As I’m sure you’re aware, there’s been no shortage of negative news stories recently, particularly since the Reserve Bank raised official interest rates at the start of May. If you believe the forecasts, there will be several more interest rate rises to come, although the time-frame of these adjustments is less certain.
What we can be certain about is that we have seen a definite impact on the Victorian property market, although it is worth keeping in mind that this change has been a response to a slight drop in confidence levels rather than the hip pocket. Some buyers have stepped back to wait to see how far prices may drop, although this is a very risky strategy as I will explain below.
The key to dealing with a market like this is to maintain your perspective. The fact is that whilst most properties have experienced a marginal drop of up to 5% since the market peaked, prices are still around 15% higher than they were one year ago. For example, a property might sell in May for around $1.05 million as opposed to the $1.1 million it could have achieved late last year, but this is still a marked improvement on the $900,000 we might have anticipated only 12 months before that.
We also need to keep in mind that the election is also affecting people’s confidence levels, but this is only a short-term factor. History has shown that people tend to sit on their hands and wait for the poll to be finalised, but certainty will begin to return as soon as the dust settles.
Our expectation is that the downward pressure on prices is likely to continue for some time yet, but as we have proven so often recently, excellent sales results are still being achieved with the right advice and strategy. Whereas the right advice tended to have a positive impact on people’s prices in the past year or two, we are noticing that in the current market it can also make the difference between selling and not selling.
Looking ahead, we know that Winter is the time of year when there is less stock available for buyers to choose from. Combine this with the opportunity for buyers to lock in interest rates before they get any higher, and the next few months could prove to be an excellent time to make your next move, as long as you put the right plan in place.
For those who are going to be selling and buying, timing your move will be crucial. With the right approach you should be able to achieve a strong sale in Winter, then benefit from being a cashed-up buyer later in the year when the market balance is likely to swing more in the buyer’s favour.
The good news for buyers is that our Buyer Advocates are already getting access to an increased number of off-market opportunities and have been able to secure these for clients at prices that are already factoring in a price drop, enabling our clients to get in ahead of the market.
As I mentioned earlier, attempting to wait out the market is never a wise strategy. Remember all those people who decided to hold off on buying while the pandemic was in full flight, thinking that prices would fall? Many of them missed out completely, being priced out of their preferred property options after they went up in value by more than 20%!
Even if you don’t plan on buying or selling in the next few months, there are real benefits in starting to put a plan in place right now so that you are set to go when the moment arrives. So, feel free to reach out to speak with one of our dedicated specialist Buyer or Vendor Advocates to help you with your next move.
We look forward to having a chat.