Holding off on purchasing property because you think prices will continue sliding? You might want to think again.
While there’s been a lot of talk around dramatically dropping property prices over the coming months, it appears that may not be the case. Instead, the time to buy is really now.
We caught up with our National Head of Acquisitions, Brad Purcell, to find out why.
Things are getting busy – and will only continue to get busier
“Generally, we’re noticing improvements in buyer participation – particularly for quality assets,” says Brad. This means more open house attendees and bidders, and, as a result, higher clearance rates.
For prospective buyers, stronger buyer participation equates to greater competition. It’s something we’re noticing more of now compared to the last three quarters of 2022, and a trend we reckon is only going to continue in the short-term.
Factors like healthier migration, job growth, low unemployment, a strengthening economy, improved consumer confidence and new schemes to incentivise first-time home buyers will create even more competition in the market.
Prices are demonstrating potential to stabilise
Following the recent property boom where property prices more or less skyrocketed, what we’re observing now is a correction in the market. However, the increase in buyer participation could very well be an indicator that prices could be stabilising across the majority of markets – particularly Sydney, Canberra and Melbourne – with others set to follow suit.
This is typical of the property cycle. Off the back of inflated pandemic prices and a subsequent downturn in 2022, we’re potentially entering a period of stability. However, we expect this stage to be relatively brief and for the market to enter the next phase – upturn – either before the end of the year or Q1 of 2024
“We’re under no illusions that we’re going to see the same level of growth as 2020-21, but we could soon be seeing the end of the ‘price correction’ phase,” says Brad. “We’ll see price stabilisation and then price increases.”
Demand outweighs supply
When there are more buyers in the market, there’s more demand. Unfortunately, though, there isn’t quite enough supply to meet this demand; new housing is only being erected at a moderate rate, largely due to the currently high cost of construction. In a nutshell, there’s a housing shortage that will probably only get worse as competition grows. And just like any other scenario where demand exceeds supply, prices will go up.
“The longer you leave it, the increased level of risk that the continual supply and demand skew will mean more money will need to be paid for the asset in future,” says Brad.
What we’re experiencing now is truly a buyer’s market. So if you’re in a state of ‘wait and see’, you might find yourself waiting too long.
If you’re looking to purchase an investment property, expand your existing portfolio or find a family home, get in touch to discover how Brad and the Milk Chocolate team can help.
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