Insight

09.06.20  Selling Advice

 

Will Winter 2020 Be This Year’s Spring For Eastern Suburbs Property?

In Sydney’s eastern suburbs, Spring is typically seen as real estate selling season.

It’s usually the time of year when the most stock gets listed, when open homes are at full capacity and when buyers flood into the market ready to swoop on a property before the year begins winding down and we move into the more relaxed summer months.

But I don’t have to tell you that the COVID-19 pandemic has turned 2020 into anything but a typical year - and that extends to the property market. We started the year strongly, with prices lifting almost five per cent in the three months until February. But March and April - usually high volume months for real estate sales - were characterised by low stock levels and stagnant prices. During May 2020, Sydney property prices fell just 0.4%, despite the widespread business closures and restrictions taking effect, so we haven’t yet seen significant falls.

Now, we’re seeing fewer properties go to market than at any time in recent memory. In fact, CoreLogic reported that total listings in the 28 days to May 2020 were 20.1% lower than a year ago - and we were reporting low stock levels back then.

This, along with economic uncertainty and social restrictions, is creating an entirely different dynamic in the Eastern Suburbs property market. And, I believe the result could be that Winter 2020 will be the best time to sell a property than we’ll see for some time. Here’s why.

1. There is less competition among sellers right now

Low stock levels make it easier for quality properties to stand out. When buyers have the choice of several properties, they also have negotiating power. They can go in harder knowing that if they miss out, it shouldn’t be too difficult to find another home that works for them.

Nowhere is this lack of stock more obvious than at the top end of the Eastern Suburbs property market. Here, there are few properties for sale - with many listings being pulled from the market after COVID-19 first struck despite high-end buyers often paying cash.

While quality property attracts buyers in any conditions, right now premium listings have less competition from other homes than I can remember.

2. There have still been strong sales

We’re still seeing strong sales, even in the midst of such economic uncertainty. Anecdotally, I’ve noticed that one reason for this is that many people who sold their home in late 2019 or early 2020 to take advantage of rising prices haven’t yet found somewhere to move to. When they do find something they like, they’re usually prepared to pay for it.

These strong sales are also having a ripple effect. If someone misses out on one home, it often motivates them to become more aggressive in their quest to secure a home next time around. We’re seeing that happening in the Eastern Suburbs market right now.

3. Prices have held up so far

The market data supports our observations that property prices are holding up well. According to CoreLogic, the median Sydney property price rose 0.42% over April 2020 after also rising 1.1% in March. It dipped ever so slightly over May 2020, dropping just 0.4%. The factors that we’ve already mentioned - low stock levels and a pool of willing buyers - have contributed to keeping prices stable. However, so too have the longer-term trends such as record low interest rates.

Also, unlike past recessions, people aren’t yet being forced to sell their homes in large numbers.

4. This could begin to change

Some economists are forecasting that this could eventually change, especially if the effects of COVID-19 stay with us for some time. For instance, CBA has forecast that prices will fall 10% nationally, taking us back to where we were midway through last year.

It’s also worth remembering that JobKeeper and generous bank policies on mortgage repayment holidays have meant that many people who would potentially have been facing financial hardship currently aren’t.

The JobKeeper wage subsidy is set to end in September - although this may change. Around the same time, we’ll also start to see mortgage freezes lapse. If our economy isn’t yet back to something near full capacity, we could see some of the economic hardship deferred until then, as the RBA recently reminded us. This could conceivably begin to impact negatively on prices - both because people can afford less and because more stock will come onto the market as people default on their mortgages.

5. People will be around

One of the key reasons Winter can be a slower season in the property market is that people simply aren’t around to buy. After the Christmas and Easter holidays, more Sydneysiders probably go away over the July school holidays than any other time of year.

2020 will be different. A lot of people who would usually travel will still be in Sydney. With restrictions on gatherings starting to loosen open homes and auctions could well be in full swing.

In other words, the usual rhythm of the selling year simply doesn’t apply to 2020.

6. There is no such thing as one property market

Property prices never rise or fall in unison. Instead, there are micro-markets that take on their own life. For instance, the same factors that drive growth or losses in the first home buyer market are different from those in the prestige downsizer market. So the headline figures you read about may not necessarily apply to your home.

You always should always focus on the current conditions for your specific property - not in the property market more generally. That’s where a good local agent can make the difference. They’ll understand the markets within the market and can advise on when and how to go about marketing your home to the people most likely to buy.

That said, given the lack of stock, strong buyer demand, stable prices and potential uncertainty, there are strong arguments to consider selling now regardless of what type of property you have.

In fact, the comparatively favourable conditions right now mean that Winter could well be 2020’s Spring when it comes to selling your home.

Want more?

If you’d like to know more about buying or selling in Sydney’s east, please get in touch.

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