While it is factual that increasing interest rates and decreasing property values have resulted in reduced opportunities for those intending to move houses, the present climate is not as pessimistic as portrayed in the news.
So, what should the average seller make of the current situation while contemplating whether or not to list their property for sale this year?
Our market research has provided valuable insight into what is happening in the market. Here are the nine things sellers might not know about the 2023 property market:
A more sustainable market is making a comeback this year
The demand for homes has mostly increased compared to pre-pandemic levels
The current property market reality differs from media reports
Most people are not deterred from buying despite interest rate rises
Rising interest rates create time pressure for buyers to purchase
Strong demand in the rental market accelerates property purchase plans for many
Properties that are well-maintained command higher prices in the market
Engaging a real estate agent can help in achieving favourable results
Delaying the sale until the ‘perfect’ time may not yield the desired outcome
This year, the property market is returning to a more sustainable state. Experts prefer the stability and realism of current market conditions over the unsustainable price growth seen during the pandemic.
The current market rhythm is normal and productive and it is not as bad as portrayed in the media. The first three auction weekends of the year had a decent volume of 60 to 90 properties, with a clearance rate of 75% to 82%, which is healthy.
The market is stable, and buyer activity is strong, indicating a positive outlook. Sellers should capitalise on the current shortage of property, as buyers are searching for everything available. Sellers should take advantage of the market while mortgage pre-approvals are increasing, indicating access to necessary finance.
While it is true that in some regions, demand has decreased since the Reserve Bank of Australia started increasing interest rates in May 2022, recent data indicates that buyers are showing more interest in purchasing homes in most areas than they were before the pandemic.
The reality of the property market is different from what is being sensationalised on the front pages. It can be difficult for people who aren't experiencing the property market firsthand to understand what's happening.
For those who only casually follow the market, negative headlines in the papers may paint an inaccurate picture. It's important to consider where you're getting your information from and whether it's from reliable sources.
In many regions, there is a significant shortage of properties for sale, leading to high demand. Real estate agents are reporting a need for more listings, and if the current stock was doubled, it would likely sell within weeks.
If you're considering selling your property this year, go out and see the market for yourself, do not solely rely on an agent's opinion. It's essential to understand that there are submarkets within major cities and taking only a high-level view may not provide the complete picture. By seeing the market in person, you can gain more confidence and not simply believe everything you read on the front page.
While the demand may have decreased from its previous high, it is still stronger than what is available in the market. However, those considering selling soon must understand that buyer demand is the only factor that dictates the market.
Despite borrowing power being less than what it was, buyers are looking to make their next move. They may adjust their expectations, such as not purchasing a fully renovated house if they need a larger space.
The interest rate rises to mark a return to normal levels, which differs from the historically low rates that many have become accustomed to. Therefore, it is a normal rather than a negative environment.
Buyers are feeling the pressure to make quick purchase decisions. In Sydney’s West market, the buyer enquiry levels are higher than this time last year due to low stock levels.
Despite the interest rate rises, buyers have factored them in and the cost of borrowing is still relatively low.
However, the rising interest rate environment has added a sense of urgency to buyer behaviour. With each increase in rates, borrowing capacity decreases, which is a major concern for buyers.
Borrowers are now aware that they need to act quickly before they lose their approval, as the next time they apply, it will likely be for a lower amount.
The current rental market conditions have compelled many individuals to expedite their property purchase plans. This has resulted in a notable uptick in activity at the lower end of the market.
Consequently, those looking to sell in the affordable bracket can be confident in their prospects, given the high demand for housing. The property market is distinct from other investment options since it provides an essential need – shelter.
Given the escalating rental prices and the significant shortage of rental properties, it makes more sense for individuals who can afford it to consider purchasing a property rather than relying on the rental market.
Investing in property continues to be a reliable and secure option.
Prospective buyers are seeking properties that require little to no additional work before moving in.
Homes that have been meticulously maintained and tastefully presented are gaining traction in the market and are fetching premium prices. Well-marketed and well-styled properties are receiving more attention and generating above-market outcomes. It’s essential to prepare your home for selling before putting it out on the market.
Despite the pandemic, property values in Australia remain significantly higher than pre-pandemic levels, providing homeowners with substantial equity.
The role of real estate agents has evolved considerably over recent years. In today's market, agents can play a vital role in assisting sellers to achieve favourable outcomes while minimizing stress levels.
Good agents are committed to supporting vendors with property preparation by providing guidance and connecting them with reliable local vendors for any necessary repairs or upgrades before listing.
A significant portion of an agent's work involves project management, working closely with clients to ensure a smooth and successful sale. It is imperative for sellers to choose an agent who can help them prepare their property adequately for sale.
There are no shortcuts in the current market therefore the sellers must focus on controlling what they can. By opting for a full market campaign and creating competition, sellers can achieve a great price.
Ultimately, agents can alleviate the burden of the sales process by preparing their clients well and reducing the pressure, the entire process becomes more comfortable and less daunting for sellers.
Selling a property is a highly personal decision, often triggered by significant emotional events such as births, deaths, retirement, and changes in employment, which are outside our control.
Waiting for the right time to sell may not yield the expected results, as real estate transactions are not easily quantifiable into a simple calculation.
The best time to sell is when you feel ready, as it is a life-changing decision. If the market is holding you back when selling the property, there's never a perfect time.
It's important to note that when selling in the current market, you're also buying in the same market. Therefore, if you sell your home for a higher price, you'll likely need to spend more to purchase your next property, which is the arbitrage effect.
During the Covid boom, many downsizing homeowners waited for the highest price possible, only to realize that homes in the area they wanted to move to had also increased in value.
The market is unpredictable, and there's no telling what the future holds. Therefore, it's crucial to consider your personal circumstances and priorities when deciding to sell your property.
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