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Supply and Demand
Starting out in the property market? Or are you a seasoned professional having bought and sold before? Either way knowing and understanding the basic principles of supply and demand cycles of real estate can help make you money when it comes time to buy and sell.
The basic principle of supply in any market is when there is an increase of the amount of goods or services prices will drop no matter the commodity. So, the same applies in Real estate, when there is an increase of property for sale in a particular suburb or town the price will decrease.
However, the same applies when the is a shortage of properties the prices increase as a result of multiple parties competing to buy.
Demand is self-explanatory, Demand is where there is a greater need or want for a particular commodity (real estate), they will sell for a greater price. where there is little or no demand for the commodity the price is often reduced in order to coax people into purchasing. In real estate, when there is a high demand for a style of property or property full stop in a certain suburb or town and a limited number of properties are available, the price of the properties will increase.
So ultimately supply and demand are interconnected: Demand for properties decrease and there is an oversupply, prices fall, and vice versa Demand is high and there is an under supply of properties prices increase.
Determining factors of the supply and demand cycle
Following the supply and demand cycle is no easy feat and it can take some time to get your home ready for sale, be it completing renovations so you can sell for a profit or just simply searching for a new property before you put your house on the market. But usually the process of buying and selling all happens at the same time so you need to be prepared, finances in order etc...
One of the main drivers for property demand is lower interest rates, when interest rates are low money is cheap! So, people tend to take on larger mortgages. More buyers flock to the property market because they can borrow more than they could before, or for those who have large amounts in the bank it is better value to put their money in to property investments because the interest they get from the bank on their money is quite low! All of this creates Demand for property and if coincidingly property supply is low, the increased demand and limited supply will drive prices up.
Property investment is sound
Buying or selling whether in a period of increased or limited supply and demand remember land is a finite resource and investing in property on the whole is very sound and if you follow the supply and demand cycle when you buy and sell you will see a pot of gold at the end of the rainbow.
We are currently experiencing the high demand and low supply part of the cycle now here on the southern end of the Gold Coast, so if you had thought about selling Now is the Time
by Chris Pole | M. 0400 811 485 Supply and Demand……. real estate the Basics palmbeachfn.com.au February 2020 First National Burleigh Ph: 07 5522 3100