As agents and ‘trusted advisors’, people seek our advice to help them make better decisions around buying and selling real estate.
Some topics are easy to give advice on – presentation, advertising, sales method, strategy, etc.
Other topics are not so easy – like timing – because this is largely outside of our control.
People want to know if now is a good time to buy or sell?
Should we wait for more/less stock?
Should we wait for interest rates to plateau?
Should we wait until spring?
Should we wait for prices to go down/up?
Unfortunately, we don’t have a crystal ball, and making market predictions is a fool’s game.
The banks get it wrong most of the time and they have hundreds of analysts far more intelligent than us.
I mean, who would have predicted that a global pandemic (and subsequent loosening of monetary policy) would have led to the biggest real estate boom Australia has ever seen?
And who would have predicted, after the RBA had said categorically that interest rates would not increase until 2024, that we would see nine consecutive rate hikes by the start of 2023 – the most aggressive tightening in our history?
Crazy stuff.
Back in May 2019 just before the Federal election everyone was predicting that the property market, having already been gradually falling for 18 months, was about to really crash. Especially if Labor got in and eradicated negative gearing.
Well, Labor didn’t get in and the exact opposite happened.
Literally, in the space of two weeks the market turned, and we went from having no bidders at any of our auctions to several bidders at most of our auctions.
It was incredible to watch. Prices soared 30 to 40 percent in the subsequent two years, even as Melbourne was locked down for near on 12 months.
Bank analysts got COVID’s effect on property prices wrong by an order of magnitude.
The predicted 32 percent crash (CBA’s worst case scenario) turned out to be a 30 percent windfall in Stonnington and double that in some coastal regions.
To put this in perspective, CBA‘s predicted impact of COVID on the price of the average house in Armadale was off by $1,500,000.
Yet we still pay heed to their future predictions.
Currently, there is a lot of negative talk around rising interest rates, a looming global recession, and persistent inflation.
It is understandable why many punters have a gloomy outlook for the real estate market.
Yet, like with COVID or any other complex macroeconomic event with thousands of unforeseeable variables, no one really knows what is in store for house prices this year.
They could go up, go down, or stay flat.
One thing we do know is that the current market is not that bad. It’s actually pretty good when you focus on the stats rather than the noise:
Jellis Craig saw a clearance rate of 84 percent on Saturday (30 out of 36 auctions).
Our office had an average of 23 groups inspect per property on Saturday (well above average, even for this time of year)
Auction volume was down 44 percent this weekend compared to the same weekend last year (276 v 490 according to the REIV)
Team Fetter/Sciola sold 54 properties from July to December 2022 and only one property that we took to market did not sell (98% strike rate).
So, if the market is still holding up well now (albeit it on low volume) and we don’t know what the rest of the year will bring (and certainly can’t control it either way), then this begs the questions – why wouldn’t you sell now if you are otherwise ready?
On the buying side, I am happy to give you some unsolicited advice…
If you are motivated and ready to buy, and you find the right property at the right price, you should try and buy it. Now.
Why? Because there is no guarantee that you’ll find something better (or “cheaper”) later in the year.
Stock is tight and will remain so for the foreseeable future. This I am happy to predict without a crystal ball.
Whether you’re buying or selling, or both, please let me know if I can help you make better real estate decision this year.
David.
Feature Image: 11 Gibdon Street, Burnley
David Sciola 