Ready for a Change?

Last Saturday we saw the return of the Liberal government in New South Wales after the state election was held. I am not sure how this translates – if it does – on a federal level but we will find out in a couple of months.

In the meantime, we can look at what is happening in the market today. Although auction clearance rates are at a healthier level than they were at the end of last year, auction volumes are dramatically lower. In Sydney alone, the number of properties taken to auction last weekend was little over a third of the number in the corresponding week last year.

There has been an 18% reduction in the number of new properties listed for sale in Sydney over the past twelve months. Having said that, the total number of properties on the market remains high, meaning there are a lot of unsold offerings out there.

Of course, the talk of a falling market deters sellers who don’t have to sell from making the decision that now is a good time to move. However, if you are looking to upsize in the same market, now can be a great time to make the lifestyle change. If you sell a $1.5M property for 10% less than you would have received at the peak of the market, you are selling at a $150,000 discount. If you’re buying a $2M property for 10% less, you are buying at a $200,000 discount which means there is $50,000 less that you need to find to make the same lifestyle change.

John McGrath recently wrote:

“Every time a boom comes around, we are reminded of the capital growth property can achieve. People kick themselves for not buying five or ten years ago as they see prices going up and up. Then the market inevitably turns and people forget that lesson…..that’s how people miss opportunities.”

Property should always be considered a longer term proposition. A few weeks ago I included a graph in my email which illustrated the cyclical pattern of the real estate market over the past several years. Although lifestyle considerations should be given priority, the indication is that we are approaching the bottom of the cycle and that now would be a great time to purchase.

First home buyers can take advantage of the low interest rates, government assistance, and the generous supply of quality apartments. Upsizers can benefit from the decreased changeover cost and lifestyle enhancement. Everyone can benefit from the fact that there will be less competition at auction and are therefore more likely to purchase at a fair and reasonable price.

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Published March 28, 2019

By Belinda Cassano