Grab a Property Bargain this Christmas - December 2018
As the Christmas trees and decorations go up, most people turn their attention to preparing for the festive season and deciding what will appear on the dinner table.
But smart home buyers and savvy investors who have been sitting on the sidelines waiting to pounce can potentially nail a bargain this holiday period.
December and January are the discount months not just for fridges and washing machines but also for property this year. And the discount period for property doesn’t last forever or roll around every 12 months like the January retail sales. I’ve been running propertybuyer for almost 17 years and there are very few times when the market conditions favour the buyer – but now is one of those rare times where it is ripe for picking up a good deal.
Sydney’s market peaked in July 2017, but prices have now scaled back 8.2%. Melbourne’s property market peaked in November 2017 but has since fallen back 4.9%. Interestingly, my discussion with many agents across Sydney is that prices have fallen a lot further than this and the lag effect with data means that it may not show up in the figures for a few months. Some agents suggest prices have already fallen in key suburbs by 10% to 15%.
The pace of price falls appears to be slowing which signals the bottom of the market is likely sometime early next year. This is supported by data showing the level of property internet searches rising rapidly and also a recent Westpac consumer confidence survey on “time to buy a dwelling index” which has been rising strongly in recent months.
As prices in Sydney and Melbourne have dropped considerably over the past year, this has created some excellent opportunities for home buyers seeking to upgrade or downsize.
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December is an ideal time to buy. Why? Because Christmas creates a deadline for buyers and sellers to make firm decisions. Vendors want certainty about a sale. Home buyers want direction on where they are going to live next year.
Buyers may also be thinking about achieving their goal of home ownership or securing their first investment property that they keep putting off. The holiday season is a time when the mind relaxes a little more and provides a chance to dream and set goals. But as they say “a goal without a deadline is just a dream.”
Another reason I love buying property in December is there is far less competition. I can make confident offers for my clients knowing I won’t be beaten to the line (unlike 2 years ago where it was a race to exchange).
The trick is to find motivated vendors that are active sellers and will meet the market price. According to Core Logic, vendor discounting is currently 7.3% for Sydney and 6.1% for Melbourne. This doesn’t mean an automatic discount for every property. We have achieved even deeper discounts than this recently. But well-located property in high demand suburbs is only experiencing minor discounts.
For a property priced for sale at $2.5 million this could mean a discount of potentially $182,500 in Sydney and $152,500 in Melbourne. But in reality, there are much deeper discounts available if you know how to negotiate well and find good quality property with motivated vendors.
If you are considering trading up in this market, then what you may lose in the sale of your home is more than made up for in the buy price of your next home. For example, say you sell for $1.5m today and lose 10% (ie $150k discount) and then you buy your next property for $2.5m (discount $250k) the you are potentially $100k ahead than if you are buying in a hot market.
What this effectively means is that buyers that were priced out of some blue-chip suburbs may now find prices are cheaper and they can target those areas, whereas last year they had to choose second tier areas or fringe suburbs.
My advice is buy the best quality property you can comfortably afford that will suit your goals or lifestyle for the next 10+ years and buy with confidence when an opportunity presents itself. No one can accurately pick the bottom of the market 100% of the time, but it certainly seems as though we are close.
If you’d like help finding or negotiating your next property, please contact my friendly team of Buyers Agents – we give advice without fear or favour as we are strictly on the buyers’ side. Email us your property brief or call us on 1300 655 615 today.