Spring: Best Buying Conditions in 3 Years – September Market Update
September 1, 2023 / Written by Rich Harvey
Written by: Rich Harvey, CEO & Founder
Get ready for a change in property sentiment coming this spring. With a severe shortage of property listings over winter and buyers ramping up demand, we expect to see a rising volume of transactions over the spring season. This month I interviewed several top agents in the capital cities and looked into the mindset of the buyer and vendor.
Spring: Best Buying Conditions in 3 Years – September Market Update
My team of Buyers Advocates are telling me that the next three months we will deliver some of the best buying opportunities they have seen since the Covid pandemic panic period. With interest rates peaking, and many mortgage holders suffering difficult mortgage stress, there's likely to be some motivated vendors listing their properties during spring.
During August we transacted over $27.8 million of property for local home buyers and investors, several expats and foreign buyers, but found the lack of stock a constant challenge. Good quality property in well located streets is seeing competitive buying conditions. CoreLogic report that prices over the past three winter months rose by 4.5% in Sydney, 4.2% in Brisbane, 3.2% in Perth, 3.2% in Adelaide and 2% in Melbourne.
I expect to see rapid price rises levelling off over the spring season, but we are still likely to see a positive overall rise in housing prices during spring. Auction clearance rates have been at very healthy levels with Sydney at 79% and Melbourne 70% last weekend (see table below). Expect to see auction volumes ramp up to over 1000 in coming weeks for these two cities.
The total volume of listings is currently down 26.7% compared to the 5-year average – this is because strong sales volumes are absorbing new listings faster than expected. See chart below:
Justin Nickerson, Director at Apollo Auctions has observed that the Brisbane market has seen increased listing volumes which is encouraging for buyers, but that due to constant demand prices have not flattened yet and remain stable.
Nickerson believes that people are tired of waiting – vendors are now coming to market and saying, “Let’s get on with it” and embrace the next stage of life. The most sought-after property types are brand new or finished properties that buyers do not have to renovate (and risk higher blowout in renovation costs). And conversely, the best opportunities for savvy investors in the Brisbane market are those properties in need of renovation.
In the prestige market of Sydney’s Eastern suburbs and North Shore, Darren Curtis of Christies International Real Estate notes there is chronic shortage of stock at the top end of the property market. We have typically found that around 750% of transactions we do with sales agents in these markets are via off-market channels.
The low Australian dollar is enticing some international and expat buyers, and there is a significant number of Chinese buyers starting to come back in force looking for luxury property. Curtis says the Chinese buyers are driven by four major attractions “Great schools, blue sky, ocean views and clean air.”
Curtis also said there is constant demand from high-net-worth local buyers looking to relocate and secure a premium property. The downsizer market has been very active in the Eastern suburbs and North Shore with families selling up the family home particularly in the $5 - $15 million range and finding low maintenance / high quality townhouses and apartments.
In Sydney’s leafy Upper North Shore, Alex Minton of Pello Property believes that spring will be “an absolute ripper” with more stock coming on and a greatly increased volume of turnover. Mintorn has noticed that the buyers who have sold are highly motivated to buy quickly and secure their next home and have a touch of panic, as prices have levelled out and could start to rise quickly again. One trend that Mintorn has seen play out by vendors is their preference to start with an off-market sales campaign to keep their options open. He has also seen some massive prices being paid by international buyers for the big trophy (ostentatious) homes that are brand new or near new and close to quality private schools.
In Melbourne, John Konidaris of Harcourts Manningham has also experienced low stock levels during winter but expects spring to bring greater joy for buyers. He is not expecting to see the doom and gloom price correction that some commentators were speculating with distressed sales. Konidaris says prices are holding up well regardless of economic conditions and higher interest rates with quality homes selling for over $3m in his area covering Doncaster, Donvale, Templestow, Bulleen, Balwyn and surrounds.
The Buyer Mindset
Our business had loads of enquiry during August – but many buyers are still sitting on the sidelines waiting for the perfect buying conditions to appear. Sorry to burst your bubble - but no one rings a bell and lays out the red carpet to say the best time to buy is the 15th of September 2023. And don’t expect to see massive mortgage defaults. CBA – Australia’s largest bank reports that just 0.5% of borrows are behind on repayments.
Most buyers have been challenged by lack of options, so the property shopping list is often down to just one or two good properties. Buyers have been concerned about missing out and frustrated with the lack of choice.
And the other thing playing on buyer’s minds is finance approvals which have been crimped by rapid rate rises and expire after 90 days – so for some buyers, there is a sense of urgency.
The Vendor Mindset
Many vendors have been reluctant to list their properties simply because they are worried, they will be unable to find an alternative property due to low listing volumes.
Agents are reporting that vendors have been too influenced by media stories and have inflated expectations on price. But sellers that understand and accept comparable sales are ready to go – and have realistic expectations.
Another trend we are seeing with many vendors is the downsizing of debt – vendors are opting to take advantage of stronger prices and buying a property with zero mortgage or substantially lower mortgage.
If you’re buying or selling this spring – here’s my top 5 tips:
1. Get Clarity - Create a simple “Buyers Brief” summarising your target suburbs and preferences.
2. Finance Approved - Have your deposit ready and finance pre-approved so you can confidently make offers & beat other buyers.
3. Research - Get out every weekend and mid-week to see as many properties as possible and create shortlists and notes about everything you see.
4. Evaluate - Critically assess the pros and cons about each property and think about future-proofing your housing needs.
5. Be decisive - Quality properties will sell relatively quickly.
Finally, if it all seems too hard and you’d like help, consider engaging a buyers’ advocate to do everything for you! We know when to strike and how to strike!