How to make buying in a down market work for you

You’ve probably heard the term “buyers’ market”. When property prices drop, it’s usually buyers who get the best deals.

But there’s a good chance you’re upgrading your home by moving somewhere new, right? That means the potential loss on your existing property could be more than offset by the savings on your next one. Holding out for a better sale price might also mean paying more when you move.

Here are our tips for selling and buying in a down market.

Understand the gap.

Let’s assume your current place is worth $500,000. Now you’ve seen something you love you love with a price tag of $900,000. Quick mental arithmetic – that’s a difference of $400,000.

Now let’s say the market drops by 10 per cent. It probably won’t, but it’s easier to work with round numbers. That drop could mean your home’s value dips by $50,000, which would probably feel pretty bad.

But the value of the property you’re planning to buy also cops a hit. Instead of being priced at $900,000, it could be worth as little as $810,000 – a potential saving to you of $90,000. And rather than having to make up that $400,000 difference, it’s now $360,000.

Really look at the market.

Of course, a down market doesn’t mean prices have fallen in every area. Different suburbs and towns may have copped a lesser hit. Many factors can affect property prices and some are more evergreen than others, like proximity to amenities, safety and perceived value for money. The research may surprise you: historically desirable suburbs might fall further from artificially inflated prices.

Before you decide not to buy and sell, have a proper look at the spots you like. A downturn of 2 per cent in your current area could actually be a blessing if you’re moving somewhere that’s dropped even lower.

Remember: property is a long-term investment.

To make the most of your property, you’re probably going to hold onto it for at least five years. While the loss might hurt now, the market may have recovered when it comes time to sell.

Take your time to make a good choice. Although there are deals to be done, buyers tend to be gun-shy when prices are low. Look for property in suburbs that have long-term appeal. Think about what’s going to attract the next owner in years to come – that means good shops and schools, but also overall liveability. Find a spot with great streets, access to transport links and job opportunities.

Even in a burgeoning market, you should be making well-informed decisions about which property to buy . Do your research, get out and see the market up close and know when to take a step back. Plus, you can add even more value to the mix with a competitively priced home loan and enjoy cost savings no matter how the property market is tracking.

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