WILL THE GOLD COAST HOUSING MARKET CRASH OR CLIMB?
It’s common sense and understandable that everyone who wants to buy a house wants to make sure that they are getting the absolute best price possible, we are all the same in this regard.
Especially when it comes to the Gold Coast where buyers, whether domestic or international, still view it as a cheaper alternative to the main centres such as Sydney, Melbourne and Brisbane. As a rule, people always want to pay as little as they can, but what about when it’s time to sell and get a return on that large investment?
It’s important that we talk about two major points that often a lot of people overlook. In the haste and rush of signing the paperwork and moving into your dream house, many homeowners don’t think about cycles and price corrections.
Cycles Are Natural
Life is fairly cyclical. We see this in everything we do. From our parents taking care of us, to us taking care of them in their later years, everything is constantly revolving. The financial market (and the housing market) is no exception.
Market Uncertainty is not the Same as a Cycle
We see market uncertainty pop up every now and then through a number of global events. Look back to when Donald Trump was elected President, everyone thought not just the markets would plummet but WW3 was about to start (it may still do!) and on a more local level when ScoMo was “voted” in as our new PM, the prices in real estate flattened and the share market dropped, but overall on the Gold Coast we have continued to creep on an upward trajectory price wise.
These are examples of times when there was uncertainty in the market. It was brought about by changing world conditions and global leadership changes. This was not an example of a true cycle, this was an example of uncertainty. That’s what most people get wrong.
Instead of being the end of a cycle, this was an example of a moment in time where people were sceptical. Fear and or uncertainty motivated the market to potentially create better deals, but nothing like when the true cycle heads downwards.
So, if uncertainty leads to the chance to grab a potential bargain, how can you make sure that you are able to capitalize on these great deals when they do come around? And how can you know that you are in the right place at the right time?
The answer is learning how to time out the cycles.
Anxiety Can Lead to Better Deals
Anxiety in the market is brought on by people’s perceptions of what the market will do. More precisely, people think that the market is going to go down, and this is what causes a slowdown in the economy and what gives the ability for buyers to pick up deals. This is not always the case and many times the economy is what causes a drop. But in many instances like now, in Sydney and Melbourne, it’s all about fear and anxiety on buyer’s parts.
It has been 10 years since the Global Financial Crisis (GFC) reared its ugly head with the collapse of Lehman Brothers in the USA. A number of articles have been written recently in regard to a potential crash occurring in the not so distant future, whether this does occur is anyone’s guess, what we do know is that cycles are inevitable and at some stage the real estate market will see a slow down.
It’s interesting that fear and anxiety and even people themselves can cause the market to slow down, rather than the actual economic situation. Look at our economy right now in Australia, we are actually in a very good place. Australia ranks fifth in a report from AfrAsia Bank in terms of average wealth per person, only behind small countries such as Monaco, Liechtenstein, Luxembourg and Switzerland. We are sitting well above Singapore, USA, Canada and our little brother New Zealand. There should be no reason for prices to drop aside from people’s nervousness.
Price Corrections Influence the Market
Because of some of the prices reached in Sydney and Melbourne, people fear that we are at the end of the cycle, and in those cities, we may be, but I’m not so sure on the Gold Coast just yet. Luxury homes in areas such as Sanctuary Cove, Hope Island, Sovereign Island and Mermaid Beach are selling for more and faster than ever before. This is factual. In markets such as Upper Coomera we have reached a median price of over $500,000 for the first time and the average sale time for these properties is now down to 37 days, 24 months ago or even 12 months ago the average Days on Market for a property was nearly double this. With these fast increases some properties will go for more than what they are worth, which will in the long run force prices to drop slightly as people realise that others are overpaying.
This is where the conversation about price corrections comes in. When properties are priced too high, and the economy is good we see these corrections happening. This is a natural effect of the market.
Again, keep in mind this is just my opinion. No one actually knows what will happen, but my prediction is that these price rises we have seen are more due to “market hysteria” than anything and properties will begin to take longer to sell and drop back down slightly to what they are actually worth.
However, the homes that are priced correctly and are not owned by sellers that are totally out of their mind, will do just fine because these homes will be recognized as bargains even though they are nothing more then just priced intelligently and accurately!
Intelligence is a Factor in the Market
If you are smart and understand the cycles and the economy you can always pick up a good deal, but you must not too greedy. If you are greedy and wait, sometimes you will miss your time. You must act when the market is on your side.
This works the same for a seller. If you are smart, and not greedy, you will price your property appropriately and get it sold for top dollar. But if you do what most sellers do, and you overprice your property for a third more than it was ever worth, you will quite possibly sell it for ten to fifteen percent under its true value.
Remember the longer a property sits the market, it grows stale. I’ve worked with enough clients to know that most believe that their home is worth more than it really is. But don’t feel bad, we are all guilty of the same thing; the only difference is when I sell my homes I don’t let my emotions get a hold of me and price them for more than they are worth. Also, it helps that my father is an accountant and can talk some sense into me.
The Market Will Correct Itself
The biggest thing to remember here is that the market will always correct itself. It ebbs and flows, and you need to remember that cycles occur naturally. Right now, people believe we are at the end of a cycle. Because of this there are deals to be made!
If you are waiting because you think there is going to be huge bargains in the future and a huge price correction, you are better off playing the game right now because you have uncertainty on the side of sellers. And when people are uncertain they don’t play as hardball in negotiations.
Keep your eyes on the overpriced properties and keep your fingers on the pulse on the ones that are priced well. But at the end of the day remember one thing (and this is the most important advice I could ever give you) ...
Buy the best home that you can AFFORD
And remember one other thing; if you overpaid a little bit or underpaid a little right now it’s going to make ZERO difference in your life when you sell this house in however many years. The market you sell in is most likely (unless you rent in between or move suburbs) exactly the same one that you are buying in.
If you buy a home for $600,000 right now and it is worth $900,000 in 10,15,20 years from now, it’s going to make zero difference if you could’ve bought the house for $580,000 or $620,000 instead of $600,000.
BUY WHAT MAKES YOU HAPPY and forget about saving a dollar here or there. At the end of the day I promise you will come out ahead!
Someone once told me that there’s always another deal around the corner, but there’s not always another house that’s perfect for you and your family.