Forget the weather and buy a property
As the middle of the year approaches and the weather becomes cooler, many people may wonder if they should wait until spring to make their next real estate transaction. This could be due to the fact that historically, winter is considered to be a quieter time for the property market and spring has proven to be busier period, with high volumes of buying and selling.
However, I do not believe that the cooler weather should be the only factor in your decision to buy or sell a property. In fact, there are a number of reasons that indicate right now might be an appropriate time to make your next real estate move. Below are some factors that could influence your decision to buy or sell in the coming months.
Auction clearance rates
Although national auction clearance rates have not quite passed 80%, the weekly results have been within a few percentage points for almost three months now. This is an outstanding result given that this time last year the clearance rates were 66%. Both Sydney and Melbourne have clearance rates above 80%, with Sydney nearly touching the 90 per cent mark.
These clearance rates demonstrate the high level of demand in certain locations. If you are looking to sell at the moment, it appears that this winter might provide a great opportunity to do so. There is the possibility that if you wait until spring to list your property, you could be doing so with many others. The spring influx of properties may create a higher level of competition between sellers, and thus more options for buyers. However, if you list now you may gain an advantage because there are typically fewer homes on the market during winter. This could potentially give you a stronger position to negotiate from as a seller.
The decision to buy or sell a property can be dependent on many factors including: location, lifestyle, budget and your employment situation. One of the most important factors however, is interest rates. People who have experienced high interest rates know just how hard it can be to make headway against a mortgage when rates are high.
Interest rates at the moment are at historically low levels. The benefit of this is that if you are looking to buy soon, you may be able to take advantage of these low rates.
I would advise however, that buyers should consider their finances very carefully. Purchase a property that fits within your budget and try to refrain from overstretching yourself with debt simply because rates are low. If homes are unaffordable in a location where you would like to live, consider renting in that location and buying an investment property in an area that you can afford. Now may also be time to consider locking in an interest rate on a portion of any loans you may have – this will give you a degree of certainty about your repayments in the future.
The wave effect
It may appear to some that due to price increases seen in some areas, there might be limited room for capital growth in the Australian real estate market. In my opinion however, it seems that there are many areas which represent value. It is important to remember that not all areas have experienced large price increases recently. I believe that a ‘wave’ of growth may begin to spread from suburbs that have had high levels of price growth into areas that have not yet experienced the same rates of growth.
I would advise that people conduct thorough research when looking to purchase their next property and not consider real estate as a short-term investment.
Picking the right agent
The growth in Sydney and Melbourne has no doubt attracted many new agents into the real estate industry. In times like this it seems many job seekers turn to real estate, thinking that it could be an easy job. When the market experiences a period of strong growth, be careful of agents who spruik the benefits of a boom. Such agents are unaware that a healthy property market is actually characterised by steady, sustainable growth.
I don’t believe that selecting the right person to sell your home is as simple as finding the agent with the lowest commission or who promises you the highest price. My advice would be to find an agent with the most ‘SOLD’ signs in your area. Most people select an agent with the most ‘FOR SALE’ signs but the perception created here is definitely not reality. More ‘FOR SALE’ signs indicate that the agent is having less success and it also means that if you list with this agent you will be one of many trying to sell through this agent.