by John McGrath
Next week marks the beginning of winter, a season where most real estate markets run a bit slower because fewer homes are listed for sale. And herein lies one of the greatest myths in real estate – that winter is a bad time to sell. Actually, the opposite is usually true.
Buyers have no reason to stop shopping during the colder months. For example, growing families and upgraders who need more space do not suddenly stop needing more space. Their motivation to buy doesn’t go away just because it’s a bit colder or raining on Saturday mornings. You also need to remember that most people with approved finance are only given six months to buy before they have to re-apply. So they don’t have time to take three months off over winter.
Thus, demand doesn’t change much. What does change is supply, which means more competition for the homes that do go to market over June, July and August. I think winter 2016 presents a particularly good opportunity for sellers in Sydney.
After three years of boom conditions, prices are still rising this year, just not as much as they were before. CoreLogic RP Data figures show Sydney property values up 4.5% between January 1 and April 30 this year compared to 6.9% over the corresponding period in 2015.
Despite this slowdown, one of the factors currently keeping prices strong in Sydney is a lack of stock, which is creating a favourable supply/demand dynamic for sellers. Add the ‘winter effect’ and it’s reasonable to assume competition could be stronger over the next few months.
This presents the best opportunity Sydney home owners have had to fully cash in on the capital growth they’ve achieved during the boom.
It’s important to remember that true market booms happen only every now and then. If you hold a property for 20-30 years, you’ll probably only go through two or three real booms over that timeframe.
If you’ve been waiting for this most recent cycle to end so you can sell your home for the maximum price possible, I’d strongly encourage you to consider selling this winter. If you don’t, you’re probably going to kick yourself in Spring when a flood of new listings come on to the market.
In 2014 and again in 2015, we saw a significant change in the strength of prices achieved during the final few months of the year, directly due to a higher volume of stock. Across the board, prices didn’t fall per se, but the number of people competing for the same homes declined and this meant fewer properties were commanding those big above reserve results.
Another great benefit of selling in winter is you get to buy in Spring. Ideally, you always want to sell when there are fewer homes on the market and buy when there are lots of homes on the market. A winter sale and Spring purchase fits this ideal scenario.
Some properties present better in winter, some in Spring/Summer. Talk to your preferred agent and weigh the pros and cons of putting your home on the market this winter. As experts in their local area, agents know how each change of season affects their marketplace. The more experienced agents, particularly those who have worked through previous booms, can also advise you how your local market tends to change in the immediate couple of years after a boom.
All of this will help you decide if a winter sale this year is the best option for you.