It's a great time to sell but you need to plan for what's next.
Demand for property is genuinely outstripping supply. A strengthening economy, solid jobs market and historically low-interest rates that appear locked in for at least the medium-term add to the demand for property.
The latest figures show the national stock of homes for sale is 28.5% lower this year than the five-year average. Over the same timescale, new listings are down 12.9%. That’s a tight supply.
Auction clearance rates across Sydney have come back a little but are still over 65% which is still a massive performance. Homes are selling one week faster on average than they were a year ago. And the Australian real estate market overall is now valued at over $8.1 trillion. That’s more than a $1 trillion increase in 12 months. And a large part of that boom has been driven by price growth in our country towns and regional areas.
So if you are thinking of buying and selling in a hot market, these are some of our ideas that might help you plan your way forward.
What does better look like?
Moving to a different suburb or property style – considering a sea or tree change – can be a dream come true or a nightmare in the making. The difference between it being a step up or a step backwards is how well you know what you want and your willingness to try before you buy. If you don’t know for sure that your next purchase is right for you or you’re worried about not finding a suitable property to buy, consider renting while you assess your options. Renting can be challenging right now in many of our booming markets, but unless you are confident that you have the ‘where and what to buy next absolutely right, test areas and property types by renting. Keep your current property and even rent it out to even up the cash flow. Many who have used this system discovered things about an area or style of home they hadn’t appreciated. That insight let them refine their criteria, so when they did buy and sell, they were happier and better off than they would have been otherwise.
The market is always local
Regardless of the national or capital city headlines, property prices are all about local markets. Always check what is happening to prices in our neighbourhood, and more importantly the area you are thinking of buying.
With real estate, there are always longer term ‘swings and roundabouts,’ as they say. Some areas and types of property are just not doing as well as others. Right now, that’s because of long-term changes in how we live. Much of our white-collar workforce are looking to work from home at least a couple of days a week. Units that were always in demand by students, investors and first home buyers are less in demand. That may change back, but no one knows when. The key thing if you are selling or buying is to know your local market. Headlines about the national market are just headlines. There is plenty of essential data on each local market, so ask us, we can help.
Is your home hot?
The market may be on fire, but how do buyers feel about your particular property type? While all boats float in a high tide, some property types will be more in demand than others from suburb to suburb. So if you’re selling an unrenovated and dated property in a market of all near new homes, even a hot market may not offer the dividends you hoped for. On the flip side, if you’re selling a large family home in an area clamouring for upgrades, you could be in luck. But don’t think you have to accept the status quo. Marketing and targeted affordable renovations can change a property from being a wallflower to finding a market niche with buyers falling over themselves to secure. A property doesn’t need to be the most popular; it just needs to appeal to a few buyers. Marketing and presentation are about targeting and focus.
Watch the supply and demand curve
The economic data points that make this market look like it will continue to grow can change quickly. Changes to interest rates, employment or even the calling of an election can soon turn up or down the heat in the market. It pays to be vigilant. It also pays not to get caught up with every press release and prediction of the market. No one ever reads the market flawlessly, and even the best get it wrong more often than they get it right. What we know right now is that our economy will more likely get stronger rather than weaker. We are heading towards winter, which is usually always a time of fewer homes for sale. We can probably expect strong prices off the back of low supply for a few more months to come. When eventually interest rates start to climb, that’s when things will turn down, or maybe not, who knows, so be safe. Plan for the long term, make sure you can afford the rise in interest rates and know that at some point, the market will change.
What’s your life plan?
Regardless of what the market is doing, the most important thing is to consider your personal life goals and the role that property plays in these. Your property is likely to be your largest financial asset – and your shelter, security and place to raise your family. Lifestyle desires should influence when you want to sell, not just money and optimising the market. If this feels like the right time for you, then get into the market.
Sell or buy first
This is the question people have argued about forever. In a rising market, buying before selling can be scary but not as frightening as having sold and watching the market climb further and more out of reach with each day. That’s the stuff of nightmares and cold sweats. Having to buy something that’s not ideal just because you are under pressure to find something is really not smart. Think about buying with a delayed settlement. You’ll be able to sell in this market with out too much issue. If you aren’t sure on the property you want to buy or the area you want to buy in, think about moving into the area and renting. You’ll be surprised how much better you’ll understand the area, the better properties for what you need and you’ll be on the spot when the right home comes on to the market.
We can help
If there is a way we can help, don’t hesitate to reach out. We’d be happy to explain local prices, buying trends, time-on-market expectations and the type of marketing campaign that will maximise the value of your home.
Property is a tremendous long term asset, so are we. Talk to us.