Buying and Selling in the Same Market

Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

Property market commentary is almost always focused on the numbers although unless you are a sophisticated property investor, many of these statistical observations can be confusing to the “mum & dad” buyer trying to read the market.

When buying the family home, as long as you buy and sell simultaneously under similar market conditions, then the state of the market is almost irrelevant. In fact, upgrading your home in a slow or falling market can be beneficial. That’s because, if you assume a property market has fallen 5 per cent, your $550,000 home might only fetch $522,500, yet your new home previously worth $770,000 now sells for 5 per cent less at $731,500; a $9,000 net benefit.

Alright, this is a crude example but in recent years, it is the $1,000,000 plus price bracket that has adjusted down more than property priced around the Perth median of $515,000. That’s why the median house price has been falling up until now.

Buyers are now emerging from their holding pattern with the latest numbers showing upward pressure on median prices, sales volumes improving and supply of quality homes constrained. If you are an upgrading buyer, this market is ideal and you ought to proceed with confidence in such a low inflationary and interest rate environment. Property has always been a long term prospect and the family home purchased in 2017 for the median $515,000 ought to (if history repeats) be selling for $1,030,000 sometime over the next decade. Even if price growth is more subdued (such as it has been over the last decade in Perth) over the next ten years, most commentators agree that the bottom of the market has already passed.

It is somewhat inevitable that property prices will continue to rise over time and affordability constraints aside, those hesitating to buy when there is good choice about is counter intuitive. In a rising market when people gain confidence to buy, stock levels fall as demand increases and choice becomes so constrained that many buyers are forced to buy homes inadequate to their needs or end up competing for quality homes and paying more than they should.

If you’re upgrading through the market and have recently sold, I recommend you make a buying decision soon.

by Hayden Groves
REIWA President
REIA Deputy President

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