A recent report from RP Data debunked the myth that Spring is the best property selling season.
We all expect listings to increase during the spring selling season however; when buyers aren’t active the greater volume of listings compresses the market further. The spring selling season is much vaunted each year but I would suggest that during some years we should give the alleged selling bonanza a miss.
Earlier this year RP Data undertook an analysis of the property market during the 2000 decade looking at sales each month and the number of listings each month since 2005. The results showed that March was the busiest month for sales followed by May (note neither are in spring). For listings, the greatest volume of listings was recorded in November followed by October (both in spring).
Each year the market gets extremely excited by the spring selling season when in fact, it would appear that autumn is the time to get most excited. Over the last decade autumn has accounted for 26.6 per cent of total sales compared to 25.4 per cent in spring. However, listings were greatest in spring (26.7 per cent) followed by autumn (25.4 per cent).
Despite the fact that spring isn’t the busiest season for sales, typically as spring arrives listings increase and the number of properties being taken to auction also increases and this year has been no different. The issue this year being that spring has arrived and property value growth is flat after strong growth since the end of 2008. Since the last week of August 2010 until the week ending 17 October 2010, total listings nationally have increased by 4.3 per cent and across the capital cities listings have increased by 6.1 per cent. Across the nation the total number of listings is currently 7.6 per cent above the 12 month average and 9.8 per cent higher across the capital cities.
The greatest increase in listings since the end of August has been recorded in Sydney, with an increase of 10.8 per cent. Listings have also risen above the capital city average within Canberra (8.9 per cent), Perth (6.9 per cent) and Darwin (6.8 per cent). All other capital cities have recorded growth in total listings of less than 6.1 per cent however, only Hobart has recorded a fall in listings.
Despite the increase in listings the latest property value data we have available to August shows that value growth is slowing. Across the combined capital cities property values fell by -1.2 per cent over the three months to August according to the RP Data-Rismark Home Value Index.
The RP Data report went on to say:
I can understand why vendors get excited about the spring selling season, the flowers are blooming the weather is warmer and the house and garden is looking at their best. However, why would you have a spring selling season just for the sake of it? This year it was clear that the market was slowing: auction clearance rates were weak, housing and lending finance data was trending lower and property value growth was slowing.
Despite these clear indicators of a slowing market, listings have ramped up and the number of auctions has also been climbing. So far during spring of this year there has been an average of 1,470 capital city auctions each week (1,578 if you exclude the two grand final weekends). Throughout 2010 there has been an average of 1,395 capital city auctions each week, so clearly auction activity has picked up in spring. The increase in auctions has not been met with an increase in auction clearance rates.
During 2010 the average weekly capital city auction clearance rate has been recorded at 62.6 percent. Since the beginning of spring the clearance rate has recorded an average of 58.3 per cent.
The result highlights that spring of this year is witnessing an above average number of auctions and a lower clearance rate.
Spring has always been touted as the season in which to sell your property however, the data shows that more sales occur within autumn. Coupled with this the number of properties available for sale in autumn are typically lower, as a result vendors will probably have a better chance at selling than they would during spring.
In my opinion spring has its place as a time to sell (it is still the second biggest season for sales) however, having a selling season every single year despite market conditions appears to make little sense. Vendors need to better educate themselves prior to listing their property to truly determine whether or not spring is the time to sell. Although it may typically be the case, during years such as 2008 it certainly wasn’t the time to sell and it appears that spring 2010 will be another disappointing selling season.
Source: RPData www.rpdata.com
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