Spring to Bring New Life to Australian Property
By Greville Pabst FAPI FRICS, CEO & Director, WBP Property Group
Spring has arrived and with it so too has a welcome improvement to the weather. For property, this seasonal change marks the advent of what is undoubtedly the pinnacle of the trading period.
Commencing in late September, the typical spring selling period runs through to December, concluding in the lead up to summer holidays.
Characterised by an increase in property listings brought about by the warmer weather together with the spring bloom that ensures our gardens are looking their best, spring is generally considered the best time of year to sell a property.
But, although winter is traditionally the least popular time to market a property, this winter has exhibited uncharacteristically high sales volumes with implications for the new spring season.
Figures show that stock volumes in August were more than 17 per cent higher than at the same time last year. Though this resulted in a notable decline in auction clearance, compared with the same period twelve months earlier, national clearance rates remain relatively stable. Averaging 58 per cent, despite disruption from the Federal Election, volumes showed movement in a positive direction in the lead up to September, following a significant fall in July.
As a result, despite an imminent increase in volumes, this spring's stock levels are expected to be lower than in previous years. Continued global economic uncertainty will impact market activity during the season, resulting in fewer transactions as people adopt a more cautious approach to property investment. Many vendors will wait and see' in anticipation of improved investment conditions before trading up and taking on greater debt.
Property owners are also wary of the market's reaction to higher interest rates and reductions in assistance to first home owners that have resulted in a slowdown for property growth, with some property types exhibiting falls in value of between five and ten per cent.
Furthermore, the expected reduction in stock levels compared with previous spring selling periods is likely to create further disparity for the already sensitive supply and demand equation for residential property, almost certainly resulting in a rise in auction clearance rates to in excess of 70 per cent for major capital cities Sydney and Melbourne. But, while this result may represent positive conditions for sellers, the reduced stock levels may have a detrimental impact on affordability, applying upward pressure on values for already stressed buyers.
According to RP Data, in the 12 months to the end of July national dwelling values rose 9.7 per cent with Melbourne the clear performer at almost 27 per cent; an unsustainable growth trend that has now reduced significantly to more regular levels.
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