Michelle May 08 June 2022
Buyers’ advocate and host of property podcast Buy Your Side, Michelle May, explains why spring is not necessarily the only time to buy real estate, and how to use the more quiet winter market to advantage.
Wintertime may not be the most popular time to go house shopping, but savvy buyers could be in for a cool bargain if they pay attention.
Though the cold season traditionally signals a slowing real estate market, from June to August, buyers need not wait till spring. Winter is more likely to be a buyer’s market for several key reasons.
Stock levels may not be as high as in the warm months, but fewer house-hunters in winter means there’s less competition.
A lower number of buyers per property means there is less pressure to make purchasing decisions on the spot, making winter house hunting a far less frenzied affair than it can be during the sunny months. Potential buyers can inspect properties at leisure and take the time they need to make the best possible choice for them.
With the incoming rain not letting up in the next few months, buyers will get the opportunity to view properties in their worst light and this is not necessarily a bad thing.
Buyers should pay attention to damp or musty odours, which may suggest poor ventilation, rot, or water damage.
They should also be on the lookout for drips, leaks, areas of pooling water, or signs of rising damp on the walls. Freshly painted walls may be great, but may also cover up any of these potential issues so always ensure an independent Building and Pest inspection is carried out.
Rain and clouds don’t draw crowds at auctions but are excellent for accurately gauging how much natural light your potential home really gets. Consider it a bad sign if the house resembles a gloomy cavern every time it rains and move on.
When inspecting homes, don’t forget to check the outside of the property as well. Obvious red flags include large puddles of water that don’t dissipate, as are drain pipes that are not connected to anything once they reach the ground.
How can buyers tell if what they paid is what the property is worth?
The last remaining piece of the puzzle for buyers then is understanding the impact of capital growth.
What is capital growth? At its most basic level capital growth refers to the increase in a property’s value over time. If you purchase a property for $500k and sell it five years later for $600,000, the capital growth is $100,000.
Most buyers mistakenly focus on how much they will make when they sell a property when it comes to property. A common misconception is conflating capital growth with a suburb’s median price.
Many buyers believe that just because median prices tend to rise over time, they’ll be able to cash in on capital growth, but the reality is that median price is merely the halfway point for properties in any given suburb. This means that half of the properties that sell within a suburb will fall short of the median price while half will exceed it.
It’s therefore essential to use an investor’s eye when assessing property in order to properly evaluate its capital growth potential. Emotion should have nothing to do with this process and it’s best to leave your superficial wish list at the door.
Factors that negatively impact capital growth include a bad location such as on a main road, little to no parking, inflexible floor plans, or low internal light throughout.
On the flip side, properties that tend to do well will have a great location with little to no development nearby, are situated on a quiet street, within walking distance to amenities and nearby green space. Private outdoor areas are another big bonus, as are excellent transport links.
When faced with an excess of stock, discerning buyers will have done the homework to sift out quality properties in good areas to ensure that their picks will receive the benefit of strong capital growth.
As with everything, information is power, and if you do your due diligence, you too can win at the property game.