A softer property market can appear to make the role of a buyer’s agent easier. There may be fewer competing buyers, vendors can become more willing to negotiate, and properties that once attracted dozens of offers may remain available for longer. But these are often the conditions in which professional advice becomes more important, not less.
When almost every market is rising, a mediocre purchase can still look successful for a period of time. In a fragmented or declining market, the consequences of choosing the wrong location or asset become much clearer.
At InvestorKit, we have helped more than 2,000 clients purchase over 3,000 properties, representing more than $2 billion in acquisitions and creating more than $500 million in equity.
That experience has reinforced an important principle: a cheaper property is not necessarily a better investment.
If a suburb’s median house price has fallen by 10 per cent, it is tempting to describe that as a buying opportunity. But the first question should be why prices have fallen.
If housing supply is increasing, employment is weakening, or vacancy rates are rising, that lower price may reflect deteriorating fundamentals rather than value.
Conversely, a market does not need to experience a major correction before presenting an attractive entry point.
Victoria is a good example of why buyer’s agents need to understand individual property cycles rather than relying on broad state or capital-city narratives.
InvestorKit has been buying in Melbourne, Geelong, Ballarat and Bendigo for some time, and those markets are now producing very different results.
Greater Melbourne’s house prices have risen 4.0 per cent over the past year and inventory has tightened to around 2.5 months of stock.
However, individual submarkets have performed very differently.
Brimbank recorded 7.6 per cent annual growth and Cardinia 6.1 per cent, while Stonnington West declined 9.0 per cent and Boroondara fell 2.0 per cent.
Geelong is now experiencing relatively high sales pressure, with house prices up 7.5 per cent and inventory at 2.9 months of stock. Bendigo has recorded 12.1 per cent annual growth, while inventory has fallen to 2.3 months.
This is where buyer’s agents need to move beyond median prices and understand what is happening beneath the surface.
Stock available for sale, days on market, vendor discounting, rental vacancies, building approvals, population movements, employment and affordability can all provide indications of where supply and demand are shifting.
Tasmania demonstrates what can happen when those conditions translate into stronger momentum.
Regional Tasmania is now emerging as one of Australia’s fastest-growing regional markets. Launceston has recorded 13.0 per cent annual house price growth, inventory has fallen to 1.3 months of stock, vacancy is around 0.4 per cent and rents have increased 12.2 per cent.
At InvestorKit, our proprietary EDGE (Evaluation, Data & Growth Engine) platform analyses thousands of suburbs and hundreds of indicators for exactly this reason. Historical price growth tells us what a market has done. It cannot, on its own, tell us whether the conditions that produced that growth still exist.
Softer conditions can also give buyer’s agents an opportunity to improve the quality of the asset itself.
When buyers have greater negotiating power, the objective should not simply be securing the largest discount. It should be using that leverage to purchase a better property: an established home with a stronger land component, better location or greater owner-occupier appeal.
Cash flow must also form part of the analysis.
InvestorKit research comparing Dubbo and Gosford illustrates this. Under the same lending assumptions, a typical three-bedroom investment property in Dubbo had an estimated monthly holding shortfall of approximately $238, compared with $1,985 in Gosford. Yet both markets produced approximately 7.1 per cent annualised house price growth over the previous decade.
For a client trying to build a portfolio, that difference can significantly affect their ability to make their next acquisition.
The bottom of a property cycle is rarely obvious while it is happening. Trying to predict its precise timing is therefore less valuable than recognising when the balance of evidence is improving.
The buyer’s agents who navigate this period successfully will not necessarily be those who call the exact bottom.
They will be those who understand the difference between price and value, recognise improving fundamentals early and help clients make decisions based on evidence rather than emotion.
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