Understanding supply and demand can help you understand the selling and buying opportunities. Of course, purchasing or selling your home is also influenced by a number of personal factors that need to be taken into consideration to determine if it is the right time to sell for you. Looking at supply and demand can help provide a clearer picture of what is supporting the market growth, who is currently looking to buy, and understand what is selling, as well as the timeline and strategy for going to market.
Understanding Supply and Demand
A balanced market is where the supply of properties meets the demand. At this point, the market is considered balanced, with prices stabilising as neither buyers nor sellers have a distinct advantage.
In economics, supply refers to the total amount of a specific good or service that is available to consumers. In the context of real estate, it represents the number of properties available for sale in the market. Property supply can be impacted by:
- Available land: The amount of land available for development
- Construction rates: The rate at which new properties are built
- Government regulations and zoning laws: These can either restrict or promote the development of new properties
- Existing housing stock: The availability of existing properties for sale, including the type of property, e.g. there could be a number of apartments but very few homes available
Demand in economics refers to the quantity of a good or service that consumers are willing and able to purchase at various price levels. In real estate, simply put, it is the number of buyers looking for properties. Demand can be impacted by:
- Population growth: More people migrating to an area typically means more demand for housing
- Economic conditions: A strong economy boosts buyer confidence, which includes a healthy employment rate
- Consumer preferences: Trends and preferences can shift demand towards certain types of properties or locations. For instance, there could be a number of apartments available but only a handful with river views
- Government policies: Tax incentives, subsidies and grants such as the First Home Owners boost can influence demand by helping people get into the market sooner.
Short-term vs long-term
It is important to understand both short-term and long-term influences, as the short-term influences impact the price now. But it is also good to remember that your prospective buyers are making a long-term investment, so they might be interested in demographic trends, economic growth, and long-term government policies. The marketing of your property might highlight planned upgrades to amenities that will support the long-term demand for the property and make it an attractive option for your future purchaser.
Predicting Market Trends
Forecasting supply and demand trends is challenging as indicators of changing supply and demand include various economic factors. Coupled with this, unpredictable economic changes can also greatly alter supply and demand patterns. This makes accurate forecasts difficult and requires constant monitoring and adjustments.
Timing the market for buying and selling requires a deep understanding of key indicators such as GDP growth, employment rates, and consumer confidence. Analysts look at indicators such as housing data, including construction rates, property listings, and sales volumes to offer insights into supply and demand changes.
These elements are good to be aware of if you are looking to buy or sell, but it is also important to remember that real estate is a long-term investment and your home could very well be your largest asset. So whether it is time to buy or sell your home, you also need to take into consideration personal factors such as lifestyle changes, financial goals, and personal preferences to determine when it is the best time for you.
If you are considering selling, it is always best to consult with a professional who can provide personalised advice based on both market trends and your individual circumstances. If you would like to learn more about how Penrose Real Estate can help you sell your property, please reach out to arrange a complimentary property appraisal.