Written by Shane Heffernan (BidPro Property Advocates)
It’s no secret that the Australian property market has defied all expectations by continuing to demonstrate extraordinary resilience at a time when our country’s economic, mental and physical health has come under enormous pressure. Residential property has had a double jab for protection and a booster jab for longevity.
And so what is holding the property market together and what does the future hold?
The answer is very simple… low-interest rates, greater access to funding by easing lending standards and a severe shortage of stock. These clearly are the key driving forces and as long as they stay at current levels, we will continue to see strong price growth.
Prior to the outbreak of COVID-19, the Australian property market was already robust. We saw rapid growth in property prices brought about by cheap and very affordable finance. Along came COVID-19 and immediately we saw a change in property owner behaviour. Vendors became nervous on a number of fronts. They began to question:
- If I put my property on the market, will a lockdown interrupt the sale?
- What will that cost me?
- If I sell now, will there be something suitable to buy?
- Am I not better off waiting until this Covid thing passes?
Wait they did… and many are still waiting.
Despite widespread predictions that the property market was in for a rocky ride, nothing could have been further from the truth. Stock levels suddenly reduced and this immediately applied upward pressure on prices. There were many buyers in the market but limited supply to satisfy the demand.
This is still the case… and there is no immediate change in sight.
Rising prices and a flood of buyers will usually prompt intending vendors to bring their properties to the market. The real estate profession is anxiously awaiting this day but it has not yet arrived. COVID-19 uncertainty continues to dampen confidence in decision making and it may be some months before we see this lift.
And so here are the most common questions that are put to us by our clients and the advice we offer in return:
Is now the time to sell or should I wait?
There is no definitive answer to this question, as it is subject to a range of factors specific to your property and if applicable, your investment plan. Questions that should be asked include:
- What is the reason for selling the property and do you have an investment plan for the funds?
- If you’re relocating, are you selling at a high price only to re-purchase at a high price, albeit with the addition of selling and purchase costs?
- What are the tax implications of selling and does the property continue to form an effective part of your tax plan?
These are all questions you should be asking yourself and potentially seeking professional guidance for.
If you are certain that you need to sell the property and have been waiting for the right time, given the factors previously discussed of low supply, access to finance and low-interest rates, sellers are in a strong position.
The question is, how long will these strong market conditions be maintained? This is an unknown, and it is therefore important that you make the decision for the right reasons.
If I sell now, what can I do to minimise the risk of not having somewhere to go?
Start looking now for something to buy or rent. The strength of the property market looks like it may continue for some time and provided you are realistic in the price you want to achieve for your home, you should have no trouble in selling.
As a prospective buyer, should I buy now or wait?
Some say there is never a bad time to buy property. Sometimes there can be better times…but never a bad time. Historically, downturns in the property cycle have been relatively short lived and have usually been followed by a solid rebound. In other words, you have to work really hard to lose on property in the medium to long term…as long as you make sure you buy the right property at a sensible price.
That being said, there are no guarantees when it comes to growth assets and you should be confident in your views, so that your decision is well thought out and based on solid research, without being rushed into an emotional purchase that you may regret.
Will property be more expensive in the first six months of next year or will it be cheaper?
On current trends, it looks as though house prices will continue to rise due to supply and demand pressures. Experts are suggesting we are unlikely to see any immediate lift in interest rates that will dampen this trend and even if banks begin to tighten their lending criteria, there will still be a surplus of buyers in the market.
If you’re looking to purchase a property but not sure where you should start, engaging a property advocate allows you to leverage off a professional’s expertise, to target, locate and purchase the property you want, stacking the odds in your favour.
To find out more about Property Advocacy and how it can help you, click here to learn more or get in touch with a BidPro Property Advocate directly to arrange a no-obligation chat.
Disclaimer: * The content of this article was written by Shane Heffernan, Managing Director of BidPro. The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.