With the final test before the Easter hiatus passed with flying colours it is now very obvious to all and sundry that the market has jumped up a notch. How far? 3%, 5%, 7% or 10% in the past 4 months; the stats will tell us that in a month or two. But anecdotally, it is easily in excess of 5% but probably not quite 10%.
Since October and November last year we are now looking at increased prices. I know this is not a new thought, however it is when we have to account for changes to comparables when trying to estimate what may happen at an auction for our clients. With selling agents quote ranges basically useless and demand seemingly on the increase it is time to look at what the market is doing in quantitative terms.
Since late last year the market in the sub $500k seems to have moved about $25k. The market between $500k & $750k is up about $30k – $40k. $750k – $1. 5m seems to be the hardest to pick with many sales exceeding comparables by well over $70k. The top end of the market is the one where comparables usually still tell a very accurate picture of what is likely to happen. This may sound strange as we have had reports of record sales and record “above quote range” sales. But in reality the comparables are usually there to show the increasing prices. It is the agents that seem to be quoting lower in the top end over $2M
If you are buying property this year, you will need to “spend” some of your capital growth that you should get over the next 12 months. With likely growth rates around 10% during the lower interest rate periods, you can assume that if you do not offer or bid a little over what a property may be worth, it may take you quite some time to get in to the market. If it takes 12 months then you will most likely need to find another 10% compared to what you hope to spend now.
In 2010 the market jumped up much faster than it is going now and flattened out as of April. We all know the median price dropped in the 2nd half of 2010, but it wasn’t due to “falling” prices, it was more due to the fact that the better homes in most suburbs were not on the market, and the lessor value homes were. This skewed the median to make it look like the market prices were falling, but in actual fact they had simply levelled out and there were not as many buyers in the market place. By 2011 when the market was flat, the supply and demand equation had simply levelled.
This may occur again this year after April and it will be the best negotiators that will buy property during April and beyond. You will also need to analyse the property you are looking at to a much higher degree of scrutiny. I believe it will get harder to purchase through this year, especially if interest rates fall again which is just about a certainty according to all leading media economists.
I have spoken to a number of agents over the past 3 weeks and only a very few will be working on ANZAC day. The REIV have requested that its members honour our service men and women by not running auctions, however, with demand high some agencies have said they will run open for inspections after 1.00pm and some auctions.
If you are considering a purchase this year, please do not hesitate to contact our office for a no obligation meeting to discuss your needs.
JPP Buyer Advocates