The property market may seem like an overwhelming mix of numbers, legals, jargon, cycles and advice. Knowing what the property market is doing and where it is heading is a challenge, but we believe in learning as much as possible. Read the statistics, watch out for articles on property or the economy, talk to experts and learn as much as you can. In this way, one can make their own decisions, rather than relying on other people’s opinion on what should be done.

At its simplest level, real estate economics is a matter of supply and demand. A few properties for sale, not meeting the market’s demand will mean that prices rise. Conversely, if the ‘for sale’ inventory exceeds demand, prices will obviously fall.

Today we will be sharing with you, the 6 most important ways in identifying a healthy property market, so that you can take control of your investing choices.

1.The first thing to look for is whether supply and demand are in balance.

If there is a balance, prices will stabilize and homes will sell at prices closer to their true values without the unhealthy side effects of an unbalanced market—bidding wars and prices so high that they either shut out first-time buyers or so low that they suck away equity from homeowners who become reluctant to sell and who eventually withdraw from the market.

During recovery, rapidly rising prices may create bubble-like conditions, threatening the market and raising worries of a crash.

Markets can change quickly, but it is not hard to tell when supply and demand are so out of balance that they create abnormal changes in the market which make it difficult for both buyers or sellers.

2.Another thing to look for, is the number of property sales.

When it comes to property development there are multiple stages, beginning with acquisition, through to planning, civil works, roads, and finally registered titled lots ready to be transferred to the end user. If developers are selling all of their stock before everything is complete, this is a good sign that the market is warming up. If there are thousands of completed properties sitting there unsold, that means the market is slow.

3.When the market is healthy, you will be able to see the media/press increasingly reporting good news and numerous property stories.

As the growth cycle moves upwards, developers are the first to act. Following that, around a year later, the media catch on and start reporting. This pushes the market up to its peak, because this is when everyday investors catch on and open their wallets. Keep an eye out for the ‘b’ word in the press (that’s ‘bubble’), because that is a good sign that the market is hot or at the very least overheating.

4.Underlying to any market movement is the economy; therefore it is wise to keep an eye on your country’s economy.

If the economy is flat, depending on how flat and why, then the property market may sit flat too (unless we are referring to London, which many foreign investors see as a safe place to invest and a flat economy was never a hindrance or an obstacle for them to invest in, even during financially difficult times). Additionally, watch out for the rental market. In particular look for 2 things: low rental vacancy rates in a market and/or for rising rental prices. Simply, due to the nature of supply and demand, the rising cost of rentals equals to an increased need for housing. An increased demand for property means a healthy market.

5.When the market is booming, development and government incentives begin to dwindle.

Incentives, like the First Time Home Buyers Grant and many others, are put in place to get people onto the property market, driving the economy up, reducing unemployment and reigniting the industry in general. So when these incentives are harder to come by, that means the property market is healthy.

6.If you’re selling a property, and if once this is listed you immediately receive multiple offers, that is a sign of a healthy market. This is tracked via a mechanism called average days on the market. Alternatively if you are selling at auction, you will receive crowds of people attending, which is what is happening in London at the moment, for example.

It is important to note that due to the nature of the property market these 6 identifiers will not always line up at once, but if you have got three or more of these, then the market is fairly healthy, which is great news for investors.