Spring is here, normally signifying the busiest time for the real estate market. But 2020 has shown itself to be a year unlike any other, and things are not what they have been in the past.
Between all the commentary by economists and media coverage on the state of the property market, there has been ongoing divided opinion on whether house prices will boom or bust, and it can be hard to figure out exactly what is going to happen in your local area.
Although CoreLogic data has helped to highlight some of the significant slowdown in transaction activity in response to COVID-19 restrictions, it's important to keep in mind that every market is different, and what you read in the media headlines may not apply to your local market. So, how do you sort out the noise from the facts to understand how your local area is doing?
If you're thinking of buying or selling, or even just interested to know where your home value is currently sitting, we will help you figure out the market signals you should keep an eye out for.
Quick property market stats to consider:
- This week, the combined capital city preliminary auction clearance rate came in at 72.4 per cent, the highest preliminary clearance rate recorded since early March
- This time last year, a final clearance rate of 70.7 per cent was recorded across the combined capitals
- Total stock for sale nationally is very low, falling a further 8.6% in the 4 weeks leading to September 6th (according to the latest CoreLogic Monthly - Insights for September 2020). This can be attributed to a sharp fall in listings in Melbourne, where new stock added to market was almost 80 per cent lower than what it was this time last year.
- The effects of COVID-19 and the resulting loss of employment, lower consumer sentiment and restrictions on migration have had a bigger impact on transaction activity than on home values.
1. Keep an eye on property prices
Property prices are driven by supply and demand, and knowing the market conditions of your local area as well as where your home value sits against comparable properties sold in your area can give you a good indication of how property prices are currently doing.
When demand for property is high, but the supply is sitting relatively low (as is the case of the general national market right now), competition between buyers will drive prices up. An oversupply in stock on the market can conversely result in a buyer's market, wherein sellers will find themselves needing to lower price expectations.
Keeping track of how your home value, as well as the property prices in your local area are performing will allow you to stay informed on your local market to understand the ebbs and flows of supply and demand. You can get a free property report here.
Staying in contact with your local agent in a quickly changing market can help you understand the current value of your property. Regularly updated home appraisals can help set expectations and help you figure out the right time to sell. You can speak to your local Upside agent who can give you a free, no-obligation market value appraisal report with comparable sales in the area here.
2. What is happening in the suburbs around you?
A good way to get an understanding of the trends in your area, or what could be on the horizon for your home's value is to keep track of what is happening in the suburbs around you. Buyer's dilemma stemming from housing affordability in a neighbouring suburb could mean that attention flows on to your local area. Track recent listings and sales in your area as well as those in surrounding suburbs, and look at what they sold for and how long they were on the market for a good overview of how property prices could trend.
The property market moves quickly and it can be difficult to stay on top of it. Let Upside do the heavy lifting for you with up-to-date details of all the latest property listings and sales in the areas where you’re looking, delivered weekly to your email inbox. You can sign up here.
3. What are the latest auction clearance rates?
Clearance rates are a key property market indicator, showing the number of properties in your city sold over a certain timeframe, and can help you understand the type of market that is taking place. Here, it is important to keep in mind the stock volumes going to market, as is the current case in Melbourne, where restrictions on real estate activity have seen a fall of 80 percent in new listings than what it was this time last year, resulting in an inaccurate indication of how the market is actually performing.
In other capital cities, the latest stats from CoreLogic show:
|City||Clearance rate 21/9/20||Total auctions||Clearance rate this time last year||Total auctions this time last year|
4. Days on Market
A good indication of the market is to observe the days on market, which is the average time it takes to sell a property. A decrease in days on market is reflective of a high demand market, while an increase generally suggests a higher chance of vendor discounting.
In the last 3 months to August, according to the latest CoreLogic Monthly Insights for September 2020, typical days on market was 45 days across the capital cities, which was an ease up from 47 days in the 3 months to July this year.
Days on market in capital cities
|Sydney||49 days||41 days|
|Brisbane||59 days||57 days|
|Canberra||61 days||57 days|
|Melbourne||46 days||39 days|
Here, it is important to take into consideration the availability of buyers in the area - as is the case for some regional and more expensive suburbs. Your local real estate agent will have the most up-to-date know-how on these figures, and can help you understand the latest market figures in comparison to the conditions in the past.
5. What is the current economic environment?
Although it can be hard to separate the facts from fiction, it is still a good idea to keep an eye on what economic analysts are predicting for the near future. An uncertain economy leading to a potential decline in house values could mean that if you were thinking of selling, now is the best time to start the conversation with your local agent before a drop in prices.
A few things to keep top of mind when deciding whether or not it is the right time to sell could be:
- Record low interest rates means that there will be ready and willing buyers to purchase properties that spring on to the market and are priced well.
- Stock levels are very low, with buyer demand last week 24.9 per cent higher than it was the same time last year.
- The tapering off of government stimulus support and the end of mortgage freeze could see a rise in distressed sales towards the end of the year.
- Despite the recent reduction in home values, demand is still much higher than it was a year ago, a run-on impact from historic low mortgage rates, stimulus and restrictions on how people are spending their money (no overseas holidays or interstate travel in some instances), is driving a big appetite for housing.
- Some experts are predicting an extended spring as transactions continue into December on the back of lower transaction volume throughout the rest of the year coupled with less people travelling over summer. This could be even more pronounced in Melbourne as they look to transition out of lockdown.
- Now could be the most stable the market will be for some time.
Naturally, you’ll want to make sure that the direction you take with your property is the right one, whether you’re selling or buying a home in Australia.
The best thing you can do to ensure that is to get in touch with an experienced real estate agent. In these unprecedented times, a seasoned property agent will have assessed the situation better than anyone else and will be able to provide you with invaluable advice for how to buy or sell your house.
Get in touch with your local Upside agent today to guide you towards the best move for your home.