After another big weekend of auctions the REIV clearance rate has dipped just under 60%. But this doesn’t really tell the tale of what is happening in the market place. Four out of five of the auctions we attended on Saturday passed in with only one NOT being purchased after negotiation.
The very high enquiry levels are switching from investors to owner occupiers. In the past four weeks there have been two owner occupier enquiries to every one investor enquiry. There are many people who already own a home and would have been selling and moving up the property ladder to a more expensive home over the past two years that did not. They have been procrastinating. But a time must come where those who need to upsize, or downsize cannot wait any longer. I believe we are reaching that point now. Most procrastinators have been sitting on their hands for nearly two years.
If this trend continues, it will mean an increase of the family homes in the $400 – $700 and potentially the $1M – $1.5M ranges being put on the market. They will be good homes in good locations, and will mean that there will be better choice of family homes which we have certainly had a lack of for the past eighteen months. However, it will also mean there will be an increase in buyers for the next level up as well.
Whilst it will be good to see the increase in choice of property, it will also be good to see more top end properties of each of the suburbs now being put on the market. However, it will become much more difficult to purchase due to the increased competition of cashed up buyers.
I believe this year we will see the return of the traders. Those who have a home and have paid off a good percentage of the mortgage, who are now in a position to sell and repurchase. The market indicators will be very slow to encapsulate this trend as the median price will not change very much. Many of these vendors will be realistic with their values on their own homes but will probably be very aggressive on buying well.
I believe this year we may see a rise in turnover back to averages around 75,000 homes in the metro area being sold but we will not see a huge increase in price that normally accompanies this sort of spike.
2012 will be the year when owner occupiers will lead the charge for purchasing property. If you are one such person, then think setting very specific limits when you buy and sell. If you would like some assistance before taking the plunge, please feel free to call and have a chat with one of our advocates.
Ian James
Director JPP Buyer Advocates