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No spring in sellers’ steps, but property investors are in for sunny days

Spring has sprung and while this warm, flower filled season usually rings in the perfect market conditions for vendors to think about selling up after the dreary winter months, this year things are a bit different.

Traditionally our property markets are slower mid-year, which is why most real estate agents advise sellers to hold off until their gardens are in bloom and the sunshine brings buyers who were holed up for winter back into the market.

While spring technically begins on the first day of September, the spring real estate season doesn’t actually commence until October – when the footy finals have been played and won and people have less sporting commitments to keep them away from weekend auctions and open houses.

However this year, the property markets started to cool off considerably around July and continue to do so, with most analysts predicting a quiet ride for housing right through to next year. This is largely due to interest rate uncertainty, which has put a dampener on buyer demand and caused stock levels to creep up, forcing prices to level out.

Data from the Real Estate Institute of Australia shows national property sales have declined by about 20% from this time last year.

Witnessing how much tougher it’s become for sellers in recent times due to the current oversupply of stock, I would advise that if you don’t have to sell just yet…wait.

Of course if you have little choice but to sell while conditions are not ideal and you intend to buy back into this same, flatter market, obviously you have the potential to get a better deal on your next purchase. In other words, the possible lower price you accept on your property could be offset by a lower purchase price on your next home or investment.

Overall though, conditions right now are definitely not optimal for sellers. As such, it’s crucial for property investors to remember that if you need to realise some of the capital growth from your portfolio, you should never sell to do so. Your best bet is to refinance instead so that you can access your growing equity.

And why would you be thinking about selling or more appropriately, refinancing as a property investor right now? Why, to take advantage of the buyer’s market of course!

Latest quarterly figures from housing data collection firm Residex show 20 per cent of Sydney suburbs experienced a drop in value, while close to 50 per cent of Brisbane suburbs sustained a fall in values.

The flatter market conditions, along with the current oversupply of properties for sale, generally see vendors get a bit nervous and as a result, more willing to partake in harder negotiations. This gives investors who have a sound property and finance strategy in place some excellent buying opportunities; a welcome change from the first half of the year when multiple bidders were doing fierce battle at Saturday auctions and driving up prices in their wake.

Investors should always follow their strategy though and not buy something just because it seems like a bargain. I always suggest to clients that they follow my proven strategy of buying below intrinsic value in areas that have outperformed the averages and more specifically, properties that have value add potential so you can manufacture capital growth when market conditions are a little bit lacklustre.



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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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