- Dwelling values are rising at the fastest rate in 20 or more years
- Some prospective homebuyers aren't prepared to pay market price
- Buyers may need to be flexible on location and specifications
Before the pandemic darkened our doors a year ago, a number of property markets around the nation were already experiencing rising market conditions.
In fact, after a softer marketplace for nearly two years following the peak of the boom, Sydney property prices had been strengthening in a consistent way.
As the year progressed and our nation handled the crisis admirably, the combination of pent up demand, a number of years of subdued buyer interest, under-representation from investors because of lending restrictions, record low interest rates, construction stimulus measures, and more money generally in our pockets, transaction numbers and property prices started to reignite.
In fact, according to CoreLogic, dwelling values are rising at the fastest rate for some 20 years with more price growth forecast for the next year or two in many locations.
Demand outweighing supply
And we are in the unusual position where this is happening across almost all property markets in Australia. The last time that happened was in the early 2000s.
The sharply rising market conditions are also due to the significant uptick in buyer demand at the same time as property listings being unusually low.
So, at the moment, we’re regularly being contacted by potential clients who have missed out on buying a number of properties over recent months. They just keep missing out.
Sometimes, they simply haven’t been prepared to offer market price for a property, which is vital in a rising market. Of course, it’s difficult to establish the ‘market price’ in a fast-moving and active property market. And that’s a whole other scenario.
At other times it could be due to their criteria for a new home is too narrow, as this drastically reduces the potential options.
Many homeowners have their suburb of choice to live in, of course, but when there is far more demand than supply, and prices are surging in a sellers’ market like now, then being flexible on location might be needed.
Sure, in an ideal world, everyone would be able to buy where they want and what they want.
But this ‘market nirvana’ rarely exists and certainly doesn’t when hordes of buyers are competing for a limited number of properties on the market in highly desirable locations across the nation.
You might consider neighbouring suburbs to your place of choice, which would often offer similar attributes but can have different price points depending on their perceived prestige amongst buyers.
And buying into a more affordable suburb that is next door to a more exclusive one can actually make sound property investment sense more generally with the potential for excellent capital growth.
And again, everyone has different needs and wishes and wants when it comes to property types, land size or the configuration of the house depending on the size of your family and who you’re buying this for.
So, the same flexible mindset as with the area or suburb could be adopted where possible.
Some home buyers stick really rigidly to buying a lifestyle property but forever miss out because they aren’t prepared to pay what is needed to secure this type of in-demand property. They’re not keeping up with the market.
And I am not saying just throw hundreds of thousands of dollars more at it than you need to, but know what the property is worth when it comes to recent sales and, as important, know what the property is worth to you.
How many more weeks and months are you prepared to spend looking for your dream home?
The same can be said for people who are stubborn and insistent on buying this type of house in a particular location when they can’t actually afford to do so.
But they might have the funds to buy a premium unit in the same location but would rather miss out entirely than rain on their house ownership dreams.
Another element that buyers could maybe have flexibility on is when it comes to the number of bedrooms or bathrooms a potential home should have.
It’s a matter of thinking about the ‘must-haves’ and the ‘nice to haves’… there’s a big difference.
While I would never suggest purchasing a property that fundamentally won’t suit your needs, there’s no point in that because you’ll just be unhappy. Further down the track there could be ways to change the internal features of a property as long as it has the structural specifications to do so.
So think really hard about what you can and what you can’t compromise on, in terms of area and in terms of the actual property itself – the ‘must-haves’ and the ‘nice to haves’.
Know the market that you’re trying to buy into really well in terms of demand, availability, and pricing. Do your research.
I think that with property prices rising so quickly, buyers who are not flexible enough may wind up missing out on this market cycle altogether.