The price of real estate is soaring in most markets around the nation – growing at the fastest rate in more than 30 years.
In fact, in Sydney and Melbourne, the median dwelling values have both recently hit record highs, according to CoreLogic.
Other smaller capital cities, such as Brisbane and Adelaide, as well as many major regional locations are experiencing their strongest market conditions in many years.
There are multitude reasons why prices are booming, including super-low supply levels and interest rates, pent-up buyer demand, and expats bringing new money home with them.
Plus, it doesn’t seem likely that these strong market conditions will fade anytime soon.
Indeed, odds are that prices will continue to rise over the short-term because of the strong competition amongst buyers.
Fear of missing out
The historically low supply of property listings in many areas is causing FOMO amongst buyers, which is pushing prices even higher.
Those with the deepest pockets are often the victor in high-demand locations such as in the inner pockets of Sydney or Melbourne, but also even in other less well-known locations in other parts of the country.
However, it doesn’t have to be that way.
With total property listings sometimes at decade lows – and most buyers understanding this is the current situation – then this can result in over-the-top offers for properties because of their fear of missing out.
It is this scenario that is seeing more people work with buyers agents, who often can learn about properties before they hit the market, which can give potential purchasers a head-start on the competition.
It might seem counter-intuitive that off-market deals would still be on the table in hot market conditions, but they can, and do, still happen.
Sure, the volume of these types of opportunities might be reduced, but some sellers will always prioritise privacy and other important personal factors over the sale price of their properties.
Another reason why more people are choosing to work with a buyers agent is to help them understand market prices and to prevent them from overpaying.
Sure, many properties are selling well above what might seem logical, especially in Sydney’s most desirable precincts, and sometimes a homeowner needs to pay what is necessary.
However, investors always must remain unemotional about their property purchases, which can be a difficult thing to do in rising market conditions.
Professional buyers’ agents provide advice and evidence on why they recommend certain locations to their investor clients, with part of that expertise including the ideal numbers that need to be achieved such as purchase price and weekly rents.
With property prices increasing rapidly – and with more growth forecast – there does need to be some flexibility on potential purchase prices, but never to the point that the property no longer makes any financial sense whatsoever.
Some people are paying 2024 prices today because they naively expecting prices to increase significantly more in the years ahead, when that growth is in no way guaranteed everywhere.
A sounder strategy is paying market price to buy a property in a location primed for superior growth and strong rental demand in the years ahead.
That way, investors are not risking overpaying for a property that may not be worth as much as they paid for it in a few years’ time.
That’s another reason why working with a professional buyers agent is a way for investors to prevent emotion getting the better of them – and making a financial misstep that will long outlive the current booming market conditions.