Our property markets have been surging this year with double-digit growth in sight for all our capital cities.
And now that more Australians feel secure about our economy in general, and their jobs in particular, this will only place more impetus under our markets.
I recently heard someone suggest our housing markets are on a Mexican wave.
You know, like what happens at the cricket or football when they used to allow people to go to the MCG.
One person starts and another joins until the whole crowd has their hands in the air and the circular intensity builds and builds.
And this is showing itself as FOMO (fear of missing out) - when homebuyers and investors are scared the market is running away from them.
They feel they must get into the market and this is showing with even secondary properties selling well above their vendor’s expectations.
Normally at the beginning of the property cycle, there is a flight to quality – people remember the type of properties that held their values well during the downturn and avoid secondary properties.
But currently, I’m seeing some home buyers so worried the market is going to pass them by that they are compromising their selection criteria just to get into this market.
Unfortunately, we’ve seen how do you send up when the market eventually slows down, and it’s not always a pretty sight.
The strength in our housing markets is underpinned by a disconnect between supply and demand. Just look at the charts above.
- Also read:Here’s how to avoid these 12 common reasons property investors fail to build a Multi Million Dollar Property Portfolio
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Sydney property market forecast for 2024
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
Corelogic reports national total listings – the stock of properties for sale on the market - over the four weeks to the end of March was 25.5 per cent below the five-year average.
This is because buyer demand is so intense that it is outstripping the ability of sellers to put their properties on the market.
The ratio of sales to new listings is tracking at around 1.1, implying for every new listing added to the market, 1.1 homes are sold.
This in turn keeps the overall inventory levels low, fuelling a sense of FOMO amongst buyers.
- Compromising on Location – desperate to get into a particular suburb, some buyers are now looking at buying on or too close to main roads or train lines or flood-prone areas, rather than buying in an adjoining suburb they can afford.
- Overspending - FOMO is causing some buyers to take financial risks by exceeding their budgets or spending their last cent to get into this market and they have nothing left over for the inevitable expenses that occur when moving home.
- Avoiding Due Diligence – in a rush to beat the competition, some buyers are waiving cooling-off periods or not conducting essential building and pest inspections or strata searches.
- Ignoring Repairs and Defects – other buyers are biting off more than they can chew and end up purchasing properties with structural issues that are likely to lead to problems they should have avoided, and potential huge repair bills.
- Buying off the Plan – despite knowing new and off the plan apartments make poor investments, some buyers are hoping the market continues to rise to cover the premium they paid for buying this type of secondary property.
This is a great time to remember the quote from Rod Warren Buffett – "Wealth is the transfer of money from the impatient to the patient."
Sure the markets are moving on, but not all properties are going to increase in value. Now, more than ever, correct property selection will be critical.
You can trust the team at Metropole to provide you with direction, guidance, and results.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that's exactly what you get from the multi award-winning team at Metropole.
We help our clients grow, protect and pass on their wealth through a range of services including:
- Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! Click here to learn more
- Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $4Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney, and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment-grade property. Click here to learn how we can help you.
- Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management – Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.