The Media's Effect On The Market

Paul Wilcox

As a long term licensed agent I always find it a little amazing to watch people's habits when it comes to buying real estate.

In my position as a buyer's agent I see this day in/ day out with speaking with potential clients, everyone seems to believe what is actually written in the press is gospel, were as others seem doom & gloom I see & advise clients of the opportunities abound. The current market in which I trade in ( 3km-15Km outside the sydney cbd) is actually holding up reasonably well. Interest rates are condsidered  cheap as chips at the moment with some great 3 year fixed options offered coupled with the fact that there is  limited competition on most properties.  Having spoken to a handful of potential clients the same old story is "I will wait and see what happens here or overseas or my (brother, neighbour , friend etc) tells me its not a good time to buy property at the moment.",  Were, I see opportunity abounding , being cheap money, less competition , high yields on purchase greater growth potential buying in the CURRENT market, buyers just seem to want to follow the pack and "sit on their hands" 

Once the market takes off everone wants to buy as it seems to be the  majority rules as there is a general feeling of being left behind or not being able to purchase something  that day/ week/ month It almost seems that the higher the prices rise the more buyers want to "transact" , almost like lambs to the slaughter - following the pack.  Property firmly becomes  back on the menu on dinner parties and its more common  to see domain/ real estate .com apps out on numerous ipads at any local cafe come 7.30- 9am every Saturday. The "problem "as I see it from my role as a professional buyers agent  ( backed up by colleagues in/ out of my employ) is that once it been picked up by the media  some 6- 8weeks after the upward movement has already started and any opportunity of catching the tide has been lost.

This is when buyer's agents as a whole I get the busiest as buyers turn to us out of frustration, from being gazumped constantly to spending $$$ on building/ pest inspections / legal advise  or just not being fast enough / being in the right place at the right time etc. , nevermind the time spent at lunch/ after hours surfing the major portals, ringing, emailing agents .  As I write this there have been more than one set of figures out in the last or so  saying that the worst is behind us and that Sydney is set for  good growth, This could be fuelled by the fact that there is still a shortage of good quality stock available.  Foot traffic thru opens has been increasing in the last few weeks ( apart from today- cold ,  wet and missable ) perhaps its the spring selling season now on us or that recent rate cut  ( again).  

With only approx 10 weeeks to Christmas I am keen to see what happens next 2-3 weeeks as school holidays have now finished and there is on 10 weeks (approx) to christmas , I am sure that agents are telling their vendors to get to market quickly to take advantage of the supply/ demand issues.  Come mid November the market slows down  so thus the 10 weeks now becomes a lot and the increase rate dip normally takes 8-10 weeks to transpire into the market .   My brief to my clients at the moment is act quickly to secure your next dream home or investment property as well located blue chip property rarely sells at too big a discount and its not worth competing with several other parties, as from experience there is always another buyer  out there with deeper pockets or a propensity to overpay either based on lack of knowledge and/or  research typically the buyer who has been looking for an extended time and will buy anything just to stop "saturday slog" and regret their decision within the following 12months.  Yes it does happen , unfortunately there are no small mistakes in real estate.

So, buyers if you see something that is in your budget/location etc  my advice is to act on it , and block out what is in the press. Take the view that buying your new home/ investment property is a long term strategy its more time in the market and not timing the market. Factor in if the market moves at ???% over the period of your search calculate how long it will take you to save those extra (net) dollars to stay level with the market and not just factor in a larger mortgage as rates have been falling.

Consider Warren Buffett's approach to investing - counter cyclically or closer to home as Real Estate master John McGrath would put it "zig when others zag".

Whatever you do,  remember when you have finished reading the current state of the market in the paper the market HAS already been moving , blink and you have missed it. Remember Tsuami's start under water where they are not seen or heard but are "active" 

Good luck out in your market