Handling Market Ups and Downs

What goes up usually comes down. Make sure you are prepared for the market whichever way it is travelling.

Anyone caught by a fast incoming tide will know the feeling. The children have gone off exploring caves and rock pools, and it’s so nice sunbathing on the beach. There seems to be plenty of time to get to safe ground before the tide turns. But really there isn’t. The tide is no respecter of the tardy, the forgetful or the ignorant. It is a game of chicken with only one winner. King Canute taught us that in the 11th century.

It’s the same with the property market. Handling the ups and downs of the market is just part and parcel of buying and selling property. In a falling market those that lie in wait for the bottom before they strike are invariably too late. By the time the tide has turned many of the ‘steals’ will have already been stolen, the snips snapped up and all the property going for a song will have sung – more often than not bought by the lucky rather than the clever. Like many who wait until the ebb’s final retreat they might be taken aback by the speed and strength of the flood. It is never a good plan to try and second-guess the property market.

But for those who really look the signs of a returning market are clear. First, much of the unsold property stock that has been on the market for some time will begin to change hands. Overpriced stock will still stick but sellers who price their homes correctly and buyers with cash or access to mortgage funds will start to clear the backlog. Then first time buyers will pick off moribund new-build flats and houses that were caught at the high water mark. At that point the market moves from stop or slow to full ahead.

So what should opportunist buyers do when the market tide is past its nadir? Well to be on firm ground forget that you missed the very bottom of the market. But act quickly before the tide really does come in. After all, as any holidaymaker will tell you, it is always better to be damp than drowned.

But in property what one gains on the swings one often loses on the roundabouts. Sell well and your following purchase might be less advantageous. Buy well and your sale might not be so bright. But either way the result will be much the same. That is why in the end it doesn’t matter very much if you buy in a rising or falling market. What is far more important is the amount of capital growth you build up through home ownership. Over an extended period of time the property market as a whole will have a more significant impact on your wealth than losing or gaining a few thousand pounds here and there during the process of moving home.