Whether it is for personal use or an investment asset, having your own property can be one of the biggest investments that you can make throughout your lifetime.

There are some enterprising people who also find opportunities in real estate believing that it could bring them big bucks with no less than several thousands of dollars coming through the pipeline for every single transaction. But is this always the case?

People generally believe that owning a property fulfils a lifelong dream and making an investment in the real estate market can be truly rewarding.

However, the market goes through a cycle of ups and downs, so it is necessary to know how to base a major property purchase decision without long-term regrets.

According to industry experts, any market situation goes through a series of ups and downs. It’s all about making the best-informed choices at the right time.

During the last couple of years, real estate values in some parts of Australia and New Zealand have been dwindling, thanks to the effects of the Coronavirus pandemic. Since early 2020, home sales have declined by an average of 12 per cent in some parts of Australia.

As with other parts of the globe, worldwide real estate markets were starting to see the signs precursory to the global 2008 real estate crash.

Higher interest rates

These scenarios pointed to one of the warning signs – higher interest rates. This means a higher cost to pay for loans used for home building that drove up costs and reduced the demand.

There are several perspectives that would come into play, buying or selling, but always remember to take caution in such a scenario.

It would require serious consideration before convincing yourself to do so if you need to get good value out of it.

For instance, investors can see a silver lining in this situation because there are bound to be opportunities for those letting go of an existing mortgage if they can no longer afford to service their mortgage. That is if the investor has money to spare and is willing to wait out the cycle and add assets to their existing portfolios.

Still, due diligence and careful consideration must be taken, which is why knowing the signs are critical and important.

Low demand means lower home sales

Although home market scenarios may vary in terms of location, it is important to note that the economic status of an area is a major contributor to the demand for houses.  Remember that the ability of a person to afford housing is based on their capacity to earn and dispose of their income.

With lesser opportunities in an area, people tend to move away and seek better ones. This eventually leads to lower demand and people scrambling to sell their homes to search for greener pastures.

Asset bubble

The sudden rise in the prices of securities can be a sign of an impending market collapse because it sustains growth by exceeding valuations versus standards. This happens to the point where the “bubble bursts” and values dramatically drop.

To avoid experiencing a market crash on your property, make sure to start weighing your options. Think things through before you start to consider selling or buying property during challenging times.

Get advice from real estate experts such as professional real estate agents and seasoned investors to help you foresee an impending real estate market crash and make the most out of your valuable property before it happens.