Myth busting the Australian real estate market
With so many different opinions and information on the property market available, it can be difficult to make sense of the truth behind what we read, see and hear.
Here are three myths about the real estate market that I believe should be dispelled to help Australians make the most of property transactions in the coming months.
1) That stabilising growth is a bad thing
According to CoreLogic’s August home value index, national dwelling values remained flat over the month, with capital city values edging 0.1 per cent higher. Simultaneously, regional dwelling values slipped 0.2 per cent lower.
CoreLogic’s head of research, Tim Lawless, said this steady result provides further evidence that the national housing market has moved through its peak growth phase.
Whilst some may believe slower growth conditions are something to be alarmed about, I believe it also brings with it a number of positives.
It may enhance the opportunity for some to come off the sidelines and enter the market. Affordability issues may be lessened to some degree, as people’s wages and savings may be able to grow at a pace more in line with housing price growth.
People may also be faced with more time to weigh up a transaction in a marketplace that is not as hurried. Buyers may face less pressure to rush in and purchase the available stock, as we have seen occurring in more heated areas such as Sydney and Melbourne. This may also prove beneficial to investors who may have the chance to purchase an investment without getting caught at the top of the property cycle.
Vendors on the other hand may face less risk of selling and being priced out of the market when looking to buy again.
Moderate short-term growth can often lead to more sustainable growth over the long term so Century 21 is not overly concerned about cooling conditions.
2) That foreign buyers have put pressure on affordability
Australia is naturally an appealing market for international buyers – boasting a great lifestyle, climate and appealing property prospects.
Plenty of discussion has surrounded the influence of foreign investment on the real estate market, and whether this is preventing some Australians from getting on the property ladder. This appears to have resurfaced in recent times with increased taxes, changes to investor lending policies and new regulations in China.
I believe it is a myth that international buyers have caused a great deal of grief for our local market. Rather, they have helped our building industry to remain a strong and stable part of the national economy while likely increasing housing supply.
Not all properties built in Australia can easily be sold to the domestic market. For example, much of the stock that Asian buyers are purchasing here is not really in the first home buyer market, such as apartment stock.
It could be argued that our real estate and construction industries may suffer if foreign investors are increasingly pushed away, as they will look to invest into other parts of the world.
3) That agents don’t need to work that hard to make a sale
During market booms, the belief seems to circulate that properties virtually sell themselves. Some may see the agent’s role as a simple one that allows them to reap the rewards of high commissions.
It is important to dispel this perception as agents play a valuable role in facilitating successful transactions.
In a more stable market, the role of a good agent becomes critical. In these types of conditions it can be a little less easy to bring buyer and seller together, and to reach an acceptable meeting of minds. Agents may work for weeks, or even months, and put in significant effort without even earning a cent if a sale is not achieved.
Many also tend to forget that real estate can be quite an emotional game. Selling one’s home can be a stressful, confusing or intimidating process and this is where the experience of an agent will be invaluable to navigate the transaction and manage the emotions of all parties involved.
Whilst cheaper options may suit the circumstances of some, choosing a skilled agent with refined negotiation abilities should be a key consideration for vendors in the coming months. It is worthwhile considering that a little extra investment in an agent who will tirelessly negotiate and market on your behalf could pay dividends in a sale price beyond your expectations.