Although it is tempting for vendors to cash in and sell when the property market is hot, rushing to market is not always a smart move, warns KR Peters Director Peter Nicolls.
Mr Nicolls says one of the most difficult decisions facing property owners is not only when to sell, but whether to sell first or buy first.
He says the answer very much depends on the state of the market and whether your plan is to upsize or downsize.
"In a down market it's always best to sell first and buy after," Mr Nicoll advises.
"Your house is equity, so you are effectively converting it to cash, then converting it back to an asset again.
"In a down market it’s best to buy upwards, to purchase something bigger and more expensive."
To illustrate, Mr Nicolls uses the example of a $1 million dollar property that in a downturn sells for $900,000 - a $100,000 loss for the vendor. However, in a sluggish market the more expensive property the vendor wants to upsize to will also be cheaper.
"In a bad market you might pick up a $2 million property for $1.8 million, saving you $200,000. You have lost $100,000 but are still $100,000 in front," he explained.
"In a good market you might get $1.1 million for the same house, but you will pay $2.2 million for the bigger property so you are $100,000 worse off.
"It's better to buy and sell if you are upgrading when the market is down and the reverse is true if you are downsizing.
"It's all relative. You get top dollar in a hot market but you'll also pay top dollar."
Even a veteran of Mr Nicolls’ experience is surprised at the demand for quality properties in the current market as prices continue to surge post Covid thanks to low interest rates, government incentives and relaxed lending criteria.
"Prices are constantly rising to such a degree that a property purchased 2 or 3 months ago now looks cheap," he said.
"People can see the market is going gangbusters. Buyers are determined, keen and hungry and have a burning desire to move.
"Banks have also been very helpful lending to home buyers who want to take advantage of low interest rates."
For advice on the best strategy for buying and selling in the current market contact the sales team at KR Peters.