SELLERS
Most sellers are subsequent buyers . As such , while in a strong growth market sellers are usually buoyed by prices moving quickly , many find it stressful to buy back in once they ’ ve sold . In 2021 , we saw many suburbs jump by well over 15 per cent within a three month period . Worst case , some recent sellers may have been in a situation where they could not afford to buy back their recently sold home by the time they settle . For a seller that ’ s a subsequent buyer , a slower moving market makes it easier to transact . There isn ’ t such a rush to buy a new home immediately upon selling .
LONG-TERM HOLDERS
The last two years have been a great time for house flippers . Buying and selling while taking advantage of leverage has resulted in some investors doing very well over a short time period , even without making any improvements to a property .
The investors that do well long-term are those that don ’ t house flip . House flipping , while lucrative in a rising market , is problematic in a slow market and many get caught out when market conditions change . For long-term holders of property , even buying at the peak of the market rarely creates problems as it ’ s then possible to ride different cycles over a prolonged time period .
As an example , the worst downturn we ’ ve seen was in Sydney following the Global Financial Crisis . Prices dropped by 17 per cent between peaking in December 2007 and then bottoming out in February 2009 . A purchase made at the peak , however , would ’ ve completely recovered in value by December 2009 and two years later would ’ ve achieved price growth of over 14 per cent in the following 12 months . A house bought in December 2007 would on average be worth 2.5 times more now than what was paid at that peak .
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