Is it a downturn or are expectations just too far from reality?

Discussion in 'Investor Psychology & Mindset' started by Scott No Mates, 21st Aug, 2018.

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  1. Scott No Mates

    Scott No Mates Well-Known Member

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    There are two drivers of the markets, fear & greed.

    Firstly, fear. That is fear on both sides of the market - fear of missing out (buyer or seller)

    Secondly, there's greed - wanting too much out of the deal.


    Looking at clearance rates in both of the major east coast markets and it would appear that the vendor's expectations far outstrip those of the buyers. The buyers are no longer in FOMO mode, this is slowly moving towards vendors seeking certainty and taking pre-auction offers rather than testing the market on the day.

    However, the adjustment of vendor expectations is slow - hence the high numbers of properties which are being passed in at auction. Agents may be doing their jobs conditioning vendors about the state of the market but are vendors listening? They are still well and truly entrenched in the 'greed' mode, seeking to maximise their selling prices and ignoring the change in market sentiment.

    How long will it be before vendor expectations start adjusting? We'll see that the 'days on market' indicator will continue to blow out until unrealistic expectations meet the market. Sure, agents will still talk up the market but they will then work even harder to condition their vendors to meet market when the feedback from opens is far from expectation.
     
  2. TAJ

    TAJ Well-Known Member

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    Location:
    Northern NSW
    Vendors often hang out to see if some fool comes along that will pay overs. If they have no real need to sell ( financial problem) then why reduce sale price?
    Different of course if they need the funds.