Buying when uncertainty is at its peak.

In real estate, prices are driven by supply and demand. When everyone wants a certain type of property that generally leads to rising prices. When there’s an influx of listings of a certain type of property or in a certain location, prices fall.

 

This is relatively simple and most people understand the basic mechanism of supply and demand.

 

Over the past few years, we’ve been in an environment where demand has been extremely high and supply equally as low. This has driven prices to rise by up to 40 per cent in many blue chip areas in what has been a great period for homeowners and investors.

 

On the flip side, buying good-quality properties has been extremely difficult. With demand so high, when a highly desirably property came onto the market, competition was fierce and you would most likely be competing with multiple buyers as sale prices continued to stretch further and further away from those initial price guides.

 

This situation was fuelled by low interest rates and the media talking about rapidly rising house prices.

 

Now the situation is slightly different. The media have changed their tune and interest rates have been moving higher. This has impacted buyer sentiment and there are fewer active buyers.

 

While there are certainly more listings now than there were 12 months ago, we have to remember, that in the overall scheme of things, the number of high-quality properties available to purchase remains the same.

 

One of the key differences now is that there is far less competition for those really good properties when they come up.

 

This is a really important factor to consider. If you were trying to buy premium blue chip property last year, you really didn’t have much room to negotiate and it was difficult to compete. You really had to be prepared to pay what a property was worth or more than likely above that level just to secure it.

 

Now the tide has turned and buyers are once again back in the driver’s seat. This doesn’t mean that you simply go out there and buy any property just because it’s cheaper than what it might have been a few months ago, or just because the agent is dropping the asking price.

 

This is the time to really hone in on buying A-grade assets that are not always going to be available.

 

This might seem counterintuitive, given that we are at a time when there is a lot of uncertainty out there, but the closer we get to peak uncertainty, the better buying opportunities become.

 

When the situation changes and conditions are great again, then you can be sure that you’ll once again be fighting against many other investors and home buyers trying to get a hold of the very best assets. 

 

If you’re prepared to think long-term and understand that periods of uncertainty can often deliver the best opportunities, then you might just be able to find yourself a great deal on an incredible asset that will make you money for the rest of your life.

If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.

 

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