The Upturn Downturn: buying in a buyer's market
Category Blog
Perhaps a fluctuation of prices in the property market is a good thing. Well, for some. But it does change static situations which, in themselves, can pall with regard to the movement of property; a bit of uncertainty or variation in prices can certainly add a bit of spice to the property market, drawing new interest in both selling and buying.
Owners who have sat with property for years may be galvanised into selling when prices drop because they think, rather gloomily, that prices may fall even further and they better get the best price they can as quick as they can. Buyers of course, benefit from prices dropping - perhaps in an area they have long aspired to live in. With the current low interest rates, it means that sellers may find it easier to sell their homes, and buyers can pick up really worthwhile opportunities.
While a falling property market doesn't make everybody happy, there are pointers that balance out the change, and it does depend on how each individual is looking to gain at any particular moment. And almost every situation can prove its merits.
Upsides are more than just falling prices
Smaller bonds:
There's a range of plus-signs around cheaper houses, coupled with low interest rates. There's less to owe the bank, and smaller amounts to pay each month. And it's easier to qualify for a home loan. And indeed, under these circumstances, location desired can become location affordable. It also means a buyer can buy a house at a good bargain, and then have extra cash for renovations - all of which adds to the impetus of growing the economy.
First-time home buyers:
When there's a boom in property prices, first-time home buyers are left scurrying to find a place. Often they end up with a poky flat instead of the small house they had their eye on in a new development. Rising property prices can create a curtailed lifestyle on all levels, which in turn can impact on the economy negatively. But each time prices fall, they are given a bigger choice of the market - even if is just an apartment with an extra room or a garage. Each time they make a choice for a better lifestyle, there is a ripple of improvement through an entire society. Falling property prices can conversely help to improve the market, perhaps even leading to the next upturn.
There's a wide range of choice:
During a boom, there may be fewer properties for sale. Oddly enough, people tend to hang on to expensive properties, enjoying the value under their control, and always believing that the price may climb even higher. And then, when properties do come on the market, they may be hotly contested - and buyers may find themselves in the stressful situation of literally bidding against others, or having to make quick decisions under pressure.
'Buyer's Remorse' can play a big part during these times because a homeowner may have had to forego a property they would have preferred, but were not really given the time to make a considered purchase. Sometimes the house itself becomes secondary to actually achieving ownership. Buyers may make their move because they feel the property might rise in value - a factor they hope will offset their hasty move. Currently, in the 'downturn' buyers have a wide range of dwellings across the market to choose from; there's more time and less anxiety. A generous selection of quality listings - added to low interest rates - makes this time to buy particularly attractive.
Bottom of the market:
The point is not to buy with a view of waiting for the market to bottom out, or a rise in prices. There will always be growth and decline whenever you buy. Certainly buying when the market is down means you have opportunity to score when it swings up - which it will. Buying in a low market doesn't always translate into an investment, but it probably has more benefits than buying at a top price which may hold more potential to fall than increase further. Whatever the market, people still buy on emotion; a dream home is always exactly that. Sometimes the ups and downs of the market are far from mind when the heart is happy.
All points in favour, point in the right direction
There are many people advising there's no better time to buy a property than right now - and there has been a significant uptick in home loan applications and approvals. It is a buyer's market, but sellers are able to cash in on many benefits as well.
- If you are able to find a property for less than one million, you will be exempt from paying transfer duty. This is especially advantageous for first-time home buyers.
- Interest rates are the lowest they have been in 50 years.
- With the lending rate currently so low, you will be able to qualify for a bigger bond with the same salary, and your repayments will be lower.
- Make sure you have a competent and tenacious estate agent by your side for any tough negotiations. People are Covid-weary and there are many bargains out there just waiting for your search.
- Likewise for sellers - ensure a highly experienced estate agent is by your side offering advice on market-related pricing, marketing, paperwork, comparative market analysis, show house strategies, and negotiating skills.
- Selling in the time of Covid-19 means that properties may come quickly onto the market because people are tired of their cooped-up current environment and desire change. Upkeep and repair expenses can influence these decisions as well. Keeping your eye on location, price, and renovation potential, will ultimately see you making a good decision with the support of your agent.
The Leapfrog Property Group
Leapfrog Property Group offers a fresh and innovative approach to buying, selling, renting and property investments, ensuring the best property deals for clients across South Africa. Our agents are qualified, trained, experienced; our approach bold and spirited, driven by heart, generosity and honesty. It is our mission to advise, eliminate obstacles and save you unnecessary expense. Trust is our watchword. And value our motto. Armed with our combined credentials, we are the bright face of excellence in the South African market.
Author: Leapfrog Property Group
