10 tips on buying in an underperforming property market

Now is a great time to buy a property in areas of Australia where the property market is underperforming such as Perth and Darwin.

shane kempton

Buying property is as much about timing as it is about location, location, location.

If you bought a property in Sydney when this market was underperforming during the period 2004 to 2009, then you would now have achieved a significant financial gain.

Like Sydney back in 2004-2009, there are a number of key property markets that currently are underperforming such as Perth and Darwin, so now is the time to buy into these markets before they start to recover.

However, buyers still need to take a cautious approach to buying a property in an underperforming market and take into account the following points:


1. The cheapest is not always the best. Focus on lifestyle locations that deliver high rates of capital growth over the long term i.e. properties near the city, river or ocean.

2. If you are entering the property market for the first time, it is better to buy a small unit in an area that traditionally delivers high rates of capital growth rather than a large house in an outer suburb that historically records lower rates of capital growth.

3. Try to avoid areas with a high number of rental properties. Suburbs with a high rate of owner occupiers generally tend to have better street appeal which helps with the resale of the property.

4. Check high capital growth areas that have fallen the most during the past year. These will tend to rebound strongly once property prices begin to rise.

5. Pick suburbs in these areas with a high number of properties for sale that are in your target price range.

6. Find a street in a target suburb which has a number of properties listed for sale. Generally, there will be greater competition amongst these sellers.

7. Speak to the selling agent to determine if the owner is a motivated seller i.e. an owner may want to sell urgently as they have moved overseas.

8. Get an independent valuation of the property. If the valuation comes in below the listed price it will give you greater negotiation strength with the vendor. However, if the valuation comes in around the listed price, it will give you peace of mind that you are not paying too much for the property.

9. Try to have pre-approval finance. This will encourage the vendors to accept your offer.

10. Set a deadline for the acceptance of the offer, i.e. 24 hours. This will put pressure on the seller to make a decision.

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