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All the latest news, facts and tips from the team at Pioneer Credit Connect

05
Oct 17

Spring Buying Season

by Matthew Ikin
Spring Buying Season

Introduction

What is spring buying season?

When is the best time to buy or sell a property?  People have mixed opinions on this and often toss up whether to follow their gut feel or take a more research driven approach to the market. It can also be easy to be influenced by the varying opinion of others, so it is important to be familiar with some simple concepts and statistics.

With the warmer weather also comes a hotter property market as we move into Spring. During this time of year, the usual winter lull is dusted off as new properties and buyers begin to join the market.

The term ‘Spring buying season’ relates to Spring being considered the busiest time of year for the real-estate market in Australia, with some states seeing 40% of properties sold per year within this period.

Why is Spring so popular?

But why is Spring so popular? It’s actually simpler than you might think. Buyers rejoice with a wider selection of properties on the market, whilst sellers can enjoy increased attendance at home opens.

So what causes this ‘buy and sell’ behaviour? As the rain starts to dry up, homes become more visually appealing as gardens become lusher and outdoor entertainment features become more vibrant. With the better weather, buyers become motivated to attend home opens, making the period busier as sellers take advantage of these conditions to present their home in the best light.

In addition, as outdoor spaces become more appealing, buyers seem to have a greater desire to settle pre-summer. This can be helpful for sellers who want a quick settlement on the property, especially if they need the capital to make their next purchase. The changes to climate also tend to result in a fairly well maintained market inventory while buyers become increasingly competitive. Further to this, increased competition from buyers breeds an appetite to price more competitively which can be heightened by a limited supply of real estate inventory.

Breakdown & Statistics

2016 Review

This seasonal increase in housing market activity is backed up by 2016 figures from Core Logic. Across all eight capital cities, there were more property listings and sales throughout the Spring months of September, October and November as compared to Summer, Winter and Autumn. Furthermore, in all capital cities except for Darwin and Adelaide, house prices also jumped during those months.

Spring-time 2016 in Sydney saw 35,055 listings, which led to 14,925 sales and a median house price of $990,000. When comparing this to winter 2016 and summer 2017, buyers were able to secure cheaper house prices with the lull in activity, lowering the median house price of sales to $890,000 and $906,000, respectively.

According to REIWA, WA first home buyers were in full force last Spring, with half of all transactions over the 3 month period occurring in the lower end of the market. Houses priced at less than $500,000 saw sales lift by 12% over the previous June quarter of 2016. The Spring season in Perth saw the number of properties listed for sale sit at 14,000, above the long-term average.

2017 Forecast

Quarterly change in dwelling values moving into the Spring buying season:


(Source: Core Logic)

As we move into the Spring buying season, dwelling values have increased on average across the nation with Melbourne and Hobart showing strong growth. Sellers on the east coast can take advantage of these higher values whilst buyers on the west coast could leverage greater negotiating power as a result of decreasing sale prices.

According to Core Logic, the season appears to be experiencing a slow start in capital cities with the number of houses being listed on the market increasing 0.3%. This is however, still a move in the right direction.

Perth has had some more accelerated growth in listings numbers heading into the Spring buying season. Over the last week starting 19th September, sales activity was on the climb with activity in Perth increasing by 4% and the number of listings increasing by 1%. This is most likely due to buyers taking advantage of falling dwelling values alongside competitive interest rates, according to REIWA.

What this means for Buyers & Sellers

Tips for buyers:

  1. If you are an owner occupier, that is you are living in the property you own, then it can be a good idea to plan the timing of your house sale and subsequent purchase carefully. Buying your next home before selling could result in more complexity relating to your financial situation, which may impact your borrowing power. You can find out more information relating to your home loan and future borrowing power here.
  2. Don’t be fooled by the great weather. It’s no surprise that after the winter rain, outdoor areas will look more inviting. Appreciate the aesthetic appeal, though try to avoid thinking the home is better than it is – keep your emotions in check and allow rational thought to prevail. It can be easy to get carried away with the great features of a house whilst ignoring the other deal breakers. Remember, Spring must come to an end.
  3. More buyers will mean more competition which could push prices up. Take your time to research all the inventory on the market, even those homes outside of the spotlight because the likelihood is that you could uncover a gem, which may mean you come out on top in the long run. In Melbourne and Sydney markets that already have high median house prices, leaving no ‘property stone’ unturned will help you not only gauge what is available on the market but could mean you stumble across your dream home at an affordable price.

Tips for sellers:

  1. With the hot weather ramping up, buyers will be looking forward to spending time in outdoor areas. Keeping this in mind, buyers will be keen to look around the outdoor entertaining areas before making a purchase. The presentation of this area could make or break a sale, so ensure you have the area looking well-kept, decluttered and clean. If you have a pool, this could mean spending some time making sure the pool looks well maintained and inviting. It’s these little differences that will make the sale sink or swim.
  2. As simple as it sounds; there is no better way to make a first impression than by decluttering and depersonalising your house. Spaces will look bigger and the ‘canvas’ will be blank to allow potential buyers to imagine themselves living in the home and in turn make an emotional connection.
  3. As the Spring buying season brings more sellers to the market, the number of home opens generally increases at a similar rate. Consider hosting a home open in an off-peak time to avoid clashing with a neighbour – limited parking can be a turn-off for potential buyers.
  4. Lastly, and most importantly; know your competition! Does your home compare to others in the neighbourhood? If other homes for sale in the area have just repainted their house or renovated their kitchen you might have to review these areas. With more houses on the market, it is more important than ever to remain competitive through this period.