Open for inspections are now once again permitted. It’s great news for Melbourne’s resurgent property market, as it continues to gather momentum into 2021 and rebound from COVID-19. It's also a timely moment to pay tribute to property industry workers and customers alike, and their ability to successfully overcome what’s been a very challenging year for Victorians.
Vendors: list sooner in recovery rather than later?
When will discretionary vendors return to town? Capital city new listings are tracking to be down by 25,000 in the first half of 2019 compared to the equivalent six months of 2018 – based on CoreLogic data – an almost 20 per cent drop.
Life can only be put on hold for so long. Plans to upsize, downside, move for work or make an investment will be dusted off. Now that property values appear to be stabilising and confidence is returning off the back of lower interest rates and kinder credit conditions, much of this pent-up supply of vendors will re-emerge – eventually.
But returning vendors will be weighing up a fine tactical judgement – go soon or wait until late 2019 or even 2020.
The instinctive response for many vendors will be to wait until there is further evidence that the market is operating well – say several months of strong auction clearance rates and, ideally, some price growth.
There will be a presumption among the ‘wait-and-see’ group that there must be a large overhang of unsold property already on the market, a glut that should be avoided until it clears.
However, the overhang is quite modest. Core Logic reports 116,000 current capital city listings as of early June. That’s only five thousand more than June 2018. Compare that to the 140,000 or so properties on the market in late 2011. The correction of 2017-18 has been remarkedly measured with little sign of forced or panic selling.
Further evidence of a balanced – albeit delicate – market is a Westpac CoreLogic statistic showing Australian property sales in April equating to 95% of new listings, up from a low of 86% the previous May.
Prospective vendors should remember that late winter and early spring are typically some of the most favourable times of the calendar year to list. Auction clearance rates invariably lift in August and September before declining again in late October and November. Quite simply, buyers are keen to do a deal once there is a sniff of spring in the air, whilst too many vendors are slow out of the blocks, leading to an oversupply towards the end of the year.
And even if values appear destined to be higher in a few months’ time, it’s not really a significant deterrent to selling now if you intend to buy another property soon afterwards. We aren’t in a market where prices are suddenly going to jump such that those who sell now and buy later are materially out of pocket.
Whether you’re a vendor who opts to sell in September or February, do start your planning now. Those who have the luxury of a few more months should make the most of it. Start the process of finding an estate agent. Take soundings from friends, family and associates about their experiences of agents who operate in your area. Make a shortlist and interview the contenders. Seek advice from your agent about the appropriate renovations required to bring your property up to standard and lock-in tradies to undertake work. If your property is tenanted, decide if the property is better marketed lease-free and therefore whether giving notice to the tenant is necessary.
This market is waking up from its hibernation. But it is the alert who will prosper.