Buying property in a rising market
The challenge with buying property in a rising market is to keep pace with the market and to and adjust your buying strategy accordingly, and if necessary, quickly.
It’s not helped by the fact that in Victoria, when selling agents recommend the auction method to their vendors, the campaign inevitably starts off with either no disclosed price or bait pricing. This is where the campaign pricing starts low and then increases each week according to ‘buyer’ feedback.
The only way to combat this is to know the suburb and pricing in which you are buying and to keep an eye on the difference between the starting price and the inevitable selling prices. What is the % increase on average each time and then use that as a means to gauge the ‘real’ price.
Bare in mind that this isn’t a guarantee that prices won’t keep going up if supply outweighs demand, but at least you won’t waste time looking at property that just isn’t in your reach.
1 Do your research and get to know the marketplace. Know the suburb and understand what the type of property you want is selling for. It’s not about what prices they are advertised at, but what they are actually selling for. This is the reality check to go by, so that when you see a property advertised, you already know what the ‘real’ market value is based on recent sales evidence.
Register on www.realestateview.com.au/soldtoday for the latest sales results updates each weekend.
2 Know how the pricing rules that the agents have to abide by. If you are up with the rules of the ‘game’ then agents are less likely to underquote if they know they are dealing with savvy buyers.
Visit our Free Resources page to access buyer resources including Consumer Affairs Victoria Property Pricing Guidelines for Selling Agents and A Guide for Buyers and Sellers plus my ‘Property Buyers Guide – The 7 Common Mistakes Property Investors Make’.
3 If it is apparent that you are in a rising market and hopes of obtaining your dream home are disappearing fast, then reassess your position as its time for a reality check. If you must, what one thing would you be prepared to change to still secure your home?
1 increase your budget
2 move to a nearby suburb
3 buy a smaller property on smaller size land or
4 buy a lesser quality property (where you could add value via cosmetic or structural renovation).
By being prepared to move on just one of these 4 things, you will likely achieve your result.
4 Remember, even if you are buying a home to live in and not an investment property, make sure it still stacks up as a good investment regardless. You may need to rely on its potential for capital growth to continue to invest in the future and of course, not all properties grow at the same rate!
Miriam Sandkuhler - Property Advisor, Buyer Advocate and Author Contact Us