Is a property recession always a bad thing?
Find out why some landlords are looking forward to a market correction in 2023
As a property investor, you are more than likely trying to build a portfolio of properties to generate a solid and steady income.
Accidental landlords - those with a spare property to rent out but who didn't really plan on being a landlord - are not usually considering building a portfolio, simply keeping hold of the property they have because they are not ready to sell for whatever reason.
But investors are in the property game for the long haul, with plans to supplement their pension income when they retire and have a legacy to leave to their family when they die.
An astute property investor would likely shy away from buying properties for investment when the market is buoyant, and there is somewhat of a buying frenzy. During these markets, property prices are inflated, and competition from other purchasers will reduce the negotiation opportunities with each purchase. In short, there are no bargains to be had.
But what goes up must come down. With fewer buyers in the market, property demand slows, which often results in a correction in market values. This price correction can tempt those investors back into the market to snap up those newly reduced properties at a bargain price.
Is it time for landlords to revisit the market and consider adding properties to their investment portfolio in the next year?
Stronger property sales markets and higher values have encouraged landlords to sell, but those higher purchase prices will usually price landlords out of buying. When looking at property investment as a business or wealth generator, it doesn't make sense to buy something at its highest value.
Higher property prices also affect the percentage yield created by the investment. A higher purchase price doesn't always translate into a higher rental price.
But with a slower housing market looming and the dreaded 'R' word mentioned in the press on more than one occasion, this could mark a period of opportunity for landlords and property investors.
Investors often feel that lower prices and complicated market conditions are an opportunity. As these things seem to come in cycles, intelligent property investors will hold onto their cash until the price of properties begins to drop, only to swoop in and add to their portfolio when the prices are lower.
Are you one of these property investors eagerly awaiting the anticipated recession?
There is no way to know when the market has topped or bottomed out. No crystal ball can tell you that the prices have peaked; we only realise there was a peak when it starts to come back down again. Likewise, the bottom of the market, meaning the lowest the property prices will be, is only evident when those prices start to rise again.
We can all agree that 2022 was probably the peak of the market. This could mean that 2023 might be the perfect time to buy properties for your portfolio.
Are you ready to purchase? Have you got your funds ready to spend, or is your money tied up? It might be a good time to consider releasing the funds so that you are prepared to buy property when it comes.
Get in touch to see what properties are available in the market now so that you can analyse the data and be ready to buy when you think the time is right.