Is this spring any different?

Spring has arrived. Interest rates have risen again. Last year we were in lockdown.

What can we expect this traditional selling season for real estate?

Historically, September brings with it an influx of new listings to the market. The majority of property owners think this is when their home will fare best with blooming gardens, extended periods of light and a renewed enthusiasm following the relatively dormant winter.

This year the market has experienced somewhat of a downturn. The extent and longevity of this downturn is the subject of debate amongst even the most learned of industry specialists. However, what is not in dispute is the number of properties listed for sale that continue to linger on the market -perhaps in the hope of snagging a buyer at a pre-downturn price – or are withdrawn completely, carrying with it profound disappointment for the seller.

New listings are counted as those that are new to the market and not those that gave it a go, withdrew, and relisted within 75 days.

There are a couple of indicators of fresh listings coming to market.

The rise in homeowners wanting to get an update on the value of their home. We have seen an uptick in these numbers in recent weeks.

The rise in auction booking numbers. Auctioneers are reporting an increase in forward bookings for the spring months.

Last year Sydney was in lockdown in September, not emerging until almost mid-October. Despite the late start, the real estate market had a bumper season. However, conditions were very different, with interest rates remaining at historic lows, a preceding period of imposed inactivity and relatively low stock levels.

This year we have had five interest rate increases in as many months. Uncertainty and trepidation has crept back into buyers’ minds, making them more cautious about the level of debt they want to take on. This will have a natural effect on reducing the number of buyers in the market, and therefore competition for properties, culminating in lower prices.

So what does this mean for sellers?

CoreLogic research reveals an interesting feature of a housing market in decline. The data shows that the average hold periods of sold properties rise and this is supported by current downturn figures. This is essentially because buyers who purchased in the last year are at more risk of making a loss if they sell during the downturn, as opposed to those who have held their property for longer who, overall, are more likely to have made a gain despite the intervening cycles.

Sellers will continue to need to be flexible on price this spring as the market continues to transition. Other sellers are your competition so be aware of what is selling, who is vying for the same buyers in your market, and what the buyer feedback is. Auction clearance rates are down and days on market and vendor discounting figures are elevated, indicating sellers are in general not keeping abreast of market performance.

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Published September 9, 2022

By Belinda Cassano