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The Shift in the Property Market

By Neil Campbell

There’s a funny tradition in the Australian real estate market where vendors wait for the weather to get warmer before listing their home to sell – believing they will get a better price when their garden looks best. Historically many buyers have played their part too – staying home instead of going to evening open homes in the dark or on cold and windy weekends.

Interestingly, there’s been a paradigm shift in recent times but mostly only on one side of the property equation it seems. Buyers are still out in force in many areas, taking advantage of the lowest interest rates in 40 years and for those who are eligible, grants for buying their first home. For investors, the yields on both houses and units are the highest they’ve been for a long time, making property an attractive option for wealth creation.

While some geographical areas appear to have a reasonable balance between supply and demand, other areas are experiencing a noticeable shortage of stock.

The reality is, economic cycles are not driven by the weather and neither is the property market. Vendors who are delaying listing their properties for sale over winter may end up with the opposite outcome they’re hoping for if spring brings a rush of properties coming onto the market with no corresponding increase in buyers. And with a general expectation of rising unemployment and economic uncertainty, this outcome is a very real possibility.

The situation brings to mind the old adage of “fish where the fish are” – or perhaps more accurately, fish when the fish are active. Trying to predict what will happen in a month, six months or next year is impossible for experienced economists, let alone the average person. What we know today is that there is a good level of buyer activity in almost all areas right now. And that’s no surprise – the two main drivers to buyer activity are very compelling, but both have a limited life span.

The boost to the First Home Owner’s Grant is due to be halved at the end of September and completely phased out by the end of the year.

It’s only a matter of time before interest rates begin to rise again, and the major banks have already begun increasing their fixed rates in recent weeks. So there’s no doubt it’s a good time to buy right now. And intuitively, that makes it a good time to sell as well.

Scott Baxter Director of  Ray White South Coast says there are more buyers than sellers in his area as well.

“With an entry level price for houses of $160,000 the demand is really strong from buyers both in and out of the local area, while we have a real shortage of properties for sale. The near-perfect conditions for buyers are bound to end though, so any owner waiting for a better time to sell could well be waiting in vain” Scott says.

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