Every Home Unique? So Is Every Market - July 2020
July 30, 2020 / Written by Rich Harvey
By Guest Blogger, Leanne Pilkington, Managing Director,
Laing & Simmons and President REINSW
When homes are selling well, the market is “overheated”. Then when a slowdown occurs, it falls “off a cliff”. Some media would have us believe it’s either one or the other, but the reality is invariably less dramatic, somewhere in the middle and ultimately, less newsworthy.
Put simply, it’s a mistake to assume every market around the city, the state, or indeed the country, is experiencing the same conditions at the same time.
The media is typically fond of broad sweeping statements, and this is especially true when it comes to real estate. It’s just one of those topics that resonates with a wide audience.
And it’s the dramatic statements, the outlandish opinions and the doom-and-gloom forecasts that perform best as clickbait. Anyone who is prepared to come out and talk about massive falls in real estate prices or rents will get airtime.
The reality is usually much less interesting, and therefore less likely to be reported!
Anyone looking to buy, sell or lease real estate needs to be clear that individual housing markets, suburban pockets, even specific streets have their own drivers when it comes to supply and demand, and therefore price. NSW, and even Sydney alone, will always experience many different markets, all at the same time.
Local conditions vary from place to place for lots of reasons. For example, the rental vacancy rate in Sydney CBD was 13.8% in June 2020, according to SQM, yet across the whole of Sydney the vacancy rate was 3.8% and nationally, the figure was 2.2%.
While the CBD rental market has been impacted by the decline in foreign students and the influx of AirBnB properties (likewise the coast), the west has been positively impacted by more people moving into cheaper areas.
Tenants trying to negotiate rents in the west are getting frustrated because their experience is very different to what is being portrayed in the media.
On the sales side, some areas have high levels of stock, meaning owners are more negotiable on price. Other markets have more buyers than sellers, meaning properties are transacting above reserve at auctions. This is obviously frustrating to buyers who keep reading about falling prices yet know from their own experiences that some homes are selling for a premium.
In select markets, stock levels remain tight, which is underpinning prices. Listings in some prime areas are down as much as 50% from the market peak, meaning those vendors who do take their properties to market are attracting lots of interest.
These nuances in different markets, and across different types of properties, are rarely brought to light in media stories, where loud headlines and generalised opinions dominate.
Buyers need to drill down past the headlines to get any kind of genuine understanding about what is happening in the market and, in particular, how market influences relate to the specific location and property they’re interested in.
Remember the ‘Sydney market to fall by 32%’ statistic that stopped us in our tracks when it was widely shared earlier in the pandemic?
The context was conveniently omitted. Drilling down into the entire press release (which wasn’t that easy to find), the CBA economist actually said – to paraphrase - that if we have two years or eight quarters of continuous recession, then prices could drop by that much. In other words, it would take a perfect storm of negativity for such an outcome to come to fruition.
Of course, the reality has turned out quite differently, and much less dramatically. Across Sydney last quarter, according to Domain, we had a price fall of 2%, as some areas experienced increases (the north west was up 3.4%) and others experienced larger than average decreases.
All the while, agents across the board continue to work hard reaching their customers in new and different ways, drawing on technology, which is helping keep the number of people through open homes encouraging, even in this COVID winter.
The real story is out there, always, but you won’t find it by scrolling under a sensationalist headline. Hyper-local market research is essential before you make any property decisions.
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