In this economy, we’re being told that it’s currently a “buyer’s market” and not a “seller’s market”. What is a seller’s market? A seller’s market is when demand exceeds supply. There is great demand for homes but very few houses in the market that are available for sale. Vendors and landlords are very much in control of the market and negotiations by asking higher prices. Then, what is a buyer’s market?
A buyer’s market is when supply has exceeded demand. While there is an existing great demand for homes; there is also an oversupply of available houses for sale in the market. Purchasers and tenants have the bargaining power when negotiating.
As was stated in the beginning, currently it’s a buyer’s market. Many years ago, it was a seller’s market. Then when the economy revives and picks up, it’ll be a seller’s market once again and such property cycle continues. However, I beg to differ.
Instead, in recent years, it has been the buyer’s market and it will always be the buyer’s market. It’s not about the property price or volume of transactions or the overall economy which changed the property cycle; instead it was the availability of information and transparency. The internet broke the cycle.
We’re now living in the internet age. Prior to the internet age, the real estate industry was very much traditional and offline. The real estate industry was controlled very much by the realtors – the middle men. Information about property prices, transactions, and reviews were not readily available then. The only sources available for comparison, research, and analysis were the government departments, newspapers, and magazines. Access to such information was very selective and minimal.
The realtors were also the gatekeepers of information. To sell or rent a property, the vendors and landlords have to rely on the realtors. The realtor will then advertise the property in the newspaper, distribute flyers, hang banners, and via word of mouth. The realtor’s work was very much manual prior to the internet.
Today, the real estate industry has evolved with the rise of the internet through online property portals, social media, mobile applications, and smartphones. Realtors can now advertise on Iproperty, Propertyguru, Propwall, Propsocial, social media, etc.
Similarly, vendors and landlords can also efficiently and effectively advertise on their own in online forums, Mudah.my, social media etc. They do not need to rely heavily on the services of the realtor as before.
For purchasers and tenants, they’re in a more advantageous position than before. Information is now at their fingertips. There is more transparency and wider access to property-related information.
They can compare and contrast properties for sale or for rent. They can read online reviews and analysis on neighbourhoods and (new) properties on Propwall, The Edge Property, etc. They can also research on the transacted prices on Brickz. Purchasers and tenants are now more knowledgeable and wiser than before.
Hence, even before negotiating and even making an appointment to view the property, they (purchasers and tenants) are already in an advantageous bargaining position. They’re more equipped and have more ammo to fight in the negotiating battle.
Therefore, it is no longer the volume and price of transactions, and the economy which determine the property cycle; it is the transparency of information and the internet.