17 Jul To list, or to hold, that is the question
It’s the million dollar question on the minds of potential vendors across Australia: Is now the right time to list?
As COVID-19 restrictions ease in most cities, except Melbourne, sellers poised to market their homes for sale have hit the skids, concerned whether the move will net them the best possible sale price in these uncertain economic conditions.
The apprehension comes as buyers, encouraged by generous government stimuli, are scouring the market for value buys, with low stocks and a large number of house hunters fuelling competition in the marketplace.
Nerida Conisbee, chief economist at realestate.com.au, said there was widespread unease across the property sector, but online search data signalled a greater number of buyers in the market compared to the same time last year.
“In terms of selling, we can see on realestate.com.au that there are a lot of buyers out there and no matter which way we look at it, by pure search, engagement on-site or enquiry, numbers of those looking are all well up compared to the same time last year,” Ms Conisbee said.
“But on the other hand when we look at the economic fundamentals, we do have rising unemployment and a September cut-off date for a lot of the stimulus that’s in place. So, although people do seem to be quite confident, we have this murky outlook.”
IT DEPENDS ON HOW LONG YOU PLAN TO HOLD THE PROPERTY
Melbourne-based buyer and seller advocate, Frank Valentic, said many buyers had “hit the pause button” and investors, who generally comprised 40-50% of the market, had been laying low since COVID-19.
Nevertheless, he said for those looking at selling in the short-term – one to two years – now is a good time to list.
“We expect the market conditions to deteriorate and prices to drop possibly 5-10% in the next six to 12 months,” said Mr Valentic, director of Advantage Property Consulting.
“[But] if you are looking at selling in the longer term – two to five years – then I generally advise clients to try to hold the property until the market conditions improve.
“There are a lot of buyers who have hit the pause button and are not buying at the moment. They’re sitting on the fence waiting to see how things pan out.
“Stock levels are now down 40-50% on last year. There’s not a lot on the market and that’s really propping up prices because investors and developers have deserted the market.
“At the moment [in Melbourne] it’s still a sellers’ market. Clearance rates are still hovering around 65-70% and days on market are around 40 days, which is still a reasonable market.”
But Mr Valentic said the sector was bracing for tougher conditions once the government stimulus and support set to end in September.
“We are expecting a bit of pain coming up with JobKeeper running out and loan deferral periods expiring, so I would expect there to be more properties on the market later this year,” he said.
Mr Valentic said despite these concerns, the market had shown promise with some solid results at both the bottom end and the top end of the market in Melbourne since COVID-19.
“At the top end we’re seeing results and at the bottom end we’re seeing first homebuyers driving that market. We saw seven of them bidding for an apartment in Kensington recently which sold for $741,000 and we are seeing that consistently in the lower end of the market,” he said.
“At the top end, there have been 10 sales in Melbourne between $13.3 million and $23 million this year already, mainly in Brighton, Toorak, South Yarra, Armadale, Portsea, Red Hill – and Brighton had its second-highest sale in $19.8 million recently.”
IT COMES DOWN TO PERSONAL CIRCUMSTANCE
Veronica Morgan, TV presenter, Sydney-based property expert and founder of Good Deeds Property Buyers, said determining if now was the right time to sell depends on personal circumstance.
“A lot of people will hold off on selling when there’s not a lot of stock because they’re worried they won’t be able to buy the next property that they need to buy. So, it’s a bit of a ‘chicken and egg’ scenario that needs to be navigated,” Ms Morgan said.
“It could be perfect timing to sell now when there’s not a lot of stock and then time your purchase for when you expect more stock, but that is a gamble.
“A lot of people fixate on selling and they don’t look at the bigger picture so I think that in order to make the right decision about if now is the right time to sell or not, it’s really about pulling back a little bit and considering everything you want to achieve, rather than making a knee-jerk, panicked decision.”
Ms Conisbee said the second wave of COVID-19 in Melbourne was likely to cause greater uncertainty for businesses and would likely have flow-on effects to the property market with diminishing buyer and seller confidence.
“If you’re a seller wanting to get in before the September cliff, then potentially that’s a good decision because there’s a lot of uncertainty about what that will entail,” she said.
“It also depends on where you are in Australia. If you’re in Perth, which is showing a lot of positivity at the moment, then now is possibly a decent time to sell, whereas in Melbourne you don’t exactly know how the selling process will work if this second wave of COVID-19 gets any worse.”
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