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5 property blunders to avoid

It seems when it comes to property market conditions and some questionable buyer decisions of late, what is old is new again

An undersupply of properties for sale is breathing life back into many property prices around the nation, but it’s also resulting in some people making some quite silly decisions as well because of their fear of missing out.

Of course, these turns of events are like déjà vu of what occurred only a few years ago during the pandemic. 

The Winter edition of Hotspotting’s Property Price Index (PPI) found growing evidence of recovery in a variety of big and small markets around the nation. 
Jurisdictions where there was growing evidence of recovery in activity include Hobart, Sydney, some sectors of Melbourne, and the regional markets in NSW, Victoria, WA – where the key market of Mandurah has made a resurgence – South Australia and Tasmania, according to the latest index.

In fact, Western Australia, South Australia, and Tasmania – headed by their capital cities Perth, Adelaide, and Hobart – were the jurisdictions with the strongest market pulses.

Property inventory levels are also 15.3 per cent lower than they were at the same time last year and 24.4 per cent below the previous five-year average for this time of year, according to CoreLogic.  

All of these metrics sometimes turn some people a little batty, though, even in a higher interest rate environment, which is something we are starting to see once again.

There is a common saying in the property sector that you make money when you buy, because it is the time when your selection of asset will determine your potential future gains. 

Alas, emotional decision-making often makes some buyers ignore some of the proven fundamentals that are required to secure capital gains over the long-term and make costly mistakes.

5 property blunders to avoid

  1. Poor asset selection

    This mistake involves buying a property that will always struggle to be in strong demand from potential renters or future buyers.

    That is, perhaps you purchase a two-bedroom unit in a location where three-bedroom houses are the most in-demand. 

    It could also be a property that is located on a busy road, on a train line, or under a flight path, with the noise from all this traffic always turning off tenants and buyers.
  2. Paying too much

    This sounds like quite a simple mistake to avoid, but human emotions mean it is not.

    Many buyers don’t complete the required level of due diligence to ascertain the market price of a property and wind up paying through the nose for it.

    Auctions are a common place for buyers to overpay because of the competitive nature of this sales process and the heightened emotion of bidders, who often get caught up in the heat of the moment and pay far more than they ever intended to do. 
  3. Inferior property market

    From a property investment point of view, Australia is a land of myriad property markets that can make sound investment locations.

    However, conversely, it also has a huge number of areas that no one should ever invest in – the key, of course, is to recognise which one is which.

    For example, many buyers get caught out by buying into affordable regional locations, but that location may have low property prices because its economy is – and has long been – sluggish. 
  4. Ignoring your budget

    Of course, this is of paramount importance for all buyers – especially at auction as per my previous point.

    But understanding your budget is vital long before you even start your property search.

    You need to be realistic about your current, and future, income and expenses and ensure that you seek finance to purchase a property that you will be able to continue to hold over the long-term.
  5. Speculation

    When it comes to property, speculation is any buyer who is purchasing a property with a short-term mindset.

    Maybe they are seeking some sort of crazy price uplift within five years because they’re got a hot tip about some weird location that is going to go gangbusters.

    The truth of the matter is the most successful property investors are those who adopt a long-term view because property does not generally increase in value every year. Some years it might flat-line or even fall a smidge. 

The real success comes from the linear upward trajectory of property prices that has been recorded in Australia over the decades.   

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