Buying success in hot markets
Elevated demand in a time of continued low advertised supply means many potential purchasers are missing out on buying property, according to a national buyers’ agency.
The latest CoreLogic Home Value Index found that Australian housing values were 15.8 per cent higher over the first eight months of the year, and 18.4 per cent above levels a year ago, however, advertising supply remains about 30 per cent below the five-year average.
Adviseable Property Buyer Kate Hill said the disconnect between buyer demand and properties available for sale was pushing prices higher – and was likely to continue to do so for some time to come.
“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 extreme levels of demand were so out of sync with the advertised supply level that more buyers were missing out than those who were being successful.
Unfortunately, the intense buyer competition for listings in many areas was also seeing some people significantly overpay for properties because of their fear of missing out, she said.
“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 hot market conditions without burning all their cash to do so.”
Seven tips for buying success in hot markets:
1. Think laterally
Ms Hill said to aim for the “sweet spot” owner occupier resale market with a slight twist, including considering an adjacent suburb, a property with renovation potential and, for investors, those with a long-term lease in place.
2. Be proactive
Buyers need to be proactive during their property search including getting into the habit of asking agents what else they have on the books or coming up that is pre-market.
3. 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.
4. Ignore list prices
Ms Hill said being armed with the ability to determine fair market value is arguably the top advantage, particularly when buying in a rapidly moving market when list prices are a starting point at best.
5. Review the contract early
“Ask the agent for the contract early and have it reviewed by your legal representative before you enter negotiations, so that can you make an informed decision,” Ms Hill said.
6. Don’t play it too cool.
Let the selling agent know you mean business, such as being the first bidder at auction or even the first to submit an offer pre-auction.
7. 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.