While temperatures heat up across the state, the property market is cooling down, with many vendors and buyers electing to hold off their property plans until after summer. So what effect does the summer sizzle have on the property market?
Summer is a time when many people enjoy a break away from home and sometimes think about buying a beach or country house to enjoy all year round. Savvy vendors start preparing their property for sale and use the spare time to clean up the garden, complete maintenance, paint inside and out and start the de-cluttering process in preparation for listing their property in February. Astute investors take stock of their current portfolio and decide what they may sell or purchase in the following 12 months based on market trends and gut feel.
What will be the effect of the recent interest rate drop?
Although very welcome, particularly for the retail sector who needed to have bumper December sales to get through the following quieter months, the current level of economic uncertainty and the recent announcement of possible job losses has left many potential investors and first home buyers a little reluctant to start buying. Fortunately the banks have passed on most of the recent interest rate cut so this should save most home owners around $50 per month on their current mortgage.
Where are property values heading?
Auction clearance rates have increased by nearly 10% so the market is moving. The delayed spring buying season (started around October instead of September) has meant that auctions were booked as late as 22 December. Properties that are prepared well and priced appropriately are selling very quickly. In a slower market, real estate agents are encouraging vendors to prepare their properties adequately and fussier purchasers are expecting to see properties in good condition at an open inspection. Sales agents view this as an ‘insurance policy’ when listing properties, “we did everything we could to help the property sell….”
What are vendors doing?
Vendors are requiring more detailed information about the current state of the real estate market and appear to be more open to receiving good quality advice and assistance before listing their properties. They are starting to realise that they may need to spend money before they list their property for sale and in one case, a vendor spent $32,000 on furnishing their property for sale (sale price $2 million plus).
What about First Home Owners?
Reduction in stamp duty costs could stimulate more activity in this market segment. However, there is no guarantee that this will happen and many first home owners are still struggling to find the necessary initial deposit. They may hold off until September to benefit from further reduction to 50%, we will have to wait and see.
Westpac Melbourne Institute Consumer Sentiment Index released their “Time to Buy a Dwelling” sub index, which rose 7.6% in September, showing greater optimism for the spring buying season. 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.