Spring is traditionally known as the ‘real estate selling season’ in most parts of Australia. Naturally, many nervous vendors wait until after the cooler months to showcase their home at its best during spring. Likewise, real estate agents increase their marketing efforts and passive buyers start attending open inspections.
In Melbourne, Grand Final Fever hits town, then soon after preparations are underway for the Spring Racing Carnival and the Melbourne Cup, before the market starts to wind up loose ends before Christmas. Have you ever noticed how many people want their kitchen renovation completed before Christmas day?
Historically, ‘Super Saturdays’ occur around major events – for instance, the Saturday before or after Grand Final Day. On these days, there is usually a large increase in the number of properties available for auction. It is interesting to note that Super Saturdays in 2012 are expected to offer around 700 auctions, whilst in 2010 that number was closer to 1,000.
The first weekend of Spring saw a clearance rate of 62 per cent compared to 63 per cent for the weekend prior (25/26 August 2012) and 55 per cent for the first weekend in September 2011. There were 455 auctions reported to the Real Estate Institute of Victoria (REIV), with 284 selling and 171 being passed in, 112 of those on a vendor bid. The total number of auctions for Spring in Melbourne has dropped roughly 25% in the last five years indicating a trend towards more private sales. The second weekend clearance rates dropped to 58% overall.
Where are property values heading?
I am of the view that prices are pretty static at the moment and only vendors with realistic expectations for market conditions will achieve sales. Yes we went down, and yes, in a lot of suburbs we have come back. Buyers really need to do their research at the moment. This said, there have been some stand out competitive results achieved in the last two weekends. For example, we have seen both Kew and Armadale perform well, and in case where 4 or 5 bidders were participating, results were driven 23% over a vendor’s declared reserve price.
What are vendors doing?
Historical statistics can give us a sense of what has happened in the past but not what will happen in the future. When I have been out and about at auctions and opens over the last few weeks, the word on the street from sales agents across several Melbourne suburbs is that the traditional Spring Selling Season will occur later this year. A particularly cold and wet winter and lingering concern about the ramifications of the Economic Crisis in Europe has left potential vendors a little hesitant.
What is happening in affiliated industries?
I have also heard that many architects are putting off staff and yet builders have plenty of work. Vendors who may have, in the past, sold their existing property to upgrade into a better property are avoiding the transactional costs associated with selling and buying and are electing to improve their existing property, which provided they do not over capitalise, is a good strategy in an uncertain market – particularly with low interest rates.
What about First Home Owners?
After September 30, the First Home Owner’s Grant will be reduced to $10,500 for established homes and $14,000 for new homes until December 31, before returning to its original $7,000 next year. This could have a significant impact on residential properties valued under $500,000. First Home Owners also have lower stamp duty rates for their first home purchase.
Westpac Melbourne Institute Consumer Sentiment Index has just released their “time to buy a dwelling” sub index, which rose 7.6% in September, showing greater optimism for the spring buying season. So, is confidence returning to the market? Time will tell.
As a Buyer’s Advocate, I believe there are always good buys around if you match your purchasing strategy with your personal situation and do all of the research and due diligence before making a property purchase.