By Guest Blogger, Leanne Pilkington, CEO,
Laing & Simmons and Immediate Past President REINSW
The colder months are approaching and the real estate market has cooled too. Figures from CoreLogic show listing volumes are down approximately 25% from the five-year average and in February in New South Wales, transaction volumes were down about 40% according to stamp duty records. Vendors are holding back…but do they need to be? Is this position justified? Laing+Simmons CEO Leanne Pilkington considers the factors on the vendors’ agenda.
It’s clear in 2023 to date there has been some reluctance on the part of vendors to list their property for sale. Unsurprisingly, interest rates have been a key factor.
Ten consecutive rate rises, quickly passed on by lenders, have made people nervous. In crunching their numbers to assess their borrowing capacity, buyers have felt these nerves. As a consequence, so have vendors. Many have opted for a wait-and-see approach.
However, in April the Reserve Bank hit pause. Now, most people agree we are either at, or at least very near, the top of the rate cycle. Some economists expect rates to begin falling again, perhaps before the end of the year, if not next.
People crave certainty when looking to progress their property plans. Should this translate to an improvement in buyer confidence, an improvement in vendor confidence should logically follow.
Beyond interest rate nerves, some vendors have also been worried about finding a new home to relocate to. There isn’t an abundance of available homes on the market so any decision to sell might be accompanied by uncertainty as to where to move next. It has been holding some vendors back.
This is where a relationship with a buyer’s agent with their finger on the pulse can help. More than simply access to off-market opportunities, buyer’s agents can provide a more complete picture of the actual supply realities in a given market, which can clarify some of those vendor concerns.
Of course, a constant voice in the background for vendors is the media. Aussies are obsessed with property stories and the mainstream publishing houses know real estate yarns generate plenty of clicks. Commentators jump on board and we all know the best headline is a negative one.
But doom and gloom media commentary on prices is off the mark. CoreLogic national data shows the median value of properties sold rose 0.6% in March. Month-on-month, Sydney prices were up 1.4%.
Then there’s the old adage that if you buy and sell in the same market, price shouldn’t be the main consideration anyway. Instead, it’s the gap you need to focus on.
All things considered, the clouds are clearing for vendors. Time will tell if it translates to an increase in listings but with greater certainty around rates and prices, comes greater confidence for vendors to proceed with their plans.
And even if those plans are for a sale down the track, there’s no point waiting to put them into action. Engaging with agents now – both selling and buyer’s agents – is the best way to prepare.
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