By John McGrath
We’ve had two exceptional years of capital growth in Sydney and 2015 is off to a cracking start with clearance rates returning to above 80% over the first three auction weekends of this year.
You’d think in this climate that home owners who have been thinking of selling would feel pretty confident about listing right now, but strangely enough, listings are down.
The latest figures I’ve seen from realestate.com.au show listings are down by 10% on the same time last year. Why is this happening? My guess is a lot of people are worried about selling and not being able to get back into the market because it’s been rising at a 45-degree trajectory. It’s understandable that sellers are worried about being caught without a home. If the market goes up another 5-10% while they’re looking, it’s going to cost them money.
Low stock – what it means for sellers
It means a phenomenal time to sell! Right now in Sydney, sellers can take advantage, not only of today’s continually strong market momentum, but also the lack of competing homes to sell for a truly premium price. Lack of competition is a benefit that sellers rarely take into account and it can really have a positive impact on your sale price.
People who are selling in Sydney to move to flatter markets are in the best position right now. After a big run of capital growth, we often see young families and downsizers selling to realise those gains and make the seachange to more affordable coastal communities at the same time. They get the best of both worlds – an amazing sale price and a much more affordable new home. South-East Queensland is a popular destination for Sydney seachangers and we’re seeing a bit of this now, with a lot more to follow in coming years.
Low stock – what it means for buyers
The short answer here is less choice, particularly after you’ve weeded out the poorer quality properties. Don’t settle for an inferior property in an inferior location because you’re frustrated. There’s actually a lot you can do to put yourself ahead of other buyers. First and foremost, you need to accept that it’s a hot market and you’re probably going to have to pay a premium. If you’re buying for the long term, this isn’t such a big deal because in 10 years’ time, your property will have appreciated significantly if you buy a good quality home in a good quality location.
Secondly, you need some strategy! Here are some tips:
When will we see more stock? I think if there’s a more modest growth pattern going forward, this will entice more people back onto the market. For now, it’s a bit of a waiting game.
If you liked this article you'll love the Switzer Report, our newsletter and website for trustees of self-managed super funds. Click here for a FREE trial and to hear more of Peter’s expert commentary and advice.