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What precautions do you need to take in a heated market

728 views · Published 18 May 2014 · 3:53 · Indexed 9 October 2026

Channel: B.Invested · 2014 · Education

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Nathan Birch: Hey guys and girls. This is Nathan Birch here from binvested.com.au and today I'm doing a shout out to Anthony Packard and today the question is: what are some of the mistakes people will make from buying properties in an overheated market? What things you can put in precaution to stop yourself from paying too much? So looking at the question it's a question that's been asked a lot recently obviously because of the market growing changing and some capital cities are experiencing some very good growth. Personally, for myself- it's currently the start of May in 2014. I'm finding that the market is hot in a lot of areas but I don't think it’s gone crazy yet. What I normally find is when a property market increases in value you can see a property market go up in value. There'll become a shortage of stock available. So real estate agents don't have many listing on the market. From that there will be new vendors putting their properties into the market and what will happen from that is that the properties will be overpriced- they will be very high. People will then come in, purchasers will then come in and you'll have a sucker’s rally where the people will get burnt and they will pay too much. The most important thing is to understand what a property's true value is. How can you understand what a property's true value is? Look at what's happening out there in the marketplace. Understand the demographic of other people out there in the area. Can the market go up any higher? Can it sustain the growth? Is there good infrastructure in the area? Is there ability for the property to go up higher? Is there an opportunity for the rent returns to go higher? Are the properties very negative geared? I see a lot of people buying properties in the current market which they're paying too much just because they're buying an emotion. 

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