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Ride The Seller’s Wave
For much of last year, buyers had the upper hand in the local property market, with an excess of
properties for sale leading to heavy price discounting. But the balance of power has recently shifted
again, with increased buyer activity at all levels leading to a shortage of stock and a more
competitive buying environment.
Of course, with so much uncertainty still hanging over future conditions, the threat of more volatility
remains very real and it’s impossible to say how long the current trend will last.
Looking back, we saw a similar surge in buyer activity late last year, when the two rate cuts in
November and December saw a return of buyer confidence. Over Christmas and into January and
February, transaction numbers rose and the glut of stock that had collected on the market almost
completely cleared. Unfortunately, as the RBA left rates on hold and the banks kept creeping their
interest rates higher and higher, consumer confidence took another battering. The run-on in activity
was not sustained and by March, last year’s gloom had all but taken back over.
That was until early May, when the RBA announced a surprise 50 basis points rate cut. Although the
banks withhold between 10 and 18 basis points, what was passed on was enough to reignite that
confidence which had pushed the market along six months before. The result has been a massive
spike in sales volume underpinned by a surge in buyer activity at all levels, particularly the under
$500k price segment. While prices are not yet under pressure, stock is showing signs of drying up
and if the activity does continue, price growth may well be a possibility.
Just to give you an indication of how big the spikes have been, we have already transacted
approximately double last year’s total sales volumes in just the first five months of this year.
Interestingly, at the same time our local market is going so well, Melbourne and Sydney’s property
markets are in a world of hurt. Fortunately for the coastal markets, over the past two and a half
years, we’ve already gone through the price declines that other capital cities have yet to experience.
What’s happening now was inevitable in my opinion - it’s just Queensland’s turn to enjoy some
buoyancy.
Our short term future locally is looking good – the banks have been pushing customers to take on
fixed loans, which history shows is likely to mean more interest rate cuts around the corner. The
local fundamentals are also solid, with new government, new infrastructure, and an abundance of
positive energy. Providing unemployment remains stable, it looks like an exciting year ahead for
investors.
Of course, the future is still heavily dependent on what happens in the Eurozone and China. With no
foolproof way to predict what will happen, it’s always best to act based on the current environment
and take advantage of whatever opportunities are presented.
That opportunity right now is for sellers to transact in an environment where there is an abundance
of buyer activity and not a lot of competition from other vendors. These conditions will not only
make a sale more likely, but may even result in a better price. For how long we don’t know, but for
now, if you’ve been thinking of selling, ride the seller’s wave while it lasts.
We look forward to helping you make good property decisions,
Michael Knights