can only note when it has turned,” Ms Bakos said.
Buyers questioning whether to take a break from the property hunt this spring in order to see what the new year would bring would need to ascertain what their priorities were when it came to buying property.
“The question for buyers to ask themselves is: “how does the thrill of perfectly timing the market compare to the pain of being priced out of the market?,” Ms Bakos said.
“The upside to getting this right includes the avoidance of negative equity, and potentially a huge capital gain when the market rebounds,” Ms Bakos said.
“However, the downside relates to missing the bell. If buyers are waiting for the bottom of the market and happen to miss the bell, they will find themselves competing in a recovering market with plenty of opponents rallying for the same properties.
“Over the past periods of market downturn, sadly I’ve seen active purchasers opt to be bystanders in the hope that they could capitalise on a falling market, but when they’ve missed the bell, some have found themselves priced out of their desired suburb entirely. It is a bitter pill for buyers to swallow when they can no longer buy in the neighbourhood they could have once afforded.”
Buyers agent Jack Henderson said that the other issue associated with waiting to buy was that a change in personal circumstances could risk access to finance.
“Your life can significantly change between now and 12 months time. So we’re in a position to be able to purchase right now, but you may not be in 12 months time, right?”
So there’s so many variables at play – I’m a big believer in if you’ve got the capacity to do it right now [you should do it now].”
Mr Henderson said that purchasing a property should be treated as a long term proposition, limiting the impact of short term value fluctuations on the property’s eventual sale value.
“If you’re going to hold the property for, you know, the next five to 15 years, whether you buy the property today, or you buy it in six months, or 12 months time, in the grand scheme of things, it doesn’t really matter [what values do in the short term].”
One buyer who isn’t waiting to see what happens with property prices is Peter Nay, who has engaged Mr Henderson to assist in searching for an investment property in either Newcastle or Sydney’s inner west.
Mr Nay, who is based in Sydney and runs a digital marketing agency, said that he was looking to purchase his first investment property after his business had undergone a period of growth.
He said that he was yet to be affected by rising interest rates, and was more concerned with what a property would do in the long term than any short term performance.
“So for me, it’s not about you know, whether interest rates go from three to five, or if the market pulls back two or 3 per cent this year, or whatever, because, again, like I’m not looking, if I do go through and purchase something … I’m not looking to get rid of it next year or the year after the year after, I’ll buy it for the long term.”
“I’m not in the game to flip properties. I’m not a developer, I’m not a builder.”
Mr Henderson said that buyers in the current market would have the upper hand when it comes to negotiations, but it was important that that they weren’t tempted by properties with major price reductions.
“Where people go wrong in these marketplaces, is they’re looking for a bargain, as opposed to looking for the right property. So everyone wants a bargain, right. But in my experience … and what I tell clients is, if you’re getting a bargain, it’s probably not a good thing, because it means no one else wants that property,” he said.
“So good quality properties in any marketplace, including this one, are still selling extremely well, there’s still records being broken, there’s still properties that have got 10 to 15 registered bidders on them. They’re the properties that I want to be buying, because I know regardless of market conditions, there’s always going to be a strong buyer demographic for that property.”