Buyer’s vs Sellers Market: What you need to know

As with the economy, the state of the property market is driven by supply and demand which in turn is influenced by a range factors such as the state of the economy, interest rates, availability of credit, political and economic stability and so on.

The property market therefore comprises of a number of cycles and it moves through cycles periodically as it is influenced by the various macro and micro economic forces and factors. You can think of the market as a scale with buyers on the one side and sellers on the other side and so as the numbers alter – more buyers, less sellers or the reverse – the scale tips.

Equilibrium/Balanced Market

When the scale is in perfect balance, we talk of equilibrium or a balanced market – this is when there is good balance between the supply of properties (properties on the market) and the demand for properties, thus enough buyers to match the properties for sale.

In this type of market, there is usually strong activity with plenty of buyers still on the hunt for the right property, but the market is also hinged and can tilt depending on which way the economic pendulum swings. If it suddenly swings with more buyers and fewer properties, then you start heading into a seller’s market.

Seller’s Market

We talk about a seller’s market when the demand for property rises faster than new properties are listed for sale. In this type of market, there is not enough properties to meet the demand from buyers and buyers start competing for a limited pool of properties. The buyer with the best offer - generally the highest price and fewest conditions – then tends to win out the day.

Competing offers then push prices upwards and prices start rising. Sellers can then become more ambitious with their asking prices. Properties also tend to sell quite fast. Offers and prices come in at close to or full asking price and sometimes above the asking price.

When economic and other market forces start bearing down on buyers, demand for property will start subsiding and the market tends to first move back to equilibrium and then to the other end of the scale, to a buyer’s market.

Buyer’s Market

This is the flipside of a seller’s market and it means that the supply of properties for sale now exceed the demand. In this case, buyers can literally pick and choose from a range of similar properties and they can drive down prices. Properties will now also take longer to sell and offers tend to come in at below the asking prices.

In a buyer’s market, the focus tends to shift to market related pricing and if you are serious about selling, then you would need to set your asking price at the right level to attract buyer interest and offers.

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