These are all words from recent stories about the state of Australia’s property market. New studies and data are published every week and experts scramble to interpret what they mean. So who do you believe?
Of course, not all markets are experiencing the same volatile ride so it does pay to do your homework when planning to buy a property.
According to Oliver Stier, a licensed real estate agent and the director of OH Property Group, a Sydney-based buyers agency, believes moderate long run capital growth of 4-5% can be expected in line with wage growth.
“I don’t expect 40% drop in prices as some doomsayers suggest. Rental yields should be higher going forward than over the last five years due to continued undersupply of housing in NSW,” he writes on ninemsn.
“And interest rates are lower now and likely to remain so for some time to come, making carry cost cheaper for investors.”
Oliver suggests prospective property buyers or sellers ask themselves three pertinent questions before making the big leap this Spring.
1. Are you making a real estate decision based on the market or on your life?
Property investors are typically opportunistic buyers, whereas owner-occupiers usually buy properties based on their lifestyle needs, such as an expanding or downsizing family. If you are hesitant to make a real estate decision, ask yourself what is holding you back from buying or selling? Are you trying to make your decision based on timing the market (which you have no control over) or based on your life and needs?
2. How will you know when the market has hit the bottom?
The reality is that no one can ever accurately predict when the property market has or will hit the bottom. The only way to know for sure is to look at the data retrospectively, once the market has already made an upward trajectory and then it will be too late. It would be a waste of time and energy to sit on the sidelines to try to pinpoint a particular turn. Chances are you may be wrong with your calculations and would have by then missed out on some good opportunities in the marketplace. If you believe that the property market is most likely to go up in the medium term, focus on buying right and negotiating well, rather than on picking the bottom.
3. What are you in control of?
It is important to understand and differentiate between factors which you are in control of and those which you are not. You are not in control of the global economy or how the EU and USA are performing; and you are not in control of interest rates which are set by the RBA. You are also not in control of the quantity or quality of property stock on the market. However, this does not mean that you cannot be in the driver’s seat when it comes to buying or selling a property.
If you are selling a property, you are always in control of the agent you appoint, the method of sale, the timing for the listing, the marketing budget, etc. Likewise, if you are buying a property, you are in control of picking a solid property (that is not going to underperform), understanding its value, how much you are willing to pay and when you submit the offer or bid at auction.
Keep things in perspective and don’t be paralysed by the things you cannot control. Focus on maximising the outcome of the things which you can control. This means that regardless of whether you are buying or selling a property this spring, you should demand more and negotiate smarter.