Buying and Selling in a Transitioning Market.
With Winter now behind us, the Spring season of auctions, Footy finals and the Spring Carnival has begun – and the question on everyone’s lips is – what is the market doing? There’s no question that we are in a transitioning market that sits somewhere between the ‘doom and gloom’ predictions of the media quarter and the ‘rose coloured glasses’ view of many agents in the market. After years of incredible growth, there has been a slowdown this year and it’s important to look at the facts when assessing what is occurring.
If we look at July as a snapshot (final August figures not yet released), there were 2,331 auctions held in July 2018. A total of 1,471 of these sold representing a clearance rate of 63.1 percent for the month. While July typically experiences fewer auctions than the rest of the year, this is a significant drop in auction numbers, likely due to the more modest clearance rates Victorian auctions have experienced in recent months. However, this reduction in auction numbers seems to have boosted the clearance rate somewhat, however. So far (end of July) there have been 22,992 auctions held in Victoria in 2018, with 65.7 percent selling. However, the inner city has still been performing above this, as evidenced by our office clearance rate sitting north of 70% for the year.
For all the talk of a market that is in really poor shape the reality is that whilst prices have dropped slightly (down 0.6% for August and 1.7% over 12 months Melbourne wide according to CoreLogic), we as agents at the coalface are still experiencing strong buyer inspections and desire to purchase. The most noticeable change has been the sensitivity to pricing with buyers steering clear of properties they perceive to be ‘overpriced’ – largely due to tighter restrictions on home loans from lenders and reduced investor interest (both domestic and overseas). These tighter restrictions have resulted in buyers keeping more strictly to their loan limits and often looking to make offers prior to the auction to secure the property on their terms.
Conversely to many predictions from 2017, the housing market seems to have been more affected by the transitioning market and the new lending trends. Since the introduction of the new stamp-duty concessions last year, the first home buyer has continued to ride that strong momentum into 2018, with this sector of the market still enjoying the strongest inspection numbers and often bidder interest at auction.
So – what does this ‘transitioning market’ mean for buyers and sellers coming into Spring?
- Auction numbers: Our early indicators suggest that auction numbers will be lower than the last few years, with less discretionary selling occurring in the market.
- Clearance rates: Relating directly to the lower numbers above, and with good numbers still coming through properties, this is likely to keep the clearance rates higher throughout the Spring market
- Prices: Like any market, the properties that are presented, promoted and priced the most accurately are going to perform very well – regardless of current conditions. The difference will be that the highs are likely to be lower than in previous years and that there will be some great opportunities for buyers to take advantage of some properties that have missed the mark with those 3 elements when going to market. There is still a strong appetite to purchase and even an optimism from buyers that they might be able to get a ‘great deal’ due to changing conditions, which is good news if you can find a few that like your property at the same time (perfect auction!)
Whilst many agents will tell you that it’s all OK and tell you the price you want to hear in order to win business, it is particularly important that your agent is aware of the changed conditions and are fully prepared to present your home to the market in the best possible light.
As always with this time of the year, it is set to be a busy Spring with plenty of properties hitting the market for auctions in September and it is already looking like it will be a busy October and November for our office. With the AFL Grand Final on the 29th September and Spring Carnival kicking off in early November, please speak to us about how we can secure you the best approach to selling this Spring.