Buying a new home: Is the real estate boom already running out of steam?

There are signs the property boom setting records across the country might be coming to an end. So, should you wait to buy and sell?

No matter where I’m going these days, I’m always being stopped by people asking me, “How’s the market?”

They are no longer asking this question. But rather they’re making a statement, “The market’s crazy isn’t it!”

Everyone is getting carried away with the current real estate frenzy.

Everyone except me.

Bidder at a recent auction in Abbotsford. Picture: John Appleyard

I’m at the coalface. When you’re at the coalface, you see micro moments. You observe minute movements that become trends. These are often triggering results that are seen to the wider audience a few months later.

So what am I noticing?

The hot property balloon up in the sky has begun to leak some air. Don’t get me wrong – the market is still hot. But I think it has plateaued.

The first thing is, more properties being sold prior to auction has been observed. Most of the times, properties that sell prior to auction only have one buyer interested – that’s why they sell prior to auction.

The second thing is, stock levels are increasing significantly. The CoreLogic RP Data graph clearly shows listing numbers are growing each week.

More stock is coming onto the market.

The period between Easter and ANZAC Day, which also covers school holidays, should be a time when there is a pause button in real estate. Not this year.

I have been booked out in my auction business for quite some time and most agents and auctioneers I speak to tell me the stock is coming on.

This basically means buyers will have more choice and this will take the pressure off prices.

Will they fall?

Probably not in the short term. The craziness will subside, and more properties will be passed in. This is good news if you’re a buyer.

The third factor is interest rates. There have been small movements upwards on fixed rates, and this can suggest that sometime in the future the variable rate may rise even though it won’t be for some time.

Tom Panos in his role as auctioneer. Picture: John Appleyard

Finally, I have noticed ‘FOMO – Fear Of Missing Out’ now has a new friend, and it’s called ‘Fear Of Over Paying’

I have noticed that some buyers are simply fed up with the crazy real estate prices and are moving from buying to just observing. I can only assume the increased stock levels are being driven by vendors who are starting to ask themselves, “Will we miss the height of the market?”

This greed is driving vendors to come on the market after a year of a listing drought. Fear and greed have always been the primary driver of real estate decisions in the Sydney marketplace.

‘Fear of overpaying has come into the market.

While no-one has a monology on the truth, the early signs are there that this ‘crazy real estate run’ in Sydney may be coming towards its completion.

Will property prices crash?

Most likely not. Because the interest rates are so low, having money in property versus sitting in the bank is a no-brainer decision.

Tom Panos has been a highly respected figure in the local real estate industry for three decades. He is Australia’s leading real estate coach, a sough-after auctioneer, founder of Real Estate Gym and a Sky News commentator.

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Originally published as Buying a new home: Is the real estate boom already running out of steam?