Have you ever paid over asking price?

[Big Will]

having more demand than supply will increase the price.

Having investors looking at buying means there is more demand thus increases prices.

If all of a sudden all investors didn't buy any more property and sold their portfolio prices would drop. As there would be less demand and more supply.

 

[Singo]

having more demand than supply will increase the price.

Having investors looking at buying means there is more demand thus increases prices.

Yes!
And as per poll, 40% of investors pay more than the asking price. It simply means that the investors are pushing the prices up more and more.

In WA, in certain areas the price growth has stopped. Seems the investors are getting more worried about the future of mining and are buying less. Good time for the FHBs to buy.

 

[MIW]

When and where will dictate that if your strategy is to accumulate!
Say if you adopt dollar cost averaging to buying shares, you decide to keep buying say every year in January, well in some years you will pay more for the stock and some years you may pay less, right?

The more appropriate question may have been have you bought at any point in time above the median price for the suburb or even the street, if you wish to be specific?
Well, only once, about 11 months ago in NSW, but the water glimpses, the garage and north aspect, warranted the 6.7% overpayment, for a more premium property in a more premium location, for the median price of similar IPs in that suburb!
Basically, if I am buying the best IP in the block, or with some unique aspects (art deco features, Nth facing, views, garage with storage or extra shower, walking distance to beach, can be renovated to add value), then I will consider paying slightly more than the median at that time! It worked well so far!

 

[BayView]

Yes!
And as per poll, 40% of investors pay more than the asking price. It simply means that the investors are pushing the prices up more and more.

At the very best of times (like right now) investors climb up to close to half the market. The rest of the time they represent approx 30%.

So, to use today's approx numbers; investors who pay over the asking price represent approx:

100 total buyers in market...
Let's call it 50 buyers are investors (for round numbers) are currently buying.
40% of investors are paying more than asking - that's 20 investors paying too much.

So, out of 100 overall purchasers, 20 investors are paying too much...

What are the other 80 buyers in the market doing?

I think this post should be in the NG threads...

 

[hobo-jo]

Singo's post had nothing to do with negative gearing, it was simply an observation that some investors pay more than asking price and push up prices. Truth.

Even if investors didn't regularly pay over asking, they still have an effect on price (to the upside) if there's an increase in the number of them, it's the law of supply & demand: https://www.boundless.com/business/...es-supply-and-demand-affect-pricing-449-1939/

 

[BayView]

Singo's post had nothing to do with negative gearing, it was simply an observation that some investors pay more than asking price and push up prices. Truth.

Even if investors didn't regularly pay over asking, they still have an effect on price (to the upside) if there's an increase in the number of them, it's the law of supply & demand: https://www.boundless.com/business/...es-supply-and-demand-affect-pricing-449-1939/

Um; he bought up the word investors into this thread.

You, and a few others here, the media and the FHB's would have it that's always investors and their supposed NG advantage that are doing it.

I finds it interesting that folks blame investors with NG benefits, when to be NG is to be losing money each week out of one's pocket - it is not in their interest to pay too much.

But, we already have this argument going on in the other threads. Maybe we should move theserelevent posts to those two threads.

 

[hobo-jo]

Um; he bought up the word investors into this thread.

A search shows the word 'investor' was used several times earlier in this thread. It's an investment forum, do you honestly expect the conversation to avoid the word all together?!

it is not in their interest to pay too much.

It's not in anyone's interest to pay too much.

 

[Big Will]

Yes!
And as per poll, 40% of investors pay more than the asking price. It simply means that the investors are pushing the prices up more and more.

In WA, in certain areas the price growth has stopped. Seems the investors are getting more worried about the future of mining and are buying less. Good time for the FHBs to buy.

I think there was confusion on the poll as I clicked 'yes' as I bought a place for 510k when it said offers over 500k. Read the posts afterwards with people talking about it is where it finishes.

With a bit more clarification I would of hit no as I have never and know of no one that has paid over the asking price the OP was talking about.

I do agree that investors increase the demand which in turns increase the price but a poll not worded correctly can hardly be used as evidence.

 

[BayView]

It's not in anyone's interest to pay too much.

I agree.

But why do the investors always get the blame?

Even if investors didn't regularly pay over asking, they still have an effect on price (to the upside) if there's an increase in the number of them, it's the law of supply & demand:

Not necessarily.

You can have a drop in PPoR buyers, and and more interest from investors, and the overall volume of buyers in the area might actually be less.

For eg; higher interest rates coupled with tightened lending criteria and better rent yields - less PPoR buyers and a few more qualified investors able to buy.

 

[hugh72]

Yes!
And as per poll, 40% of investors pay more than the asking price. It simply means that the investors are pushing the prices up more and more.

In WA, in certain areas the price growth has stopped. Seems the investors are getting more worried about the future of mining and are buying less. Good time for the FHBs to buy.

Your assumption is slightly wrong 40% of investors have at some time payed more than asking price, if they own 10 properties they may have done this once. In this case 10% of the time

 

[skater]

Your assumption is slightly wrong 40% of investors have at some time payed more than asking price, if they own 10 properties they may have done this once. In this case 10% of the time

It could be even more wrong!

Some posters were assuming that they paid over asking price because they bought at auction. There is a distinct difference between asking price and the auction reserve price.

 

[BayView]

I suppose the other part of the question should have been; "Have you ever overpaid as an investor, or as a PPoR buyer?"

My guess is that if a FHB and an investor are looking at the same property, the FHB - if buying as a PPoR - is not as likely to factor in such things as potential to reno for equity build, or rent yield, or depreciation, or future CG.

They might if they are also a sophisticated financially educated PPoR buyer who has the plan that they might want to resell and make a profit in a few years time. The volume of PPoR buyers these days who are also like this is increasing....they are a sort of investor in this case.

The investor definitely will factor all of the above aspects into their calculations on that property - particularly for the shorter term (for wealth building and cashflow).

Based on this basic premise, you would expect the investor to try and not pay too much, while the PPoR buyer may only be interested in the property from a lifestyle, and emotional aspect, and will probably pay a bit of an extra premium for it.

If the investor is cashed up, and has identified that the area is undervalued and possibly a good bet for future CG; he/she may elect to pay a bit more, but the cashflow aspect will affect this decision unless the buyer is a higher wealth individual with enough expendable income to carry the shortfall.

In an auction scenario, it is probably more likely that the investor will drop out before the PPoR buyer, because the higher the price goes, the less the numbers will work.

The PPoR buyer will no doubt drop out once their ceiling has been reached too, but this happens at every hotly contested auction in every city every Saturday.

 

[MIW]

In the current market with moving median price how does one know if they paid more than the asking price????
Listings are low, areas of higher weekly earnings can access more borrowing, wether investors or not, herd mentality and above 100 confidence, and the recipe is what the market dictates, like that Surry Hills 2.5m tiny terrace commanding over $700K!
I like to buy at or below last 3 months median, which currently is very hard to find, will market moving up, right?