Buying a Resale Property Now? Beware of Mini Seller’s Market Phenomenon

buying-a-property-in-the-resale-market-beware-of-seller-market

For whatever reasons that you want to buy a property in the resale market now (this year end), you have to know this to understand why sellers are gaining temporary power on pricing negotiation.

Seller market is coming

You must be thinking – “Are you sure?”

Firstly, for the benefit of all, a seller’s market refers to the situation where demand exceeds supply and sellers have a stronger power in pricing negotiation.

Yes, we all know it is generally a buyers’ market now, but the real estate market is just like any other marketplace. It is highly dynamic and driven by several forces, there bound to be small ups and downs in any long-term up or down trend.

Here I’m giving you a heads up of an imminent mini seller market phenomenon that will last for 2-3 months likely to happen in the month of November.

During this period, buyers may face upfront seller decline of your seemingly high offer. Do not be too surprised, because there are actually quite a few reasons behind it.

Mini seller market phenomenon

Be it HDB or private non-landed resale market, it will undergo this unstoppable prevalent phenomenon.

There are essentially two indicators to observe its arrival;

  1. a significant drop in volume
  2. an increase in average prices (usual on a small reversal)

Some historical data

Look out for the small upswing in average prices and a decline in volume.

 

hdb-year-end-mini-seller-market-phenomenon-edited
HDB Resale Transaction, source: http://www.squarefoot.com.sg
private-non-landed-resale-year-end-micro-seller-market-phenomenon-edited
Private Non-landed Transaction, source : http://www.squarefoot.com.sg

 

Why is there such phenomenon?

What we see from the above charts is the outcome, but what’s more interesting are the causes. Here are two of them;

  • Festive season
    • Christmas will come in 2 months time and Chinese New Year will come in 3 months time.
      • Vacant possession will fall in these festive periods and it will be a big hassle. Where is the seller gonna stay when he hands you the key 1 week before Xmas/CNY?
    • Pre-occupied with vacation planning
      • Sellers are busy planning for their year end family trips and have no urgency to sell. With the lack motivation, Sellers tend to be very persistent on the asking price, there is possibly zero room for negotiation.
  • Year-end slowdown
    • Yearly targets and KPI
      • Same for agents, by now, most of the diligent ones have already met their target, it’s about time to slow down and spend time with their family. With lesser brokers to ensure timely closure, transaction volume will go south.

In this situation, the supply seems to have dropped significantly, so if you are a buyer looking to buy a resale property, you need to know how to protect your interests and to ensure you still get a good deal.

Otherwise, you will be one of the contributors for the year-end price upswing.

So How?

If you are a DIY resale buyer, unless you have chanced upon a distressed sale, you are left with 2 options;

  • wait for another 3 months
  • talk to an estate agent to strategise the game plan with you.

Nevertheless, how about taking a look at the new launch market?