Most people can no longer expect that a property will simply sell itself like it has in many markets in the past three years. Some may need to re-evaluate expectations for elements such as price, how quickly a property will sell, and how an agent will manage your transaction.
In January, CoreLogic reported that national dwelling values fell 0.3% over the month, taking dwelling values 0.7% lower since their recent peak in September last year. Across the capital cities, the softer month-on-month housing market conditions were led by Sydney (-0.9%), with declines also reported in Melbourne (-0.2%), Adelaide (-0.2%), Perth (-0.4%), Darwin (-0.2%) and Canberra (-0.1%) while values in Brisbane were unchanged.
According to CoreLogic, a preliminary auction clearance rate of 69.1%t was recorded across the combined capital cities over the week ending 18th February. Auctions clearance rates are lower across all capital cities (except Perth and Adelaide) when compared to the same period last year.
In light of these changing conditions, here are three trends to watch for over the coming year:
Opportunities that exist outside property hotspots
By the time a real estate hotspot is found and presented, often they are no longer hotspots. All the information communicated about the area may have occurred by the time the hotspot is publicised and all the buying activity has often taken place.
Sometimes markets that have attracted negative attention may hold good prospects for savvy investors.
For example, minutes of the Monetary Policy Meeting of the Reserve Bank of Australia have noted that in the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years.
Oversupply can drive prices lower which in turn, may create enticing investment opportunities. Savvy investors may wish to build their cash reserves and be ready to act in falling markets that they believe still hold strong long-term prospects.
However, in the short to medium terms, it will also be particularly important for investors to consider the prospect of higher vacancies and lower rents. Investors should not be put off by this but should ensure they are well prepared financially for lower rental income in the midst of a potential rental oversupply.
Equity markets impacting property
Recent volatility in the equity market may start to influence certain types of property. Discretionary spending areas tend to be the first affected by such volatility. If you are considering buying properties such as holiday homes, it will be as important as ever to define the reasons why you are making the investment and ensure that any investment works for your personal finances.
An agent who drops their commission too quickly
When searching for a real estate agent to sell your property in the coming months, it will be important to pay close attention to their negotiation style.
Whilst negotiation has long been the basis of a successful real estate transaction, it will be a skill that is increasingly important in a softer growth phase as the negotiation process may take a little bit more time, and a little bit more back and forth between parties.
An agent’s negotiation skills will be on display during your initial consultations, and you may be able to assess their capabilities based on how they negotiate their commission. You should be wary if an agent offers to drop their commission with you too quickly. This could be a potential sign that they may do the same when negotiating your property’s sale price.
By meeting with a few different agents, you can assess who presents a strong, reasonable argument for a fair price for their services, and in turn, choose the agent who you feel is the right fit for your property.
By Charles Tarbey, Chairman and Owner of Century 21 Australasia
Published: Tuesday, February 20, 2018