Our 2020 Melbourne property price prediction is 8 to 10% annual growth. We also see strong growth in Sydney and solid growth in Canberra and Brisbane. Richard Wakelin explains why.
Profit from the ebbs and flows of the property year
The property market is far from uniform across the year. Stock ebbs and flows across the 12 months, influenced by the seasons, school and public holidays, major sporting events and even election days.
At any one time, the level of stock and whether it is ebbing or flowing is the aggregate of numerous fine judgements by estate agents and their vendors about the optimal time to run a campaign for their property. In each instance, careful deliberation will have been undertaken on the amount of known or likely competition from similar properties in the area, and the likelihood of the auction day coinciding with strong buyer numbers.
Misjudging market tides can be the difference between the heaven of multiple bidders and the hell of none. That’s a mistake that can cost a vendor tens or even hundreds of thousands of dollars.
So it is at this critical juncture that a vendor wants an agent in their corner that has two qualities: experience and a finger on the pulse of the current market. An agent who has worked in a locality for several years will have learnt when conditions tend to be felicitous for vendors and when less so. But they also need to have on-the-ground timely knowledge about current conditions, which they gather by monitoring all local listings, and actively talking to vendors, buyers and other agents. This real-time intelligence enables tactical adjustments to campaign timings if necessary.
Of course, not every agent has these skills and even if they do, they don’t always apply them to maximise their client’s interest. There is a joke in real estate that when asked when the best time to sell, an agent will always say ‘now’ for fear that recommending a date several months away risks them losing business.
This attitude in part explains why a mismatch between supply and demand persists. Other factors include non-discretionary vendors who don’t have the flexibility to choose an optimal auction date, and a tendency of too many vendors to wait and see how the autumn and spring market are going before committing to a campaign, and then finding they are selling in glut-like conditions.
It’s therefore worthwhile for prospective vendors – and of course buyers – to have a reasonable grasp of the ebbs and flows of the market.
Auction numbers tend to grow from the start of February through to Easter or a little after. They then subside in the winter months of June and July, rebounding in spring with the highest number of auctions of the year in late October and November. Because of this movement in stock, auction clearance rates typically fall from September to the end of the year and (to a lesser extent) fall from March through to late May.
The upshot of these forces is that the best time to sell is often before mid-March and from late July through to early October. Conversely, buyers often do well by buying in late May and late October through to December. Other times of the year tend to be more balanced.