I have often observed that when it comes to buying property, people are sheep. We seek solace in the fact that other people are doing the same thing that we are. We feel that it takes the risk out of an otherwise risky scenario. So at the moment, with buyer confidence on a high note, much of the Sydney market appears to be in a frenzy, with prices well and truly on the rise.
However, there are buyers who are being reticent and scared off by auction clearance rates which have been consistently over 70%. Particularly given how hot the market is at the moment, it is wise to be cautious. To paraphrase Warren Buffet: show fear whether others are fearless and be brave where others show fear.
The big question is whether this is the right time to buy. I have heard a saying in property circles that relates to this dilemma – is it about timing the market or time in the market? I believe it is the latter. The key is getting the property selection right and then not paying too much for it.
It’s all very well to say that you should only buy in a buyer’s market. Last year was a buyers market but listings were down and there was overwhelmingly poor quality stock available. This year is a sellers’ market, and according to APM, the number of listings is the same as last year but overall there is vastly better quality out there to buy. So we have been buying more this year than last year as a consequence.
The secret is in knowing enough about the market not to get caught up in the frenzy – we use our knowledge and experience to be able to identify a property that is more likely to be an above median growth performer. And then we know how to price it and negotiate effectively. And lastly, it is crucial that you know when to walk away from a property.
Personally, I would rather buy a quality property in a hot market than a dud property in a flat market. And then we also don’t know how long this growth phase will last for. Property values could be up significantly before it flattens out again. But then again, they might not – so be careful what you pay.
Published: – February 2014
Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.