Darwon's Theory | What's The Difference Between a Cauliflower and a House?
There's been some interesting insight from down south about the effect of expats returning home on the property market, but first let's talk cauliflowers. Sounds crazy, but it'll make sense in just a moment.
As the president of NSW's peak real estate body boldly put it this week, "unfortunately, some property market commentators seeking to get their name attached to a headline have been quick to predict that the housing market is going to crash." Without reference to any data, the first predicted a 10 percent drop. The next, 20 percent. And the next, determined to get a by-line, said 32 percent. I'd like to put a few facts in the way of these "predictions" - because they just keep cropping up.
We tend to get quite emotional when it comes to property, so let's look at the fluidity of prices and value through a different lens. In recent months, droughts, fires and floods have caused the price of some fresh fruit and vegetables to soar. Then, demand spiked as we went into lockdown. We all know what happened next. Between the hoarders and the iso-chefs, empty shelves weren't an uncommon site. Now, however, prices are coming down. In fact, we're being told many produce prices will be halved.
These market commentators are saying the same sort of thing will happen to property... but the housing market isn't like a head of cauliflower. Up at $9 one day (or $12, as Nine News was reporting in Sydney), then slashed to $5.90 the next.
Yes, similar to produce, the property market's supply chain has been struggling. Some homeowners have lost their confidence, so stock levels are low. However, the level of enquiry we're receiving is hugely impressive. Buyers are still competing to get that cauliflower for $9 a head. (I feel like I've flogged this metaphor enough now…). A house is not a weekly purchase: it's one of the first things we buy, and the last we sell.
Those who aren't confident are just missing out. Simple. This dip in stock levels is resulting in some fast-paced deals, and if you're not across what's available off-market you're missing opportunities. Similarly, if you're not willing to dip your toes in the water and see what bites, you'll never know what buyers are out there.
There's not a lot of stock coming onto the market, which is resulting in pent up demand for a few reasons. Of course, now that restrictions are easing, people want to get on with their lives - whether that means upsizing, downsizing, or expanding their portfolio. However, you can get news like that from anywhere - so here's something a bit more interesting.
Down in Melbourne, agencies are reporting a huge spike in interest from expats. Melbourne agency Kay & Burton have just said that 30 percent of their enquiries are coming from expats, with additional strong enquiry from high net worth individuals. Brisbane is an especially attractive option for returning expats: close to the beach, with a plethora of new developments underway - so it won't be long before we see that migration up north, towards the sunshine.
If we're seeing that level of interest already, we could be in for a shock when Australian borders re-open. An influx of expats would help stimulate our economy, of course, but returning expats and overseas buyers do not have a property to list when they purchase a new home. They add competition, but no stock. Some food for thought, if you're thinking of buying in the next 12 months or so.
That's enough talk of cauliflowers for today! We've got some great properties coming to market soon, so give me a call if you'd like to hear about them before anyone else.
Cheers,
S.D.