Spring is traditionally the busiest time of year for real estate in Australia, with sales and listing volumes typically rising from September through until the Christmas holiday season. Typically, buyer demand and seller supply increase. However, the impact on prices is usually marginal.
We typically work with the clients of financial advisers. With property being one of our major asset classes, and credit central to most financial plans, a common question we have been asked is what we think spring will bring this year for home buyers and investors as we emerge from lockdown.
Here we share our views on a simmering market and provide some home-buyer and investor tips as we head towards a late-blooming spring selling season!
What history tells us
Historically, in Australia, the warmer weather of spring not only tells us the footy finals are upon us, it also brings a rush of new listings. CoreLogic data over a 10-year period shows an uplift in new listings of 15.7 per cent through this period, and real estate agents are indicating stock has been sand-bagged through lockdown and expect an additional 10 per cent uplift in stock on the last two years as restrictions are eased, confidence is restored and active buyer numbers remain high.
Interestingly, buyer activity does not have as strong a seasonal effect, with the data telling us that buyer activity is usually up by 6 per cent through spring.
What this means for buyers is that stock is coming, and for vendors, while the rate of growth in prices may be more subdued with the increased supply, they will still get the benefit of the market uplift we have seen over the last 12 months of 18.4 per cent to August this year — a 32-year high.
Tailwinds in place
Coming into spring 2021, the majority of Australia is in lockdown, and while demand has remained high, the supply side has been down — with SQM research indicating listings were down by 26 per cent in August 2021. With the nation set to emerge from a lockdown that pressed paused on the big city markets, the tailwinds are there suggesting a late-blooming selling season, with agents planning for a short summer break as they seek to capitalise on a wave of expected sales.
Owner-occupiers — securing a property
With both first home buyers and upgraders struggling with low stock and affordability constraints, we have been providing guidance to clients:
Investors — managing a rising market with limited stock
In contrast to owner-occupier activity, COVID brought subdued investor activity that is now bouncing back — albeit investor credit activity remains below its long-term average of total loan approvals.
Will we see a more equitable market as we enter 2022?
In summary, as we enter spring right now, we have a number of influences at play:
So, the last 12 months have seen demand outweighing supply, creating strong selling conditions and some urgency among buyers. It may be that a lift in supply brings a calming of the storm, a rebalancing of sorts, between sellers and buyers and a more equitable market as we enter 2022.
Anthony Landahl, managing director, Equilibria Finance
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