By John McGrath
This Saturday is the first of the Spring 2017 season and I’m excited to see how things unfold this year, particularly in Sydney and Melbourne which appear to be moving past their peak.
I’m expecting a strong Spring this year, despite indications of the market cooling in both cities. Excellent sale prices are still being achieved, particularly in sought-after locations close to the CBD where demand is highest, so I feel this is a good indicator of robust market conditions this season.
Last Spring, both cities were experiencing a significant shortage of stock and this had ramifications for both buyers and sellers. Buyers had the choice of paying a premium price or staying in the market longer, neither of which was appealing. Sellers stood to benefit price-wise from the supply/demand imbalance but buying back in was too hard, so many prospective vendors held off.
This caused some stagnation in the marketplace.
Things are different this year. Latest stock data from CoreLogic shows new listings in July were up by almost 17% in Sydney and 10.8% in Melbourne compared to July 2016. If this trend continues, there’s every reason to expect more homes for sale this Spring compared to last. My feeling is that while both cities will remain sellers’ markets, buyers will have more properties to choose from and we’ll see far more dynamic market conditions this season.
The number of properties selling via auction is also increasing and I think vendors are making the right choice. Auction is the best way to find out the maximum price the market is willing to pay – right now, for your home. Clearance rates are still high in the 70% range in both Sydney and Melbourne, so we’re well above normal market conditions (60%) and sellers should use this to their advantage this Spring.
I recommend getting in early with a September or October campaign this year. November is traditionally a high-volume month so vendors will likely have more competition from other homes for sale if they wait until November. This may or may not affect your sale price, it depends on the supply/demand balance in your local area.
Generally speaking, if overall stock levels are finally trending up in Sydney and Melbourne, which appears to be the case, then I’d say September and October sellers might have a slight edge over November sellers this year. Perhaps keep this in mind when planning your sale timeline.
I also want to encourage Spring sellers to listen to their agents on price.
One of the trends we always see when a boom appears to be over is a rush of owners coming to market to achieve the ‘high price’ their neighbours got during the height of the boom.
Depending on market conditions in your area, this might not be possible anymore. Demand is slowing down, especially in the investor segment, so sellers need to understand this and be realistic on price if they want to achieve a sale this Spring.
Whether buying or selling this season, I wish you the very best!
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