November 2015 - How to Take Advantage of a Slowing Market

A slowing market does not necessarily mean a price drop or correction – which is what many buyers are secretly hoping!

Sydney’s double digit rate of price growth is now slowing as the heat and intensity comes out of the market. But the pendulum still has some way to swing before we are back to a “buyers market”.

SQM research is predicting Sydney’s price growth at around 7% in 2016 but this figure masks the wide variation amongst Sydney’s 650 suburbs. In high demand suburbs, capital growth could well be stronger while in oversupplied areas it could be zero.
Selling agents are conceding the market has ‘cooled-off’ but this does not necessarily correspond to a decline in property values.

What it does mean however, is that there is less ‘interest’ in each property and hence buyers are not getting into the bidding wars that we have seen in the past 12 months. With auction clearance rates trending down toward 60% vendors will need to realign their expectations to meet the market.

As buyers' agents we are seeing that buyers have been spooked by sensational media headlines predicting a crash and the banks raising interest rates. But if you buy in a good location close to key amenities, transport, shops and schools then your next home or investment will be secure for the long term regardless of market fluctuations. Buy when your finances are ready and when you see an opportunity.

You still need to be realistic in a slowing market and the best way to take advantage is to find a motivated seller - someone who has purchased and needs to meet the current market sentiment. Look for suburbs where the auction clearance rate is low and the stock levels are good.

Buyers should still complete their due diligence as always and move at the same pace they would normally, but there is often more room to move in the negotiation providing the vendor has been well conditioned by the selling agent and/or market.

Vendors have also been exposed to the negativity in the media and may have lower or at least more realistic expectations than they have had in the past 12 months. This said, it is still important to negotiate fairly quickly, as too much greed from the buyer can still result in disappointment.

Many buyers have become tired of searching and missing out on properties that they have decided to wait until the new year.

When you combine this with some vendors becoming more realistic in relation to price expectation, there may well be a good opportunity to purchase before the end of the year.

A good buyers' agent can help you sniff out the best deals in the current market and lend a hand negotiating to save you money.  With more stock on the market in the late spring season there are still good opportunities to buy before auction – although this is more due to vendor nervousness now rather than buyer competition.

In summary, with a few more properties on the market and vendor uncertainty, there may be a greater chance to play one property off against another in the negotiation process.