If you are waiting for the bell to ring to show the change in the property market, consider it rung. The change in the current property market began its change in February with some consistent mid fifty percentile results and then through March and in the build up to Easter we saw the clearance rates hit high 50 percentile. After Easter we have now seen multiple weeks hit 60% clearance rate.
Breaking down the results further we can look at the pass in on vendor bid. This has now fallen out of the hundreds in the high 60’s and early 70’s each week after Easter. This is the really significant figure. It means there are far less properties failing without a bid. And this is reaching into the private sale market as well, where agents are talking about most properties now having multiple interest. Especially those under $1m.
In the lower end of the market below $1m the market has been firming up strongly across the board. Modern houses on smaller land, older houses on larger land, townhouse and villa units alike have been performing much better than this time last year. Apartments are still struggling due to the overabundance through 2015 – to now as well as the very negative sentiment with the cladding issues that is still yet to be sorted out.
For those waiting for the Federal election to play out, the results may not be as significant to the current property market as many think. Whilst Labour are looking at changes to negative gearing and capital gains tax, as previously mentioned there are only certain areas of the market that may be affected. And this effect will be slight. If you want to land bank with a significant weight on capital growth and not much on yield, then the changes Labour make will be significant as there would normally be a large annual loss whilst maximising the capital growth. Anyone looking at this type of investment should think seriously about buying before the end of the year when Labour have said their negative gearing will begin. If you are looking for a revenue neutral property, then the removal of negative gearing tax implications are negligible.
The better clearance rate data will be used by selling agents when discussing with vendors whether they should sell now or wait until later. Many vendors have been putting off selling their property for well over 12 months now. Many need to sell in the next 12 months and the higher clearance rates will be a rallying cry from selling agents to put properties on the market. This will mean we will see better properties hit the market. When the better properties in a suburb begin to it the market and sell the median price will rise, REGARDLESS OF WHETHER THE PROPERTIES HAVE SOLD BETTER THAN EXPECTED. It is simple maths. If higher value properties begin to sell then the median increases.
If you are considering a property purchase in the next 12 – 18 months, now is the time to move. We will see good growth over the next 2 years, albeit relatively slowly compared to 2017, but the property prices will increase nevertheless. The key to good buying right now is good assessment and very good negotiation skills. The selling agents aren’t simply taking the first offer like they were last year. It is now imperative that your assessment be accurate, and that you move fairly quickly with the right offer. We have successfully bought a couple of properties over the past 2 weeks by out manoeuvring our opposition. This can be dependent on conditions, settlement periods and of course the amount you offer.
If you would like to catch up for a no obligation chat, please feel free to call or email me.
Director JPP Buyer Advocates