The market begins to improve, but what can you do to benefit?
(Less than 3 minutes reading time)
We saw flat market conditions since September 2017 however the biggest changes to the Melbourne property market occurred in Spring 2018 with prices falling across the state by 10-15% and in some cases where premiums were paid in the heat of the 2017 market, as much as 20% price cuts were needed to see individual properties sell.
In July 2019, auction clearance rates are now landing above 70% albeit on a smaller volume of auctions than we are used to. And it is this low level of homes on the market that is helping keep this market alive, whilst the buyer demand is still reduced, evidently the election result has prompted a feeling of security according to the perceptions of buyers.
But it's not just the low stock levels and better consumer sentiment that has emboldened buyers activities, banks are also offering some excellent deals to new customers with retail mortgage interest rates of around 3.5% or lower since the official RBA rates were saw 2 consecutive cuts of 25 basis points. But not all would-be borrowers are currently able to secure a loan with lenders policies still being much tighter than they previously were leading to some people being knocked back or being asked to sell their property before a loan offer is made.
This lending factor is leading to less homes coming on to the market as many people do not wish to commit to selling when they do not yet have a destination property. Sure you will be able to sell and you will likely sell very well with the limited competition on the market but what you really want is your next home and when you cannot see it up for sale, you might feel like holding back.
But it is a double edged sword because when the right home hits the market, these people may not be in a position to purchase it because they have not yet sold. And sellers still don't want to accept a 'subject to selling' offer as they can readily sell to someone who is cashed up and ready.
So what do you do?
It's easy! You take a leap of faith that the right destination will eventually come up. It might not be during the time you are selling or while you wait for settlement date, or it might... There are new listings hitting the market every day and you want to be one of those cashed up buyers because in this market, cash is king. Often vendors will receive multiple offers on their property at once and they will usually choose the safer offer which is 'unconditional' even at a lower price.
The worst case scenario would be that you may need to lease a property while you wait for your dream home to come up, but whist this involves an extra move, it's a small price to pay to be in a position of strength to be able to secure the right home for your needs while others are still scrambling for a loan.
For real estate advice, contact the author Simon Wendt on 0407 040 706