CoreLogic recently reported that its home value index recorded its weakest month-on-month change in dwelling values since the Global Financial Crisis. The downward pressure on prices is being led by Sydney and Melbourne where the majority of Australia’s housing assets reside.
The amount of housing stock currently on the market, for this time of year, is the highest it has been for many years and this is likely very good news for people in a position to buy. Buyers may have more stock to choose from than in past years and may also be competing against fewer other buyers.
This scenario should equate to more negotiating power for buyers and perhaps better deals than they could have secured in the recent past.
This isn’t such good news for sellers but it is worth pointing out that sellers that buy in the same market will likely be relatively unaffected by the current market dynamics.
I made the observation in the boom years that real estate seasonality seemed to have become non-existent. One season flowed into the other with demand remaining strong throughout and stock levels not meeting demand in many markets.
Again, there appears to be little seasonality in real estate but with the opposite conditions in effect. Sales are not keeping up with rising stock levels and this is putting downward pressure on prices. This situation could become even more pronounced, with much off the plan stock expected to come into markets over the coming year.
While this is again good news for buyers, sellers looking to secure a successful sale need to be mindful of current market conditions, look to work closely with their agent of choice and take a proactive approach to selling.
With days on market extending in many locations, sellers would be wise to meet with their agent on a regular basis to discuss the progress of their sale. Agents should also be making time to meet regularly with their vendors.
Sellers also need to constantly assess their marketing strategy and pay close attention to market changes. If sellers have approved an agent’s marketing strategy and it doesn’t seem to be attracting the desired level of interest, they should consider withdrawing the sale or revising their price expectations.
If tomato plants have started growing up a ‘For Sale’ sign – a property has been on the market way too long and it’s time for a new agent.
Agent selection is critical in the current market and vendors should pay close attention to the number of ‘Sold’ signs they see from a particular agent in a given market – not the number of ‘For Sale’ signs. ‘Sold’ signs often suggest performance while ‘For Sale’ signs point to activity.
It remains very possible in the current market for buyers to make a great purchase and for vendors to achieve a successful sale.
Taking time to understand the market, regularly meeting with your agent and having realistic price expectations – whether you are a buyer or seller – will help you achieve the outcome you want.
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