In a depressed property market where nothing is selling, the biggest frustration for owners who need their property sold is that unless they are prepared to take huge losses and sell at any price, there is little they can do to change the situation. However, once the market starts to move in either direction, it is essential to monitor the trends before making any decisions about altering the pricing.
Check Market Trends Before Changing Pricing
It is the same situation in the rental market. Most lessors look to the end of any tenancy as an opportunity for a rent increase, but if the rental market is depressed and vacancy rates are high, then good tenants are hard to find. Again, monitoring the market is vital before tinkering with rental prices.
Does Supply and Demand Really Rule?
Like most sectors of the economy, movements in real estate are driven by supply and demand. According to market economic theory, as a commodity becomes scarce prices rise, prompting more suppliers to enter the market to satisfy demand, which in this instance is real estate. As prices continue to rise beyond the capacity of the market to pay, demand becomes less, suppliers leave the market and prices fall.
Swings and Roundabouts
Some markets are much more volatile than others, with large swings back and forth depending on trading conditions. Some parts of our agriculture industry, for example, can have trends that range from high to low in one or two growing seasons. Thankfully, the trends in the real estate industry are more long term, but this does not mean that we can ignore the market.
As both selling and letting agents, our ability to respond to property market trends is part of our service to our clients. The staff at Bunbury Real Estate keep in touch with property market statistics so they can advise both our lessors and sellers if they need to adjust their rents or sale prices either up or down.
Additional Advice to Keep Everyone Informed
We also like to clarify to clients that there is no Australia-wide property market, and that even within the same state, there are differences between regions. For example, the market in a capital city will be different from an inland market with corresponding differences in pricing. It would be unrealistic for a seller in a regional town to expect the same price for a comparable property selling a street away from the beach.
The current overall market trend in all states shows strong buyer activity and low levels of quality housing stock. Along with low interest rates, improving business and consumer confidence, a growing economy and COVID vaccinations being rolled out, our industry should be stable for some time.