As a real estate investor, knowing how to capitalise on market trends and price fluctuations is key to achieving the best return on investment.
While a slow or stagnant market may spark fear for some, for buyers shrewd enough to make the most of the lull, there can be some huge opportunities in terms of preferable prices and potential for price growth. While purchasing a primary residence or investing in a property to flip may pose challenges, a slow real estate market can actually open up a wealth of opportunity for investors.
Why buy in a slow market?
A lot of this depends on why the market is slow.
If properties aren’t shifting due to crime rates or because they’re located in a run-down locale (in which there are no plans for improvement), this is of course a red flag. These sorts of factors make it unlikely that the property’s price would appreciate much if at all over the years. However, if transactions are slow because of the economic climate rather than market fundamentals, there could be a great deal of potential. Current data suggests that a leading reason causing trepidation in the real estate market at present is the economic uncertainty, owing largely to the elections that took place this month. However, according to a recent survey, property prices are expected to rise post-elections, which can mean buying now while other buyers wait on the sidelines can be advantageous.
For a start, there is more inventory from which to choose. With less market activity, real estate investors can take their time mulling over the prospects with each property, without feeling pressured to place an instant offer over fears it will soon sell. Then there are the prices, on which sellers tend to be far more flexible during times of slow sales. You may be able to not only have a lower-than-asking-price offer accepted, but even be able to work in some bonus extras to sweeten the deal. For example, keen sellers may be persuaded to pay for things like closing costs or any repairs/upgrades to facilitate the transaction, especially if the property has been on the market for some time.
Buying an investment property to flip in a stagnant market poses an obvious risk, but for NRI real estate investors looking to buy and hold, there is the potential to buy a stunning property below market value and enjoy excellent appreciation in the coming years as the property market strengthens.
Are you considering adding to your portfolio in a slow market? Follow the Unesta team @UnestaRealty to keep up to date with all the latest Indian property developments, market news and opinion.