Questions are coming in thick and fast, so today we will answer the second question this time from someone who wants to remain anonymous. The question is “How do I know if it is a buyers or sellers market?” And we have asked Josh Masters to provide the answer.
Transcript:
Kevin:  Got a question from a listener who wanted to remain anonymous, so we respect that. No problems. By the way, too, if you have a question or a comment, all you have to do is send it in through the website and we’ll have it answered, as we will in this case because I’m talking to another one of our regular guests, Josh Masters, who is from Buyside.com.au. They are buyer’s agents.
Hey, Josh, how are you doing?
Josh:  Good morning, Kevin.
Kevin:  Good to be talking to you again. The question is “How do I know if it’s a buyer’s market or a seller’s market? The news seems to change every day. Are there some indicators that would help me work it out?” What a great question, Josh.
What would be your response, mate? What do you do?
Josh:  It is a great question. I can understand why there’s some confusion, because the markets are doing different things at different times. You look at Sydney, you look at Perth, you look at Darwin; everybody is operating on their own cycle, in a way.
Now, to define this question a bit more, buyer’s versus seller’s markets, what does that mean? A buyer’s market is typically when the buyers have a little bit more control in the negotiation. For example, there might not be as much demand out in the marketplace and buyers can call the shots, in a way.
In a seller’s market, it’s quite the opposite. This is what we would call a heated market or a really hot market. This is where sellers get to call the shots. Buyers are coming in and there’s probably multiple buyers at a time and they’re putting in multiple offers, and that’s how we define it.
There are a couple of ways you can look at this. As a top-down approach, you could look at what the markets are doing in the research reports. Things that we would look at, we would go to CoreLogic, we’d go to Domain, REA, and Property Observer, look at what the stats are bringing out in terms of where these markets are at a particular point in time. If Sydney has been going very, very strongly, there’s a good chance that that is a seller’s market, for example.
Now, as a buyer’s agents, we are operating on the ground. We’re doing the grunt work and doing the leg work, meeting buyers and sellers face-to-face every day, and we would take almost different indicators.
To give you an example, in a buyer’s market, for example, if you walked in to an open home and there were very few people there, that would indicate a buyer’s market because you might be the only buyer and that seller is almost desperate to sell their place; there are just not enough buyers out there. So, that could be a good indicator.
Properties tend to stay on the market for longer, so you might be looking at a place on the online portals and that property might be sitting there for a much longer than they would normally. You could also be the only one making an offer, for example.
Now, in a seller’s market, it’s a lot more aggressive. If you turn up to an open for inspection and there are 30 groups going through at the same time as you are, that’s probably a seller’s market, indicating that the prices in that area are probably going to be pushed much higher than they would normally.
This is the time that we see sign boards going up in front of a house and suddenly it’s sold within a couple of days. You’ll also probably be fighting multiple offers over the time.
Now, what I would say, though, is that when we’re looking for properties, if we find an investment that effectively is ticking all of the boxes – i.e., it’s a good location, low maintenance, it’s affordable, there tends to be good rental growth and price growth attached to it – then it doesn’t really matter whether it’s a buyer’s or a seller’s market.
I would say don’t get caught up in whether the news or the theory is it’s a buyer’s or a seller’s market because a good property is always a good property and there will generally always be a demand for that property. I use a saying: hope for a buyer’s market but assume it’s a seller’s market, if that makes sense?
Kevin:  Yes, it does. And I think a lot of people make the mistake of trying to time the market, as opposed to time in the market, as well, Josh.
Josh:  Absolutely. What I find is if there is a good property out there, it doesn’t matter whether it’s buyer’s or seller’s market; we are aggressively going after that property because we know that in the long run – and even in the short to medium term – if we get that property in that portfolio, then it’s going to serve us very well.
As you know, Kevin, property is a long-term investment. It’s not about what it’s going to do tomorrow, but what it’s going to do for you in ten years’ time. The leverage and compounding effects of a good investment at the start can have massive effects on the portfolio over 10 or 20 years.
Kevin:  Great advice Josh. As always, we appreciate your thoughts. Thank you for joining us in the show. Josh Masters is from Buyside.com.au.
Josh, thanks for your time.
Josh:  Thanks for having me, Kevin.