- High demand but low supply has seen housing values increase 18.4% in the past 12 months
- Investors are adding to the "price pressure cooker"
- Buyers agent Kate Hill lists seven tips to success in the current market
Despite lockdowns throughout the country disrupting the property market, overall it remains resilient.
Prices continue to increase due to elevated demand and low advertised supply. Housing values are 18.4% above the level seen a year ago, while advertised supply is 30% below the five-year average.
Kate Hill, a property buyer with Adviseable, said the disconnect between buyer demand available properties will continue to push prices higher for some time, especially given the Reserve Bank’s plans to keep the cash rate at just 0.1%
“Interest rates are also part of the equation and are set to remain at all-time lows for another two, or maybe three, years,” Ms Hill said.
“Property markets are also being impacted by record-low vacancy rates and rising weekly rents, which are encouraging more investors to take action and adding to the price pressure cooker.”
Ms Hill said the demand is so extreme that more buyers are missing out than those being successful. The intense competition has also meant some people significantly overpay due to a fear of missing out.
“Emotion is never a good thing when it comes to savvy property investment decisions because people run the real risk of overpaying,” Ms Hill said.
“However, it is still possible for purchasers to buy successfully in a hot market.”
The seven tips for success in a hot market
- Think laterally. Aim for the “sweet spot” which could involve considering an adjacent suburb, resonation potential or, for investors, those with a long-term lease in place.
- Be proactive. Get into the habit of asking agents for other properties they have on their books or those that are in the pre-market stage.
- Understand the contract. “Be sure to have a thorough understanding of the offer and acceptance and contractual process of the respective state, as well as the expectations of the local market, so that you can move quickly, yet as safely, as possible,” Ms Hill said.
- Ignore list prices. Ms Hill said often list prices are a starting point at best during a hot market, but being armed with the ability to know fair market value is arguably the top advantage.
- Review the contract early. Ms Hill suggested buyers ask the agent for the contract early so it can be review before entering negotiations.
- Don’t play it too cool. Ms Hill said being the first bidder or even the first to submit an offer pre-auction is advantageous and shows you mean business.
- Contact the agent. “Don’t be afraid to chase up the agent after the first inspection as you could be one of 50-plus groups that visited the property and you may not be as memorable as you think were,” Ms Hill said.