March brought whispers of the real estate market dropping, but are the rumours true? After two years of explosive growth and fierce competition across the country, it is understandable that a reasonable slowing of market growth can feel like a drop, but the experts suggest this is a much-needed ‘steadying’ rather than a drop.
What does this mean for buyers and sellers?
A steadying market signals the sheet balancing between buyers and sellers. This means, in certain areas, sellers will need to price more competitively and sell with realistic expectations. Buyers can enjoy a little relaxation in the market with less intense time pressure and competition, but bear in mind that getting in now is still a good idea with interest rate rises teasing.
As always, every market is presenting slightly different trends and tendencies. We talked to a group of Homely partners about their local market trends, to get their thoughts and advice:
Andrew McCulloch
CEO Ray White, based in Sydney
Is the market is dropping?
I’ll say ‘no’, the property market isn’t dropping. We know what’s in front of us now, it’s not going to nosedive. Regardless, the market is all about dealing with the now.
We still haven’t seen prices drop and I think it’s because we never saw the usual flurry of property hit the market around Australia Day that we have come to expect. What we are seeing now is classic supply and demand and last year’s aggressive growth has thankfully slowed. Growth has slowed – thankfully.
What trends are you experiencing in your local market – do you expect those trends to continue?
There is talk at the moment of the government abolishing stamp duty. It’s a good conversation to be having – it keeps the market going – but I don’t believe this will happen anytime soon.
What does this mean for buyers and vendors?
Australia, as a country, is obsessed with real estate. In a strong market like ours, you simply can’t go backward – any slowdown is more of a stabilising. If you take a step back and look at the real estate market over time, we tend to see more peaks and fewer troughs, and the numbers don’t lie.
Any advice for buyers or sellers in the current market?
My advice for buyers and sellers is simply, ‘yes!’. As a buyer, it’s always a great time to get in. For those in Sydney in particular, property is a sure bet. Even if the market were to pull back by 10%, which it won’t, it will bounce back. The only way you lose is if you sell.
For sellers, now is still a good time. We are not experiencing the same rapid growth as last year, but as I mentioned earlier, this points towards stabilisation, not a nosedive. We are still buoyant with a shortage of stock, but the key for vendors in this current market is to be realistic. Some vendors still think the market is climbing and are coming onto the market with higher expectations. Now is a good time to sell, but be realistic about your price.
Leigh Fletcher
Director Hayeswinckle, Victoria
Is the market is dropping?
Right now, we feel the market has shifted. The back half of 2021 was a seller’s market and we were seeing results exceed all of our expectations. Buyers were fighting hard for good real estate. We saw this in the early stages of 2022, but in the last 3-4 weeks a noticeable shift has been noticed.
What trends are you experiencing in your local market and what does this mean for buyers and vendors?
Buyer numbers at inspections have decreased slightly and there has been an influx of properties coming onto the market. This gives buyers more choice, therefore diluting buyer numbers at opens and competing at both auctions and private sale properties.
Any advice for buyers or sellers in the current market?
My advice to people considering selling their homes is to be realistic and sensible. If there is an interested buyer who has placed an offer, work with them to a level you are happy with and conclude on the sale.
For buyers, find the place that is right for you and don’t wait as you never know when the market will start increasing again. This is a far more level playing field for both buyer and seller, so buyers need to start taking advantage of that by being proactive.
Stu Costello
CEO Harcourts, South Australia
Is the market is dropping? What does this mean for buyers and sellers?
Adelaide and the majority of SA are still in a rising market when looking at sales prices. Our agents on the ground are noticing some differences in the volume of buyers both at certain price points and in certain locations. However, overall it’s certainly still a seller’s market with prices at an all-time high along with some very fast and intense sale campaigns.
I think it’s exceptionally difficult to predict what may or may not happen in the future due to so many external influences which could have an impact on our wider economy. I believe it’s our job and responsibility as agents to ensure that we can adapt to the market conditions quickly, so our clients have the best advice and are working with highly skilled individuals who can play to any conditions.
Any advice for buyers or sellers in the current market?
For anyone trying to transact in this marketplace, it is crucial to have someone in your corner who knows exactly what’s happening in your local environment. The agents on the ground are the first to see a market changing and understand the conditions well before the ‘statistics’ are released months later after settlement has taken place. Whether you’re buying, selling, or leasing, having the right expert in your corner is imperative.
Pauline Lyon
Estate Agent, Peard Real Estate – Hillarys, Western Australia
Is the market is dropping?
I don’t believe so. The demand is still strong, we are simply seeing less people through home opens as we are dealing with just the serious buyers. Covid cases and isolation have minimised numbers through home opens and now that our borders are opened people are able to travel, throw into the mix AFL season and that explains the smaller numbers at opens.
What trends are you experiencing in your local market – do you expect this to continue?
Property prices in the northern coastal corridor are holding strong and have shown good growth. We are now starting to stabilise with interest rates on the rise. I don’t believe our property prices will drop as I feel this growth is a long-overdue correction in the marketplace and with so many people wanting to come to WA to live, seeing how amazing the coastal Northern corridor is, it’s not looking likely that these suburbs will fall in price (these suburbs are our best-kept secret!)
What does this mean for buyers and vendors?
No one can ever truly predict the market, however with the Ocean Reef Marina development in full swing and once Ocean Reef gets Perth’s first Beach pool it’s going to draw even more eyes to our already-attractive northern coastal corridor. Since December 2020, we’ve seen a steady, and long-overdue price increase in properties which has only strengthened with the demand high and the supply low. There are still a lot of buyers searching in these suburbs from across Australia, but we’re also seeing more local buyers upgrading by suburb or house in and around the surrounding suburbs.
Any advice for buyers or sellers in the current market?
Buyers wanting to get into these suburbs should be looking at their home as a long-term investment and not planning to try and ‘flip’ a house.
Sellers, it’s a good time to be selling and I feel it will remain so for the immediate future, ensuring you have a good agent who has a good understanding of the local market to get you the best result.
Donna Gordin
Director, Home2Home Realty – Rockingham, Western Australia
Is the market dropping?
We are not seeing the WA market drop off, in fact, there is still a shortage of listings here – particularly family homes within a 10km radius of the CBD.
What trends are you experiencing in your local market – do you expect this to continue?
We’re seeing a large number of eastern states investor enquiries and, simultaneously, very few local investors getting into the market in WA, even with high yields of up to 6%. Instead, we’re seeing local Investors use this as a time to get out of the market after a difficult 10 years.
Builders are telling me their cost base for materials has increased 32% in the last 12 months. This will have a big flow-on effect on the cost of building a home. Add this to the current build delays thanks to supply shortages, and we will see those who were wanting to build flow back into the established housing market.
In the rental market, we still have good quality tenant applications coming in, but existing tenants are choosing to remain in their properties which is driving down vacancy rates. Interestingly, a high number of those that are vacating tenancies are doing so because they have recently purchased their own property – which also drives down the vacancy rate.
What does this mean for buyers and vendors?
The competition for buyers right now in WA is real – especially first home buyers trying to get into the market as they are competing with the ‘Eastern States Investor’.
Any advice for buyers or sellers in the current market?
Don’t panic, do your research and remember to ask, “what is the purpose of this transaction?”, when buying or selling.
I would also advise paying down any personal debt quickly before interest rates lift. However, don’t be afraid of an interest rate rise, in fact, make sure you budget for it. Even an interest rate increase of 2% is cheap money compared to what we had 10 years ago.
I believe that sellers, despite a rising market, must remain competitive with their pricing if we are to keep encouraging those new, local buyers into the market.
