By Rich Harvey, CEO & Founder, propertybuyer.com.au
One thing I see regularly as a property professional is buyers trying to time the market. So many sit and wait, hoping to identify the very moment when prices have hit bottom and all the complex drivers that determine market direction are aligned in their favour.
I’m about to let you in on a secret – picking the market’s exact low point is near impossible except with the benefit of hindsight. The best you can hope for is to act early in the upswing… and as luck would have it, that time is right now.
Why is the time ripe?
For all the mechanics and levers that pull the market in this direction or that, at the end of the process sit buyers and sellers. Each of those groups will decide whether to act or not based on confidence. All the good economic news in the world is useless if buyers don’t listen en masse and decide it’s time to act.
From what I can see, we are sitting in this exceptional window of opportunity where purchasers are beginning to take notice, and those that go early will get the best outcomes.
First up, what is the data telling us?
In April, the RBA paused on interest rate rises. While they’re still making noises about increases in the future, they’re no longer full steam ahead with monthly rises. In fact, depending on which economist you follow, some feel the RBA will stop here and the next interest rate move will be down! And why not – the inflation rate is slowing and they don’t want to risk overshooting the mark.
It's showing up in the data too. The Westpac consumer index has reportedly risen 9.4 per cent over April in response. In addition, confidence in the outlook for house prices ramped up too, with the ‘time to buy’ sub-index increasing by 8.2 per cent.
According to SQM Research, asking prices for Sydney homes have climbed 2.7 per over the four weeks to April 11. They also rose 0.9 per cent in Melbourne and 0.7 per cent nationwide.
A report by renowned AFR property journalist Nila Sweeney last week captured the sentiment. She wrote:
“CoreLogic, SQM Research, Proptrack and RBC Capital Markets have all declared house prices had bottomed out in the two biggest housing markets amid a growing number of housing indicators showing a marked upturn.”
On top of that, as I’ve discussed in a previous blog, migration is roaring back in this country and all those new Aussies will need a roof to shelter under.
What about the fiscal cliff?
There are some running scared at present because of the touted “fiscal cliff” which will see borrowers on fixed interest rates flip into variable rates overnight. The sudden jump in their interest rate of more than two per cent has been predicted by some observers to put them under financial pressure, resulting in a rise in distressed property sales.
But the more I study the landscape, the more convinced I become that there won’t be a fatal fall. We’ve all known about the fiscal cliff for some time. Most borrowers at risk either have buffers in place, have already sold down assets, have boosted their savings or refinanced their positions. They’ve been making moves early to avoid the interest rate shock.
I just don’t think it will be the big deal everyone is making it out to be.
What buyers’ advocates see
One of the most important indicators of a turning market is up-to-date qualitative information gathered by buyers’ advocates. It’s the things we see week-in, week-out at auctions and open houses that denote a shift is underway.
I can say with complete confidence that buyer activity is ramping up. Just in the past few weeks, sticky listings have gained traction with purchasers. Open homes seem to have less tyre kickers and more serious buyers too. Auction bidding is becoming more competitive – there are more registered bidders at events and clearance rates are rising as well.
We are also fielding more enquiries from potential buyers across all our office locations.
These are lead indicators that haven’t yet filtered into the hard data. By the time they do, the recovery will be well and truly entrenched.
Now is the time to take action
Sentiment is changing. It has a significant impact on the market, and we are in the first stages of that metamorphosis right now.
My big call is this – those who act early benefit most. If you are a buyer who has been contemplating a purchase, now is the time to get busy. Have your finance sorted and your “must have” list complete. Be talking to a buyers’ agent so that you’re primed and prepared. When the right opportunity comes along, be ready to pounce.
After many years watching multiple property price cycles, I can confirm we’re at a tipping point. If you want the best possible outcome, be an early bird and beat all others to the worm. In a year or two, you’ll look back at this time and be thankful you chose to buy rather than sit on the sideline.
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