The sun hasn’t set on the marketplace: LJ Hooker's Grant Harrod
This time every year, with the close of February approaching, we all dream of an endless summer. But according to our agents, the sun hasn’t set on the marketplace, and won’t for some time.
Spring and summer have traditionally been the major selling seasons for vendors, but conditions could turn that tradition on its head in the coming cooler months, especially with the recent strength seen in auction markets in both Sydney and Melbourne.
The numbers of people turning out to open-for-inspections have been very strong since the holidays wound up. Many buyers have been enticed by a slowdown in price growth across certain markets.
It is this very demand combined with positive economic fundamentals that will keep real estate markets humming along in 2016.
However, overzealous commentators trying to capture media headlines and mountains of data risk overloading and confusing consumers. It is, therefore, important that buyers and sellers not be swept up in the short-term outlook.
Ensure that you do what is right for your situation and your own investment strategy rather than trying to second-guess the timing of the market.
The best data to keep an eye on is that from your own street and neighbourhood.
Strong employment figures combined with the share market volatility and already historic low-interest rates should negate any “gloom and doom” talk directed towards property markets.
While buyers are out and about, listings are tightening in parts of the country.
We can see this in Melbourne where a lack of stock has resulted in price growth of 2.5 percent In January, outperforming even Sydney (+0.5%). The figures from CoreLogic RP Data, released last week, could well indicate both these markets are bouncing back following a slow down at the end of last year.
Overall the economic outlook remains positive with retail spending increasing and cheaper petrol adding more money to family budgets.
Homeowners have income to pay mortgages, interest rates are still low and affordability is improving. Some of these savings will be used by people to try and pay down their debt quicker.
Homes will spend longer on the market as we return to more normal conditions but it doesn’t necessarily mean sellers will be disappointed with the final result.
In fact, it could prove to be similar to what I have seen from our Harveys real estate business in New Zealand where prices in Auckland skyrocketed over the past 12 months, driven by migration. Prices there are now starting to moderate to a more sustainable level, as buyer demand turns to more affordable regional markets.
Grant Harrod is chief executive officer of LJ Hooker and can be contacted here.
