Real estate agent Rafi Younes shares some tips to help reduce the chances of losing money on your property.
According to Rafi, most news websites only report on property price changes at a capital city level, but there are actually many smaller markets within that.
If property prices are falling in a particular capital city, it’s not necessarily reflective of what’s happening in every suburb. Some areas might be dropping in value, while others might be steady or even increasing in value. Rafi recommends looking at markets on a suburb level to get a better understanding of what’s happening with property values in those specific areas.
Property price changes are driven by supply and demand. Prices will fall if there’s more supply than demand, and vice versa. In falling property markets, Rafi recommends avoiding over-supplied areas that have a lot of similar properties, and where new properties can be easily built.
These areas typically include inner-city apartments and house-and-land packages on the city outskirts, where developers build 100-plus apartment complexes or create 100-lot housing estates. In a falling market, sellers in these areas may have to lower their asking prices because there are so many similar houses for sale. This means that if you own a nearby property, its value is also likely to drop.
Given that property markets are typically cyclical, Rafi recommends taking a long-term view and looking at properties that will suit you for the next 7 to 10 years. This could help you minimise the risk of making a loss, as the market may have recovered by the time you’re ready to sell.
Rafi says there can be benefits to buying your first home in a falling property market. There are typically fewer buyers, meaning less competition for you. This means you may be able to negotiate a cheaper price, as well as include special conditions and clauses into your contract.
Rafi suggests that you consider locations that have a stronger buyer demand, regardless of whether prices are going up or down. He recommends locations that have good access to transport links like train stations and bus stops and allow easy access to major employment hubs like city CBDs.
He also says to consider the lifestyle offerings of suburbs, including the proximity of parks, cafes, supermarkets and schools. These types of features typically attract stronger buyer demand as they provide easy access to work and offer recreational benefits.