The balance of power is shifting back into the hands of buyers

GUEST OBSERVATION

If November trends are anything to judge by, the property markets in Sydney and Melbourne could be in for a shakeup in 2015.

While some reports suggest housing prices show no sign of easing, others have argued that a strong increase in the volume of property listings in November has given buyers more choice and stunted price growth.

If the latter is true, could the power be slowing shifting back into the hands of the buyer? And if so, what does this mean for the overall property market? Has the frequently discussed “property bubble” started to deflate, albeit slightly?

These questions are difficult to answer looking at the sales figures for one month alone, however according to CoreLogic RP Data, auction clearance rates dipped noticeably across the two largest auction markets of Sydney and Melbourne.

Clearance rates are now sitting at around 70% in Sydney, and in the mid-60% range in Melbourne, compared to the beginning of spring when clearance percentages were typically recorded in the high seventies. RP Data also suggested that property prices dipped by 0.3% nationally in November, off the back of a 2.6% drop in Melbourne alone.

Throughout November, our buyers’ agents at Cohen Handler noticed a change in seller behaviour and witnessed some unprecedented examples of the market’s potential shift, with properties being sold below the reserve price or bank valuation.

For example, Cohen Handler recently purchased an apartment in Bellevue Hill in Sydney for $1,285,000. To put this in context, Australian Property Monitors value a property of this size, number of bedrooms, and car spaces at between $1,775,000 and $1.92 million and the vendors initially requested $1.5 million.

For a seller to lower his or her asking price by close to a quarter of a million dollars is not something we have seen in the months leading up to November. This unusual behaviour seems to indicate that buyers are now holding a more substantial amount of power in property negotiation.

With interest rates currently at an all-time low, and negotiating power evidently shifting back into the hands of buyers, those looking to purchase property are better placed than ever before. As ever, it’s difficult to predict the future of the property market with any degree of accuracy, but as we move into 2015, buyers that have done their research are now in a good position to get the most for their dollar. And really, isn’t that what it’s all about?

Ben Handler is the CEO of  buyer’s advocacy group Cohen Handler. He is responsible for setting the overall vision, growth and strategy for Cohen Handler.