Purchasing in a booming market

Sudden increases in property prices, such as the one we’re experiencing right now, are not a new phenomenon in real estate. Over time, markets follow a cycle of boom and bust just like the stock market. Whilst sellers might rejoice at the current state of play, buyers can face an increasing financial challenge that changes week to week.

Breaking into the market for the first time is formidable, but it can be daunting for owners who want to climb the property ladder too, particularly when you have sold your property before buying.

A red-hot market can quickly blow all your financial assumptions out of the water. The hefty deposit that you’ve saved no longer gets the job done, and you’re tapping the calculator to see how your income can cover payments for a mortgage that you’d previously considered a stretch (despite record low interest rates). 

But all is not lost. Opportunities always exists in the property market, and diligent research and focus will eventually uncover them. 

Where previously you might have thought your mortgage pre-approval would win the day, you’ll now have to think more strategically, expand your search criteria accordingly and expect it to potentially take longer to find what you want. This is particularly the case in the current market where low stock levels are one of the primary drivers for rising prices.

It can pay to work closely with local agents, rather than simply rely only on internet listings or newspaper ads. Many buyers are reluctant to engage with agents, but let us know the type of property you want and that you’re a serious buyer who is ready to put your money down. If you sign up to our new listings, we’ll send you the latest properties as soon as they come onto the market and often before they are advertised more broadly. ‘Off market’ deals are still happening and it pays to know about an opportunity before the rest of the market.

If you haven’t done so already, you must have your finances lined up. Time waits for no buyer in a hot market and even pre-approval can take some time to secure. Double-down on ensuring you have all the available government subsidies covered. These will include first-home buyer grants and stamp duty discounts. These are a benefit and a curse. While they boost your capacity to buy, they contribute to the strength of the market.

You should plan your negotiating strategy when an opportunity arises for the right property. Price discounts are almost non-existent right now, averaging just 2.7% across all capital cities according to CoreLogic. A low-ball bid will take you off the board, so don’t do that. 

Many buyers will win a property by offering a shortened or extended settlement period that suits the seller. You can also add value to your offer by completing your due diligence and being ready to commit ‘unconditionally’ rather than with a cooling off period. Be flexible and creative in your approach.

It’s also important to understand what’s really going on in the market. You can safely ignore most of the headlines on TV and online – don’t let them panic you. Real estate in Sydney isn’t one market but thousands of micro-markets. We’d be happy to talk to you about local trends and prices rather than have you make assumptions about your target neighbourhoods.

Finally, don’t feel this is a time you should retreat from the market. There is a lot of academic research about the folly of trying to time market slumps and recoveries – there are simply too many unpredictable factors at play that can have an impact (take Covid-19 as an example). If the time is right in your life right now for you to buy a home, stay the course, be diligent and you’ll find your dream.