Are you considering selling your home or investment property?
Sure Australia’s property market came off the boil in the first quarter of 2022 as demand softened and the Reserve Bank began to hike borrowing costs.
And even though prices will still fall further, the rate of decline is slowing.
This means those interested in selling a property face a significantly different market today than this time last year when properties were selling like hotcakes.
It might be tempting for would-be property sellers to sit on their hands and wait for the market to rebound, but for many, that doesn’t make financial sense, especially for those wanting to upgrade.
After all, if you wait for the market to rise again, you’ll also be buying your next property in a rising market.
It’s all about perspective.
Instead, property sellers should readjust their expectations and look at the short-term market movements.
Just because prices and demand are on their way down doesn’t mean you need to throw your plans out of the window.
Australia’s property market peaked in April 2022 when overall national prices had risen around 30% this cycle.
Corelogic data shows that as of 31 October, the median dwelling price for Australia sits at $721,018.
Housing values across most of the broad regions remain well above pre-Covid levels, implying even most Aussies who bought a property in the last few years remain in a positive valuation position relative to their purchase price.
And all those homeowners who bought more than a few years ago are likely to be sitting in a pretty comfortable position with lots of equity in their homes.
But now we've moved to the next stage of the property cycle - the adjustment phase and at the combined capital city level, housing values have fallen -6.5% following a 25.5% rise through the upswing.
Buyers’ fears of missing out have been replaced with fear of buying too soon which means demand and competition are dwindling.
And prices will fall further until inflation and interest rates peak, which is .likley to be in the first quarter of 2023.
For homeowners looking to sell their property in today’s cooling market, the AFR has put together a list of the 10 steps to help achieve the best sale price.
Lower your expectations
Unrealistic vendor expectations can be a major issue for agents when selling a home which is why setting realistic price expectations is key.
Calculating what your property was worth six months ago or looking at comparable recent sales only goes partway to evaluating the estimated value of your property.
You also need to take into account the current and projected market dynamics.
Properties are taking longer to sell, with median days on market up to 33 days in the three months to August, which has increased from a low of 20 days in November last year, Corelogic data shows.
The discounts between initial listing prices and contract sale prices (otherwise known as ‘vendor discounting’) have also become larger with the median discount sitting at -4.0% nationally.
Similarly, auction clearance rates across the major auction markets are consistently below average.
“Serious vendors will need to be realistic about their price expectations and ensure they have a quality marketing campaign behind the property in what is likely to be a more competitive selling environment through spring and early summer,” Eliza Owen, head of residential research Australia at Corelogic, said.
Know your local market
The recent property boom was very unusual.
All types of properties in almost any location around the country increased in value substantially.
Moving forward our property market will be much more fragmented.
Median values have dropped around the country, but some states, areas, markets, or even suburbs have been affected more than others.
It’s important to do your due diligence and thoroughly research your local market - it’s not enough to apply broad assumptions to a small segment of the market.
Choose the best way to sell
So you’ve decided to sell, but aren’t sure whether to sell via an auction or private treaty.
Some well-researched sellers know what their property is worth and won’t sell for below that price.
Others have a price in mind that they want to achieve.
And then there are those who simply need to sell or sellers who don’t want the intrusion of online photographs or public inspections and prefer discreet sales where agents match the right price with a willing buyer.
Which type of seller are you?
- Also read:Home Price Growth Still Strong Over November | Latest Housing Market Stats
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:Latest property price forecasts for 2023 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:The Pros and Cons of Property Investment
- Also read:Maximising Property Values: 7 Essential Maintenance Tips for Homeowners
Set a realistic price
In the same vein as lowering your expectations, it’s also important to set a realistic price.
CoreLogic’s national Home Value Index (HVI) moved through its sixth month of consistent declines, as values fell a further -1.2% in October.
National prices are now 0.9% down year-on-year and down 4.1% quarter-on-quarter.
When setting a price you should get feedback and advice and its worth.
Know when to lower the price
Speaking of setting a realistic price, it’s just as important to know when to lower it.
Be realistic - If after two weeks into a campaign there is no interest and no bids, then you need to reevaluate what you've listed it for.
Timing also boils down to how much you need to sell the property and how much time you're willing to have it in the market.
Prepare for competition
Corelogic data shows In the 28 days to September 4th, there were 35,213 new listings advertised across Australia, which is higher than the equivalent period in 2021, 2020, and 2019.
Despite new listings counts still trending lower, there are some data points that indicate a lift is on its way in the next few weeks.
For example, ‘CMA activity’, which is a count of the Comparative Market Analysis reports generated across CoreLogic’s RP Data platform, is a leading indicator of rises and falls in listings volumes.
In the final seven days of August, CMA volumes rose 8.2%, indicating that the seasonal lift in new listings is about to take off.
The lift in listings is also expected to flow through to the auction market, where the number of properties going under the hammer across the combined capital cities typically lifts from September, and continues rising through to the start of December.
Properties are taking longer to sell, with median days on the market up to 33 days in the three months to August, which has increased from a low of 20 days in November last year.
Average hold periods for property tend to increase during a downturn as sellers sit firmly on unrealistic prices.
Get the property up to scratch
Tougher tenancy rules for landlords mean investors are more closely scrutinising properties to make sure they meet regulatory requirements for size, maintenance, and amenity.
So it’s worth making sure your property is maintained with any repairs fixed and that it meets landlord regulations.
Avoid the funding trap
Falling prices and hiking interest rates can translate to funding problems for potential sellers who haven’t got enough equity in their property to get a bigger mortgage.
This is particularly the case for many buyers who bought a property in the final months of the property price peak early in 2022.
This means that some owners who want to sell can’t - being unable to sell or refinance could see these owners imprisoned in their own homes.
Beware of entering the rental market
It might be tempting for some sellers to sell and then rent until prices decline further.
But this is a dangerous strategy.
Australia’s rental is in crisis with the lowest-ever vacancy rates, meaning it is exceptionally difficult (and expensive) to secure a rental property.
Trying the sell-then-rent strategy could see you with no home at all.
Metropole Vendor’s Advocacy Service is a special no extra-cost service to property sellers shielding you from many of the “hassles” of your sale.
We are independent and work for you. We tell you the truth.
Are you ready to find the best price for your property?
When you use Metropole’s Vendor’s Advocacy Service, we will:
- Sit down with you and determine your needs.
- Recommend the best agent (not an agency) for you. We know the best agents and the worst agents as we have been buying from them on behalf of our clients for many years.
- Check the agent's fees and advertising recommendations to save you unnecessary expenses. Should you sell by auction or private sale? How much should you spend on advertising without wasting your money? We'll tell you!
- Monitor the selling agent's performance.
- Consider any offers made and give our recommendations to you. Then we'll help negotiate on your behalf, giving you our input all the way.
- Follow the sale through until settlement.
We charge the Selling Agent a percentage fee based on the sale price of your property which comes out of their commission when the sale is made.
This means that you get our service at no extra charge, but that it is in all our interests that you get the best possible price.
Click here now and have a chat with one of our team.