Why should you upsize in a falling market?

After two years of facing hurdles, many experts say that now is the chance to act if you want to move up the property ladder.

Earlier market conditions of booming prices and high buyer competition have made it difficult for some to upgrade their home. However, with heat now coming off the market, we’ll start to see more homes available at more realistic prices, and less buyers to compete with. This point in the real estate market cycle represents a fantastic opportunity for up-sizers, as the amount of money required to climb up the property ladder becomes smaller.

Let’s do the maths

Let’s say for the sake of an easy example, that prices have fallen by 10%. (Don’t worry, this isn’t the case at the moment!)

Your $1M home would then be worth $900,000. A reduction of $100,000.

But the home you want to buy has also fallen by 10%.

Your $1.5M dream home, reduced by 10% is then worth $1.35M. A reduction of $150,000.

So by upsizing in this scenario, you’re actually $50,000 better off in a falling market. You ‘lose’ $100K when you sell, but ‘gain’ $150K when you buy. An extra $50K of benefit to you.

Rather than focusing on the selling price, or the buying price, consider the ‘change over price’ and decide if now is the right time for you to consider your next upgrade.

If you’d like to have a discussion with one of our team about the options available to you and your situation, please get in touch.

– Blog article written by Melanie Littlemore