Traditionally, spring has been a popular time to inventory and buy real estate.
For sellers, the better weather means houses are shown in their best light, and for buyers there is more choice.
Last year around this time, buyers were in the back seat when PropTrack Home Price Index revealed that annual price growth was following at the fastest pace since 1989.
But what a difference a year makes.
Today, that same index reports that every capital city – and its recently booming regions – have all been in negative price growth territory.
Steve Mickenbecker, director of the Canstar group and financial commentator, said buyers were now back in the driver’s seat.
“I think this spring will be quite a buyer’s market. Buyers should approach it knowing they have choices,” he said.
“There will be more homes on the market, there won’t be the shortage we’ve seen lately that pushed prices up.
“And there will be fewer buyers.
“The balance of power has been reversed and now buyers know they can enter this buying season without the fear of missing out, which has been the driving force in recent years.”
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NEGOTIATION IS BACK
Reece Coleman, buyers’ agent and chief of advice at Maker Advisory, said buyers are taking back control of what was a runaway housing market.
“Buyers have been sitting on the sidelines and I see no reason to sit on the sidelines anymore,” he said.
A cooling market translates into sellers accepting more realistic prices, and in many cases those price corrections offset any rises in interest rates.
“The current price of real estate is falling and the ability to negotiate rates makes one of the best times in the past five years to buy real estate right now,” said Mr Coleman.
“Sellers are serious about selling their homes, not just looking for a lottery win – and smart homeowners are seizing this opportunity to take a step because they can see that this is an economic climate where everything is aligned. .”
MORE CHOICE FOR BUYERS
List numbers are up and buyers are down, so buyers have less competition for more inventory. In August, new “for sale” listings in capital cities were up 8.7 percent year-over-year, while regional areas were up 3.2 percent, data from PropTrack shows. Total buyer demand fell 6 percent nationally by the same measure.
“There are certainly more opportunities for serious buyers at the moment,” added Mr Coleman.
“Every agent seems to have a pocket full of off-market listings. People bring in real estate agents to appraise their homes, but don’t necessarily hit the ‘go’ button until they see how the spring market will go. So my advice would be to push the brokers because they all have properties that they know are coming on the market.”
RELIEF UNDER THE HAMMER
AuctionWorks auctioneer Jesse Davidson said the reduced number of serious buyers meant competition was weakening.
“Buyers will see more options at more reasonable price points. People are now realizing that we have reached dizzying heights and prices are starting to level off. Buyers are getting a little more power than last year, and less pressure with fewer registered bidders at each auction.”
Mr Davidson said his auction advice to potential buyers remains the same regardless of market conditions.
“If you’ve done all the important due diligence, join us. There is never a time when a buyer who does not participate is allowed to negotiate after the auction if there was another bidder.
“It doesn’t mean your first offer has to be your best, but put yourself in the best position to buy the asset. From there, just monitor your steps and when you reach your limit, stop. With interest rates rising, now is not the time to buy above budget.”
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FLEXIBILITY WITH INTERESTED
While interest rates are rising and borrowing power is falling, Coleman said buyers should have serious conversations with their lender.
“If a bank recommends an interest rate of 4 percent, a good broker should be able to negotiate a rate with that same bank to levels in the high 3s,” he said, adding that buyers should also look for competitive fixed rates.
“The fact that many major banks are reviewing and in many cases lowering fixed rates is an indication that they expect interest rate relief in the short to medium term. Our advice to customers is not to accept the bank’s first offer on interest rates, as they are more negotiable now than in the past three years.”
SIGNS WE ARE IN A BUYER’S MARKET
Reece Coleman of Makers Advisory said many markets are seeing some of the most favorable buying conditions in years.
More realistic prices – The fear of missing out is really gone. Buyers have been able to buy properties at the most sensible prices in months in recent months, and in many cases the price corrections offset any interest rate hikes.
Fixed interest rate down – While there was a lot of news about the official spot rate hike, not so much noise was made about the fixed rate cut. Behind the scenes, banks are now offering bigger discounts on advertised rates than during the pandemic.
Property Rebound Forward – There is no doubt that prices are falling and will continue to do so for the coming months, but not forever. Economists are already predicting the timing of the next recovery. ANZ economists expect prices in the capital to fall by 18 percent next year, before rising again in early 2024, starting with a 5 percent rise.
Rents are rising – The good news for investors is that rents are up 7 percent across the board according to recent PropTrack data. It is clear that returns are dramatically higher in many markets and those gains will more than cover the cost of interest rate hikes for investors.
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