Property buyers to get power back in 2017
The New Year heralds a fresh start, and for many, it’s seen as the time to make changes in different aspects of our lives. We make New Year’s resolutions about health, fitness and breaking old habits, commence new careers or business ventures and eagerly plan out our short-term and long-term objectives for the year ahead.
Change not only occurs in our own personal lives, it also appears to be affecting the Australian real estate market. As we come off a strong year in real estate, there are many signs that markets around the country will likely experience changing dynamics in 2017.
Conditions look to be stabilising in the New Year, however I believe this is not necessarily a thing to fear. We are likely returning to a ‘true’ real estate market where negotiation can more effectively occur between buyers and sellers to reach a positive outcome for both parties.
Last year, factors such as lower stock levels, access to cheap finance and strong demand for property seemed to create a sense of urgency for buyers in many markets. We saw prices moving into higher territory, where one could argue they should have slowed, as available stock was quickly snapped up by hungry buyers.
This urgency may begin to cool off in the New Year. With supply levels starting to fill in many areas, conditions may change for buyers as they encounter increased opportunities for negotiation when purchasing property. Stabilising market conditions may mean buyers are placed in a better position to make an offer, rather than having to rush in and purchase in order to place their foot on the property ladder.
In particular, discussion of unit supply continues, and this year, we will see the completion of many apartment complexes in various parts of the country. While some would likely still prefer to purchase a house and land, apartments can provide more affordable opportunities to enter the market.
Vendors in some parts of the country may need to be more open to the offers of buyers, and willing to align their expectations with changing market conditions (instead of the conditions existing in what was arguably a seller’s market last year). However, in saying this, the outlook still appears to be relatively buoyant for many capital city markets, with demand remaining strong.
When looking to sell this year, a key consideration for vendors should be choosing an agent with strong negotiation skills in order to effectively facilitate a meeting of the minds and achieve the best possible results for their property.
In light of changing dynamics, it will remain crucial to investigate the market on a state-based and even suburb-based level when looking to transact property this year. We are sitting in a country that has a diverse group of real estate markets operating at the same time, so change is going to be very different in each of these markets.
CoreLogic analysis shows the disparity between markets across Australia’s capital cities, as the annual change in dwelling values for 2016 ranged from -4.3% in Perth to 15.5% in Sydney, with Melbourne and Hobart also showing annual capital gains higher than 10%.
This shows that what is true of one market may not necessarily be the same for another. By talking to local experts and familiarising yourself with readily available property data, you may be better equipped to understand how to make the most of a property transaction in your desired area. While no one has a crystal ball to tell how 2017 will play out in real estate, as always, preparation and due diligence will help to place you in a better position to navigate the highs and lows of the real estate market.