While it seems like experts are always talking about ‘the housing market’, there are many factors at play when it comes to residential real estate. The property market can differ from city to city, between the big smoke and the country, or among different property types.
Then there are buyers’ markets and sellers’ markets. Whether you’re a buyer or a seller, you needn’t be put off by what type of market you find yourself in, but rather get savvy about using the state of play to your advantage.
What does a buyers’ or sellers’ market mean?
Put simply, a buyers’ market occurs when there are more homes available than potential buyers.
As the name suggests, this is the ideal time to make a move if you’re looking to buy a home. As a buyer, you’ll likely be able to buy a great home for less than you would in a sellers’ market.
Selling in a buyers’ market
On the flip side, if you’re trying to sell your home in a buyers’ market, that For Sale sign could linger on your lawn a little longer due to the amount of competition. You might also have to lower your price or make other concessions to secure a sale.
In the exact opposite scenario, a sellers’ market is when there are more people looking to buy homes than there are homes available for sale.
Slim pickings for purchasers can result in bidding wars, especially on quality homes, which ultimately leads to price increases. Unsurprisingly, a sellers’ market is a great time to sell your home because you can be confident in securing a ‘healthy’ listing price, but it’s a different story for buyers.
Buying in a sellers’ market
With multiple buyers often interested in the same property, you’re less likely to get a great deal when the hammer falls, and you could lose the opportunity to purchase a home altogether if your negotiating isn’t up to scratch.
Should this change my approach to buying a home?
BOQ’s chief economist Peter Munckton says it’s necessary to drown out the noise of what is happening to the market nationally, statewide, and even in your region.
'It’s important to understand is what’s happening where you're looking and where you are with your finances,' he explains.
'The second most important issue is your cash flow and knowing your comfort level when it comes to how much of your income will be spent on the mortgage.'
It’s human nature to want to buy at the bottom of the market and sell when prices are high, but Peter says waiting for the perfect storm can give people analysis paralysis.
'Owning property is a significant investment, so you need to buy wisely, but it’s equally about buying a home you’ll enjoy for years to come with friends and family,' he says.
How to tell if it’s a buyers’ or sellers’ market
If you do want to learn more about the kind of market you’re dealing with, look at the number of homes for sale locally. If stock is low, it’s most likely a sellers’ market. You can also research new listings data via a number of property sites such as CoreLogic, PropTrack and Domain.
Simon Pressley, Brisbane-based buyer’s agent and managing director of Propertyology, says identifying which market you’re in could be as simple as eavesdropping on lunch time conversations around the office.
'Generally speaking, energy levels within the community will somewhat reflect property market conditions. During a sellers’ market, it will be common for workplace, cafe and barbecue conversations to centre around real estate. A fear-of-missing-out tone becomes prevalent,' he says.
'[In a buyers’ market], very few people attend open homes and weekend auctions. There’ll be plenty of properties listed for sale on real estate portals and properties sit idle for a long time [and] the advertised sale price often reduces,' Simon explains.
How to work the property market to your advantage
Whether you’re in a buyers’ market or a sellers’ market, preparation is key to nabbing the house of your dreams at the best possible price.
1. Do your homework
Researching the local real estate market means you’ll be able to understand current trends, prices, supply levels, and how long homes are typically taking to sell.
We also have our own property and suburb report available, to help you get granular on where you're looking.
2. Work out your wish list
Whether it’s a buzzy location, a style of architecture, a set number of bedrooms and bathrooms or a north-facing backyard, knowing exactly what you want will make the search more efficient and give you the confidence to act fast. In a sellers’ market, you may need to be a bit more flexible; for example, consider something a little further out from the hustle and bustle, or a property in need of renovation.
3. Get your pre-approval in order
Having a home loan pre-approval gives you a competitive edge over other buyers who haven’t sorted their finances, particularly in a sellers’ market where you’ll need to act fast. Vendors are likely to be fielding several offers, so those buyers with pre-approval will stand out as serious contenders.
4. Make a strong offer and negotiate with confidence
Coming in with a solid offer is essential in a sellers’ market. This may mean offering more than the asking price or being open to additional concessions, such as a short settlement. In a buyers’ market, some sellers are willing to negotiate on not just the price, but also settlement time frames and other aspects of the sale.
5. Be prepared for a bidding war
In a competitive market, multiple buyers are often interested in the same property, which usually leads to a bidding war either via private treaty or at auction.