Selling a home during a market downturn may seem like it will have a negative impact, however, smart property owners will see the benefits of selling and buying in a softening market. If you’re planning to take a step up the property ladder there may be no better time.
Up-sizing can mean moving to a bigger property or more prestigious area. As long as market conditions have softened equally across the different markets then your budget is likely to stretch a lot further when the market is quiet, as opposed to buying at the height of a boom or strengthening market.
Smaller price gap – While it’s true that your property value may suffer if you sell in a slower market, the savings you make from your subsequent property purchase can make it worthwhile.
Let’s consider buying a larger home in the present market at $720,000 and selling your current home at a cost of $540,000 – that’s a price difference of $180,000.
If you wait for prices to improve by 10 per cent then you are looking at buying a $800,000 home and selling a $600,000 one. This means you end up with a $200,000 price gap, or paying an extra $20,000 than if you had sold in the slower market.
Keep in mind that other costs involved with a property transaction will also be scaled up if you purchase in a more expensive or competitive market. If you set your budgets correctly, then you can ultimately save considerably when selling and buying in a softening market.
Less competition – It only takes one other interested buyer to snatch a property away from under your nose, or push the price up. The fewer buyers there are vying for property, the easier it will be to secure the home you want at a lower price.
Time is on your side – It can be tricky timing a property sale with a purchase. As things are slow in some markets at the moment, selling before you buy can give you confidence about your budget going into your next purchase. That said, if your property isn’t priced correctly, then you could be waiting for a buyer in a slower market.
Look at the long term – Of course property is best looked at with a long-term view. It’s pivotal to understand what is going on in the present property market, however, the most important deciding factors should be your own goals and readiness to move.
We always recommend getting expert financial and local area property advice before making big decisions such as selling or buying a home.