Winter 2017 market wrap:
As we head into Spring this week and farewell the cold & wet Winter period (which turned out to be mostly warm & dry) it is interesting to take a quick look back over our shoulder:
Auction clearance rates hovered around 70% and that gave us some opportunities to buy prior to auction (working on the agents’ & vendors’ fears that their property had a 1 in 3 chance of not selling on auction day).
Listings are still tight. Hopefully we will see more stock coming onto the market now for the Spring selling season (although feedback from selling agents does not support that hope and we expect stock shortages to remain for the rest of 2017).
Prices are still increasing but the rate of increase has slowed.
Listing numbers for good property are down. Recently it took us 4 months to wait for the right property to buy for an interstate client. There were only 5 possibly suitable properties that came up in the entire 4 months!
First Home Buyers are now noticeably present since the NSW state government reduced stamp duty to $0 for properties priced $650K and under (saving approx. $25K). Unfortunately for those of them not using a buyer’s agent, we see many anxious FHB’s overpaying or buying inferior property (or both).
Prices continue to boom. Many of the properties we see going to auction are achieving prices in excess of 10% over what we as buyer’s agents think is good value. For properties needing a renovation we see many buyers overpaying to the extent that once the purchase price, stamp duty and renovation costs are taken into consideration, it would be cheaper to buy something already renovated. We are seeing the same thing with development sites – with the prices being paid, the numbers just do not stack up to make a decent profit on the project for the risks involved.
This is a time to be very sure to fully conduct due diligence with the properties you are buying. We are here for the long term and so we resist the temptation to make a quick purchase for the sake of buying something. Typically, in the aftermath of a boom like that we have seen over the last 4-5 years, we see prices take a breather while rents play catch up and come back to 5+% or more before the market takes off again. It’s all part of the normal real estate cycle we see over and over (and not a cause for concern about a bubble bursting or a crash for those waiting for such an event before buying).
To find good properties post-boom, please contact us for an obligation free chat about how we can add value to your property search.