Is now the time to Hold or Play?

“‘I’m going to wait and see what happens”

It’s likely a phrase you’ve heard from those in your circle.

Or perhaps you’ve seen media headlines about the pending market ‘crash’

So, is now the time to hold off on purchasing?

Or is it time to dive in while others are fearful and vendors are willing to negotiate?

To answer that, it’s important to look at what’s been happening in the residential property markets across Australia.

Auction Clearance Rates

Auction clearance rates are often misunderstood.?

Some believe that a clearance rate of a certain % means a falling market or a rising market. And it does.

But the truth is, it’s much more complicated than that.

Different markets have a different ‘normal’.

In the Eastern States, 60% (or lower) clearance rates can be one indicator of a falling market, which is what we are seeing at the moment.?

According to CoreLogic, Sydney and Melbourne were both sitting around that 60% mark at the end of June 2022 (see below).

However, in Perth or Adelaide, 60% would be normal as auctions are utilised far less than Sydney or Melbourne.?

Because the auction clearance rates have dropped, some people are putting on the breaks.

But there are many other factors to consider…?

Days on market, the number of bidders or offers and vendor discounting are also key pieces of information.

Interest Rates

It’s been a good 10 years since we’ve seen rising interest rates.

Usually interest rate rises bring out the fear in a lot of people as their disposable income diminishes and wallets are tightened which flows into business sentiment.

And of course it’s more expensive to hold debt and/or buyers have reduced borrowing capacities.

However, plenty of people still transact in a market with rising rates, as families upsize, older people downsize, new jobs are landed interstate, retirements and sea changes present..life goes on and owner occupiers are more than 70% of the market.

And of course plenty of people make their fortune in these times too.?

So how high will rates go??

No one can answer that one with any level of certainty, however the Big 4 banks are making their predictions (see below).

Even the highest prediction in the above chart isn’t terribly bad considering how good we’ve had it for so long.?

Stock Levels

Stock levels are an interesting indicator to watch.?

When stock levels rise, it can be an indicator that it’s a buyer’s market.

That vendors are listing at a rate faster than buyers are snapping them up.

Once someone lists their property, they’re generally committed…

Which means there are opportunities to be had for buyers to get a good deal.?

When stock levels are down, it’s generally good news for homeowners as values are driven up (which is what we’ve seen a lot of over the past couple of years).

And we certainly have seen stock levels decrease in a few states/markets.

But to be fair, it's winter and most people are on holidays or sick!?

The significant shift in market performance needs to be held in context, because it’s quite normal for buying appetite to be low in winter.?

Unless you’re bunkering down with toddlers (like me), you might be in Bali, UK, US, Port Douglas or just battling the flu and/or covid!?

So don’t let lack of, or surplus of stock stop you from executing a well-planned property strategy. This spring might be one the best times we have seen in years for buyers to secure great deals.

Conclusion

Now, to bring it back to my original question…

Is now the time to hold off on purchasing??

In reality, it comes down to your situation and objectives. Now is when expert advice really comes to the surface. You need a great team of advisors around you.?

For some, they’ll feel less anxious in holding out to see how the market plays out. Remember, when you feel more comfortable so will everyone else.?

But for a lot of other people, no… it’s not the time to hold off.?

As I mentioned earlier, plenty of people make their money in markets like this.?

We’re seeing off-market transactions pumping at the moment, and sales agents are chasing us (buyers agents)!?

So, if you are in the market to buy, don’t miss out on these exclusive opportunities to secure a property that doesn’t even make it to the internet!

If you’re not sure whether you should buy or hold off, reach out and we’ll be happy to run through a strategy session with you.