With interest rates on hold for another month and clearance rates softening, August is shaping up to be one of the most positive windows for buyers that we’ve seen all year. That doesn’t mean it’s a bad time for sellers – I just see a special opportunity right now for buyers in the lead-up to the spring season, which is going to be big this year.
Anecdotally, we’re already starting to see a build-up of new campaigns scheduled to start on 28 August, which means 18 and 25 September will be big auction days. So what does this mean for August? It means that buyers who have been out in the marketplace for many months might find things just a tad easier right now, particularly as some of their competitors are choosing to sit on their hands until after the Federal Election.
In buyers’ favour right now are stable interest rates. Stability with rates gives people confidence – they don’t have to worry about their buying power being degraded every few weeks. We’re also seeing lower auction clearance rates with Sydney and Melbourne both averaging just over 60 per cent in July after a sustained period above 70 per cent in Sydney and 80 per cent in Melbourne earlier this year. Now don’t get me wrong – 60 per cent is healthy, but right now, in comparative terms, it represents a decline and indicates buyers have become cautious.
If you’re a buyer who’s been out there for a while, grab this opportunity with both hands and get proactive before the spring season is upon us. Remember, property isn’t a speculative game. It’s a long-term investment and holding back on your next purchase in the hope it might be $5000 or $10,000 cheaper next month is not a great strategy – particularly if you’re on bridging finance and so forth.
RP Data numbers show capital city property values declined by 0.7 per cent in June, which is the largest fall since April 2008. Home owners, don’t be alarmed by this – it is absolutely not a sign that the market is about to tumble. However, it does indicate a softening for the moment, and thus a window of opportunity for buyers prior to spring.
If you’re bidding at auction any time soon, I’d like to give you an important tip. If no one makes an offer, don’t take that as a sign that no one else is interested in the property. If that were the case, you wouldn’t be standing in the backyard with many times 30 other people.
In today’s market, it’s far more likely that other buyers are simply being as cagey as you – and they’re planning to make a beeline for the agent with a good offer as soon as the property passes in. So put your hand up and at least guarantee yourself the advantage of being the highest bidder. In most states, the highest bidder is extended the courtesy of first right to negotiate. If no one bids, the agent can often end up with a quasi-auction between several parties over the phone in the days after the auction. You don’t want to do that. In private treaty negotiations, agents do not have to disclose the competing offer so there’s less transparency for the buyers.
So good luck to buyers out there this month. Make smart choices with the knowledge that September/October is going to be very busy and very competitive. For further tips on purchasing via auction or private treaty, please refer to my previous commentary on this topic.
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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