How to know if it’s a good time to sell

Investors, Property Market, Sellers,  Buyers and sellers

Every home buyer is told it’s the perfect time to buy, while every seller is told it’s the perfect time to sell. Of course both cannot be true, so if you’ve made the decision to sell your home, how do you know when is the right time to do it?

Some may not be so fortunate as to have the freedom to wait for the perfect moment – where the market’s stars align and the home can be sold for a lot more than what was expected. Even for those who do have that luxury afforded them, it’s still not exactly easy to pick the right time to sell.

After all, if it were easy, everybody would get it right.

Simon Pressley, Managing Director and Head of Property Market Research at Propertyology, says it’s not about listening to what people are saying, but rather to look at what’s actually happening.

“History has taught us that an individual growth cycle within a town or city comes around once every 10 to 15 years, and typically lasts just two or three,” says Pressley.

“Learn from history, and respect the odds.”

Pressley says an area’s property market is affected by both the macro and micro economies. Macro changes represent economic shifts at a national or international level, such as federal elections or global recessions, while the micro level represents the local area, be that town, city, or region.

“The direction of a property market for an individual city is almost always a mirror image of what its local economy does,” says Pressley.

“The economic things happen first, and then there’s a knock-on effect to what the property market does.”

Like all economies, the price of housing is determined by demand and supply. When there are many buyers, pressure is placed on property prices because there’s more competition, driving those prices up. Naturally, the opposite is true when there are few buyers.

“What influences the volume of buyers most?” asks Pressley.

“Local confidence from the economy.”

So then, somebody hoping to sell their home for top dollar needs only to wait until there is a high volume of buyers, which means waiting for the local economy to strengthen. But what causes the local economy to shift upwards?

To identify this, Pressley says the first step is to get an understanding of what the most important industries for your location’s economy are.

“Identify the most important sectors in the area, and analyse what their stakeholders are doing,” he says.

“Big business decision making either creates jobs, or creates job losses.”

This analysis works to give sellers an idea of what the market may do in the future. Research will reveal that there is a lot of things going on behind the scenes, and if those things are positive they have the potential to materialise over the next couple of years in the result of job creation.

“Creating a lot more jobs than what the location normally creates is going to build confidence,” says Pressley.

“And the demand for housing is going to get much better.”

Conversely, if this thorough analysis indicates the local economy is about to take a downturn, owners will need to decide if they will quickly sell before that downturn hits, or if they will put off their plans for the long term and wait for the cycle to come back in their favour.

Exactly what these indicators look like will depend heavily on your local area, but generally the things to look for are business developments, as well as government and/or council legislation affecting business and the local economy.

The other thing to look at is the volume of supply.

“If there’s a lot more building approvals than normal, that means that in the next couple of years there’s going to be a lot more supply in the market than what it’s used to, and that’s typically not going to be kind on property prices,” says Pressley.

Pressley says there is a great deal of research to be done if one is going to read the market accurately and use that to their advantage.

“If you want to give yourself the chance to make a decision you’re going to be ultimately happy with, it’s in your interest to understand why this stuff is so important, and then take the time to find the answers to these really important questions.”

Important disclaimer: This article is provided for general information only, and the author is not engaged to render professional financial advice or services through this article. Readers should satisfy themselves as to the correctness, relevance, and applicability of any of the above content, and should not act on any of it in respect of any specific purchase, investment, or other financial activity without first obtaining their own independent professional financial advice.