By Rich Harvey, CEO & Founder propertybuyer
There is no doubt the property market has changed significantly since this time last year. Spring is a wonderful time of year to take advantage of a softening market. This past weekend there were 662 auctions held with a preliminary clearance rate of 59%. The same time last year saw 779 auctions with a clearance rate of 65% according to Corelogic.
Spring brings fresh hope and a revised optimism as the weather warms up, the smell of jasmine is in the air and the countdown to Christmas begins. Some buyers and sellers get themselves tied up in knots at this time of year, not knowing which way to turn and second guessing the market. They are worried the market may drop further or worried they can’t afford to get into their preferred suburb.
Buyers need to realise that buying a home at any time of year is stressful, but also understand that the spring market is the prime buying and selling season. As the market has softened, we are finding truck loads of off-market opportunities for our clients as agents are more motivated to sell their stock.
Prices have fallen 5.7% in Sydney and in Melbourne 1.7% since last year. The major headwind impacting the market is tighter lending restrictions (especially for investors)following APRA’s directive to the banks to reign in lending standards. Official RBA interest rates are likely to remain unchanged for the next two years according to Westpac economist Bill Evans. This current slow down in the market is a normal part of the property cycle. We don’t have a market crashing – it is simply a slow down and correction after 5 years of significant growth.
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This is one time in the property cycle were there is opportunity to jump into the market and experience less competition from other buyers. We are expecting to see more properties come onto the market in the coming weeks as agents are reporting they are conducting more appraisals. Buyers however are still hanging back and cautious wondering which direction the market will turn.
So which way should you turn? If you are a seller, I recommend you declutter and style your home for maximum impact. Get strong marketing in place and price your home in accordance with recent sales.
If you are buying – here’s my spring survival guide:
1.Be prepared – have a clear brief with target suburbs, essential and desirable criteria. I see far too many buyers not articulating their needs and therefore stabbing in the dark.2.Get your finance pre-approved. An absolute must in today’s lending environment. With your deposit ready and approval in place you can make confident and unconditional offers to beat other buyers.
3.Be decisive – quality properties in prime suburbs are still selling relatively quickly. The slowdown has not affected all suburbs equally. Premium / blue chip suburbs are more resilient and hold their prices. Consider adjacent suburbs if you can’t afford the prime one.
4.Negotiate hard – In this softer market don’t rely on price guides. Do your own independent research on comparable sales.
5.Future proof – consider how long you will hold the property and how your family will grow into the space, or if you need to downsize or renovate in the future.
6.Stick to your budget. If you are going to auction, write down your limit and stick to it! Don’t get sucked into an emotional bidding war with other parties.
7.Get help - If it all seems too hard and you’d like help, consider getting a buyers’ advocate on your side to do everything for you!
Forward predictions
Looking beyond spring in the years ahead, there are three major factors that will continue to drive our major city markets:
- Population growth (fuelled by migration),
- Employment growth – steady
- Infrastructure spending – significant.
These windows of correction are typically short-lived before the market levels off and starts climbing again. I recommend buyers take a long-term view of the market – the best time to buy was 10 years ago, but second-best time is now.
If you’d like help jumping into the spring market, please contact my friendly team of Buyers Agents who would be glad to lend a hand. Tell us your property brief or call us on 1300 655 615 today.
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