The term ‘buyer’s market’ usually applies when buyers have more power in the property market than vendors (or sellers) and therefore, have an advantage when negotiating the final price for a home. Basically, a buyer’s market occurs when there are more properties for sale than there are people willing and able to buy them.
Signs that we may be encountering a buyer’s market could include:
A buyer’s market could be a fantastic time to purchase a home, provided you research your purchase very carefully. There are some risks involved, but if you perform your due diligence and select the right property, you should be able to overcome them.
You will need to be careful not to overpay for any home you purchase in a buyer’s market, so the right property market data will be critical to your negotiations. Additionally, if the price of the property you buy should continue to fall, you may potentially find yourself in a negative equity situation – that’s where the home is worth less than you have borrowed to purchase it. But careful research and a 20% deposit could help you avoid this situation too.
Generally, it makes good sense to purchase a home when prices are low. If you plan to live in the home for a while or hold it as an investment property in the long-term, then you will likely be able to wait out the peaks and troughs of home value changes to eventually come out on top.
The problem with taking a ‘wait and see’ attitude is that it may cause you to miss the opportunity to save – home values won’t continue falling for very long. The great thing about a buyer’s market is that there are plenty of properties available and more time to explore them because they’re on the market for longer.
In our next article this month, we talk about why it is now so important to get pre-approval on your home loan and to confirm your borrowing capacity before looking to make a property purchase. As always, it’s a good idea to get your finance in order before you consider putting down a deposit or signing a sales contract, so please give me a call today.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.