Window of opportunity opens for savvy homebuyers
Once in a generation market conditions are creating a tricky situation for both homebuyers and sellers.
Property
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A lack of homes for sale was a strong element in the property market’s impressive rebound last year.
We’ve seen a change in stock levels this year, with more listings coming onto the market as vendors’ confidence increases amid continually rising home values, despite higher interest rates. Auction clearance rates have remained high despite these extra listings, indicating that buyer demand is still above supply in most markets.
Low stock can create a vicious market cycle whereby would-be sellers worry they won’t be able to find a new home within a reasonable time frame after selling, so they delay selling. On the plus side, low stock amid strong demand creates a very competitive environment, giving sellers the ability to maximise their sale price via auction.
A low-stock market is very frustrating for buyers.
Not only do they have trouble finding a home that meets most of their criteria, they’re forced to watch as prices continue to rise around them because demand is outstripping supply. In this environment, I’d say to buyers that the first week after the school holidays is a key window of opportunity for you. This is because we see a backlog of new sales campaigns being launched that week. The backlog is created by agents delaying the commencement of campaigns until after the school break.
And a new window is coming up for East Coast buyers, in either late April or early May, depending on which state or territory you live in.
In NSW, the ACT and Tasmania, school resumes in the last week of April, so it will be that first Saturday in May that buyers will find a lot of new homes open for inspection for the first time. In Queensland and Victoria, the first big Saturday for opens after school goes back will be April 20.
You’ve got to be out there in that first week, talking to agents, attending opens, with your finance sorted and ready to make offers.
Supply is not the only challenge for purchasers right now. Competition from other buyers may grow stronger yet.
Last month, Westpac published a survey of 2,015 Australians that showed 44 per cent intend to buy a property in the next five years, which is up from 35 per cent in July last year. This increase may be due to optimism that interest rates have probably peaked.
On top of that, the rental market is so tight these days that it’s prompting many young people and migrants to consider buying their first homes earlier than they normally would. High rental yields and ongoing price rises are also encouraging more investors back into property.
Put all that together with weak new building approvals and it all adds up to growing buyer demand in the established property market.
* John McGrath is the founder, Managing Director and Chief Executive Officer of McGrath Estate Agents
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