OVERSTIMULATED AND UNDERSUPPLIED MARKET - THE PERFECT STORM

Last year, the world was rocked with one of the most devastating health crises in a century. The office desk was replaced with a kitchen table with Zoom meetings prominent. With the government still running programs meant to haul us out of an economic black hole, our economy is devouring an excessive stimulus event which in turn will drive it higher and higher, now taking the real estate market with it. COVID-19 has pushed the market and placing a spotlight on regional towns such as Bunbury, with investors flocking to buy in these “more affordable” yet highly appealing locations.

There is a real concern in regard to buyers who are buying in case of missing out. The term is called FOMO (fear of missing out). Wikipedia defines the Fear Of Missing Out as “a pervasive apprehension that others might be having rewarding experiences from which one is absent”.

The regional areas are under the spotlight offering a strong rental return making it an ideal time for investors. The shift in no longer needing to work from home has also built the change in mind for home buyers wanting or having the possibility of relocating to quieter pastures.

The danger of the return of the FOMO buyers is that the buyer succumbs to the rapidly changing market. It is important as an investor to do research into the area and look at market trends and waves. It is also a common mistake to not really investigate the long-term objective. Why are you purchasing the home? Could this objective change or how long would the property need to be held in order to obtain the objective. Purchasing for investment cannot be an emotional response.

The National housing price has increased by 2.1% in February 2021.

TIPS TO AVOID!

Make a 3-year plan prior to investing and look at the past to help understand what the future holds. Do not make any emotional decisions – look before you leap. Look abroad – we are not necessarily meaning overseas however look into other regions – don’t put all of your eggs in the “close by” category – you may find a better return or growth elsewhere.

It is important to recognise the market is everchanging and it is a cycle. There are always ups and downs in every market. Make sure you do your research or seek financial advice and most importantly do not make it emotional.