For decades, Spring has been synonymous with selling. The appeal of warm weather, gardens in bloom and the prospect of moving in before Christmas have traditionally seen buyers out in full force, making it the ultimate time to sell.
However, over the last two years, as we witnessed the property market soar to new heights against all odds, perhaps one key takeaway is that traditional ways of thinking, including this notion around selling in Spring, no longer exist.
A perfect storm of record low interest rates, relaxed lending and low stock have underpinned the property frenzy over the last twelve months. Now, as the threat of interest rate rises and price rise fatigue loom, let’s take a look at three reasons why Autumn might be the perfect time to sell this year, but first, let’s take a look at the market:
Market Update
After peaking in 2021, house price growth is tipped to plateau this year before prices begin to fall in 2023. Any fall in prices likely won’t be significant enough to wipe out the gains from this once-in-a-generation boom, but rather we will see a correctional phase as we move through the property market cycle.
According to Core Logic data, national housing values were up 0.3% in February, the slowest monthly rate of growth since September 2020.
After recording significant YOY growth (+33.1% ) in 2021, Sydney has shown the sharpest slowdown, recording its first decline in growth (-0.1%) in over a year. In Melbourne, housing values are also beginning to steady and were unchanged in February (0.0%).
Meanwhile, in Brisbane and Canberra, buyer demand continues to significantly outstrip supply putting ongoing upward pressure on prices. Brisbane recorded +1.96% growth in February while Canberra saw continued momentum in the market with +0.43% growth.
So, while prices remain incredibly strong across the board, we are beginning to see the rate of growth slow. It is undoubtedly still a seller’s market thanks to the incredibly sharp momentum we saw in 2021, making Autumn the perfect time to sell.
Three reasons why now could be the right time to sell
- Interest rates are tipped to rise
The Reserve Bank of Australia (RBA) has kept the cash rate unchanged, at a record low of 0.1% since November 2020. Record low interest rates have fuelled the property frenzy, allowing buyers to borrow more, ultimately putting upward pressure on prices.
While it is difficult to predict exactly when the RBA will lift the cash rate, experts forecast that the rise could be as early as June this year or as late as mid 2023. Any hike in rates will absolutely take the steam out of the market by limiting how much buyers can borrow, and ultimately afford to pay.
For now with rates at record lows, buyers still have significant borrowing power. The looming uncertainty of a rate hike puts increased pressure on already eager buyers to transact on a home as soon as possible, at whatever cost.
- Demand still outstrips supply
Across the country, buyers are still out in full force in search of their dream home. Those who missed out last year are determined to buy – auction clearance rates across Sydney, Melbourne, Brisbane and Canberra are as high as ever and the bidding wars are frantic and frenzied, with many properties still selling for well over reserve. Even with an influx of new listings, for now, demand continues to outstrip supply.
- Life is going back to ‘normal’
After two years of lockdowns and restrictions, life is beginning to go back to ‘normal’. The real estate market thrived through these lockdown periods as many households had increased savings, a result of staying home all the time, and more time to reassess their living situations and hunt for new properties. As life slowly returns to normal and people begin to live their lives and travel once again, many will lose interest in the property market and buyer demand will eventually wane.
Additionally, with international borders finally open, an influx of foreign prospective buyers will support demand. Pent up demand from expats in the coming weeks and months will especially drive key affluent markets across the capital cities.
It’s impossible to know for sure exactly when these factors will work their way through the market and put downward pressure on house prices. However, if you have been thinking about selling, perhaps this Autumn presents a final opportunity to capitalise on the white hot market.