When it comes to property investment, while the old adage goes, “location, location, location”, there’s actually a lot more to a successful investment. As well as location, timing is also key as during the course of a year, the real estate market can change dramatically – making a wise investment a poor one if taken at the wrong time.
The best time of the year to invest in property can be determined by a number of different factors such as demand and supply, median price of properties and if the market is a buyer’s or seller’s market. These factors seem to all be intertwined and can affect each other in the market.
Buyer’s Market Or Seller’s Market
The prime time to buy property in the real estate market is during the winter months. During this time, most people are busy preparing for the holidays and the kids are still at school. Therefore, there are very few people willing to part with money and buy investment property. These conditions make it hard to make a major move and this pushes most people out of the market. The fewer the people interested in buying the property, the less the competition.
When there is minimal competition then this is what is referred to as a buyer’s market. For example, if an investor finds the ideal property to invest in, and has done all the necessary homework he may view this an opportune time to invest. However, if other investors have done their homework, they too will show their interest in the property and there will be a number of bids to contend with.
When there is this kind of a bidding war, it becomes much harder and the investor may end up losing out or paying exorbitant prices for property that could have been purchased much more cheaply. This scenario is not ideal for buyers, therefore, it’s not a buyer’s market and it would not be ideal to make an investment during this time.
In most cases, it would be advisable to purchase a house during the Christmas period because competition is at its minimum and sellers are generous with pricing during the holidays. Choosing to invest in property through a company such as Aspen Woolf gives you the upper hand as our team can advise you of new investment opportunities, often with a small initial deposit.
Price Of Investment Properties
When looking to invest in income generating assets, then the price of the properties is a very important factor. When the price is lower, a lower amount of money will be required to invest in the market. During a buyer’s market, market prices are lower as compared to a seller’s market. Different organisations give information about the price of investment properties, the median days in a month that are good for the market as well as the proportion of properties sold above the stated price. Over the past eight years data has been collected and compiled to come up with figures that indicate the specific aspects of the market. The data between October and March has the following figures:
- The median number of days in the market is 104
- The median price of sales is £193,735
- The percentage above median price of investment properties sold is 23%
The data above supports the fact that from October to March is the best time to invest in property. The data also reveals that January is the opportune time to make a move on property because the sale price is at its minimum during this time. There are some properties that will sell above the median price but the percentage is very low as compared to the other months. This particular time is very bad for those seeking to sell while it is the best time for those people wishing to purchase property because they have the negotiating power. Sellers are more likely to be desperate when the deal lags behind in the market and they will most likely sell on the cheap to recoup the money that they had initially invested.
There is also a bad time to invest in the property market. Between April and August have the following figures:
- The median number of days in the market is 67
- The price of median sales is £233,895
- The percentage above median price of investment property sold is 24%
According to the data above these are the worst months to invest in due to the higher prices. June specifically is the worst month during which to invest because the price of property is about £38,000 above that of property in January. The number of days property is on the market is relatively shorter by about a month, which significantly reduces the negotiating power of investors. The aspects that are in play during these months are characteristic of a seller’s market. However, there is a time during April and August window where investors can get a good deal for property.
The days surrounding Easter Sunday are quite ideal for any purchasing. If one does not do the proper research, then they might end up making a loss. For example, if during the month of August an investor purchases a property, then they will most likely get it at a very high price due to the median price during this time as a well as the shortage of days for property to stray on the market. However, if the same investor does wait a few months up to October or November, they will get the a similar type of property in the market and it will cost less due to the median price during this time and the number of days that property is available on the market.
Supply And Demand In The Market
A buyer’s market and a seller’s market are defined by the supply and the demand in the real estate market. However, supply and demand in this market is not as obvious as it seems. People looking to sell their houses will look for the opportune time to sell their property because their aim is to generate income. This means that the demand for purchasing property might be lower in the winter months, which is good for people looking to invest in property but the supply will not be as high. Those looking to sell may wait till the summer when the demand is higher for them to sell their properties. At this time, an investor may find it hard to get what they are looking for and this may result into a problem for the buyer.
During the winter months demand is on the low and hence, people wishing to buy property and resell it immediately may be at a loss due to the limited number of people that are willing to buy the property at their asking price. For the investors that are looking to get a good investment deal, then it would be advisable to purchase property that will be used for rental because they will earn income off it. For those who want to have an income generating asset then buying during the summer and spring months would be ideal since you can buy an asset and resell it in the short term because demand is on the rise.