Sellers all ask one question, where are property prices headed? Based off this, they try to figure out the best time to sell.
If you want to know how to time your sale whether the market is up or down, then this is the article for you.
A little secret about timing…
You would be forgiven for thinking that there is one piece of advice when the market is hot, and another for the cold.
In my opinion, that is not the case. The question you always need to ask first is “when is the best time to sell for me?”
For example; is it worth delaying retirement and moving up the coast 2 years just to see if the market goes up? Is it worth waiting years for the market to recover to downsize from a grand home that has become too large to maintain?
The market going up or down is not normally quite as important, especially when you consider how property cycles work in our video below:
When you ask ‘where are property prices headed?’, you have to understand cycles. Importantly, where you are in the cycle.
We know that a cycle will move through peaks and troughs. What is hard to predict are exact timings of these movements. Trying to pick the peak of the market is basically a game of luck.
Luck is not a good strategy. Let’s unpack why a bit further.
Waiting for ‘the peak of the market’
Yes the peak of the market is a great time to sell. Buyer confidence and activity is high. The market is going up and people don’t want to miss out or get left behind.
The problem is that when the market climbs, the marketplace assume it will continue to rise indefinitely. This is similar to the hot hand fallacy where say, a team who wins the first ten games of the season is expected to win all remaining games.
So because of this bias, no one can predict when the market will start to slow down. By the time this happens, you have already missed the peak. This is why it doesn’t make sense to wait for the peak.
A lesson from 2019
Sitting at a cafe some months after the recovery had started in Sydney, I overheard a conversation from two gentlemen next to me.
Even though it was only several months after the recovery, they were worried about prices moving and getting ahead of them again. It’s interesting.
Sentiment amongst buyers shifts so quickly. So there is no need to wait for the market to climb further to find desperate buyers.
Selling in a ‘bad market’
No it is not ideal to sell in a slow, low, bad or cold market. But there are 3 things people don’t understand about low markets.
- There is less stock available, so certain types of properties can be in demand if they present a shortage in their area
- In many cases, a good result is possible but it may just take longer
- If you are selling or buying in the same market you might be protected, or even come out better from a drop in prices. More on this below.
If you are in circumstances where you need to sell there’s no point delaying just because of a ‘bad market’. It makes little sense to put yourself through financial difficulty or interrupt your lifestyle because of market conditions.
In a down market, it becomes even more important to have a comprehensive strategy around marketing your property. This is to ensure more eyeballs hit your campaign when buyer activity is lower.
Selling and Buying in the same market
It makes little sense to worry about where property prices are moving if selling and buying in the same market. In truth, no two markets are exactly the same and you might even get out ahead.
For example, if you were selling a house in Eastwood during Sydney’s 2017-2019 trough, then buying an apartment in nearby Meadowbank or Parramatta… well you would have done extremely well.
Activity for houses in Eastwood was still strong, whereas there was an oversupply of apartments in Meadowbank and Parramatta. This meant that prices were a lot softer.
So when selling and buying in the same market you don’t need to worry as much about where property prices are headed.
By Joe Wehbe