What is a ‘buyers’/sellers’ market’? Investment terms explained

The property market cycle, from boom to bust, is a simple enough concept to wrap your head around.

However, when someone refers to a buyers’ or sellers’ market, what does this actually mean?

When a market is described as a buyers’ market, this effectively means that the buyer has advantage and can potentially negotiate the vendor down.

Conversely, a sellers’ market is a situation where the seller has the upper hand and can expect the buyer to be paying close to their asking price.

While it may be true, for example, that the market for three bedroom houses in an area may be a sellers’ market while other property types remain a buyers’ market, the two cannot be true for one market at any one time. It is uncommon for one type of stock to be significantly out of line with the area’s general demand; however, it is not unheard of.

If it’s a buyers’ market for one bedroom apartments in a suburb, it can't be simultaneously a sellers’ market for those one bedroom apartments.

In a nutshell, it is to do with the numbers of buyers per property and the sliding scale of demand. Usually, a sellers’ market is a “hot” market.

How to identify a buyers’ market

Vendors are not able to sell quickly – you may see the time on market (or ‘days on market’) start to tick upwards.

Fewer buyers, and/or an increased number of vendors (or stock on the market increases). This may also be evidenced by clearance rates dropping.

Vendor discounting on the rise.

How to identify a sellers’ market

High demand, with strong investor or owner occupier presence looking to buy. Lots of competition for individual properties.

Days on market recede.

Stock on market may, but doesn’t always, reduces.

Views per property may begin to tick up on listings portals.

Vendor discounting decreases as buyers pay closer to, or even above, the asking price.

For those looking to buy in a sellers’ market, expect there to be much competition with the vendor expecting better terms from buyers. There is a higher risk of being gazumped in a hot market, and a higher risk of overpaying.