Why Now Is A Good Time To Buy
The common perception is that when consumer confidence is low – and property prices fall – it’s a bad time to buy or sell.
However, weaker consumer sentiment, and the way it impacts the property market, actually presents some great opportunities and advantages for buyers.
With winter on the horizon, a Federal election, and prices dropping, many buyers are postponing their search and going into hibernation mode. Here’s why you shouldn’t be.
What is consumer sentiment?
As a market indicator, consumer sentiment basically looks at how confident the average person is feeling about economic conditions. This is affected by a number of things, such as unemployment rates, property prices, overseas market conditions, and the general economic outlook.
To arrive at an overall measure of current consumer sentiment, a large group of representative people in the community are polled, and the numbers are crunched. Typically, strong consumer confidence props up a strong property market and vice versa. But there can also be a lag effect where confidence levels reflect what has recently happened in the market.
Current market sentiment
Consumer confidence has taken a nosedive of late, in response to falling house prices, economic news, international market conditions, and concerns about interest rates and the upcoming election.
The Westpac-Melbourne Institute Index of Consumer Sentiment for Australia showed an 8% drop in confidence from February through March of this year, leaving consumer confidence at its lowest levels since March 2017. The survey revealed that the housing market had a significant negative impact on sentiment – particularly the low growth seen in the December quarter. Consumers in Sydney, where prices have seen declined over the last 18 months, recorded a 10% fall in sentiment. Likewise, the ANZ-Roy Morgan Weekly Consumer Confidence reports have also shown consumer confidence levels to be falling.The upside of a downturn in consumer confidence
At first glance, these figures may seem grim for the property market. However, the flip side is the challenges that high levels of consumer confidence – and a correspondingly strong property market – can present for buyers.
As the boom of the last 5 or so years showed, when you are looking to buy, a strong market can be more of an obstacle than a benefit. For first-time buyers, high prices can put even supposed entry-level properties out of reach and there’s more competition too, particularly from cashed-up investors. For upsizers, particularly those buying in Sydney’s desirable Eastern Suburbs, the gap between their current property and what they hope to buy next can be too large to hurdle.
Current opportunities for buyers
While the market is correcting, it presents more affordable buying opportunities than we have seen in many years in Sydney. First-time buyers will likely find this breathing space means they can finally get their foot on the property ladder. While upsizers may be concerned about selling in a softer market, the benefits are that there is less competition and more time to make a considered decision on a new property – plus the gap is smaller. While the approach of winter can mean less listings on the market, there is also reduced competition, which can also be a big benefit when it comes time to bargain or go to auction.
If you’re looking to buy or sell in Sydney’s Eastern Suburbs, don’t hesitate to get in touch with our team today.