Are you considering selling your home right now? If the answer is yes, then it’s time to ensure you understand the current environment of the market and work out a strategy to get an edge over the competition. Unfortunately for vendors, we’re in a buyer’s market and it looks set to stay that way for a while.
With already high levels of stock continuing to rise over the spring selling season, buyers have less competition and are in no hurry to make a hasty decision. And with longer selling times and lower clearance rates, properties are languishing on the market.
Mortgage rates are on the rise due to political leadership uncertainty and the increase of funding costs, which is contributing to housing values coming down. It’s tough selling conditions.
It may not all be doom and gloom. Let’s explore which areas are cooling across Australia and what you can do to secure the interest of potential buyers and aim for a quicker sale in this market.
Where is the market cooling?
According to CoreLogic data, “the last month of winter saw the housing market correction deepen, with dwelling values falling across five of Australia’s eight capital cities.” The weakest performing cities continue to be Sydney and Melbourne.
Controlling 40% of the combined national housing market, Sydney and Melbourne are dragging down the rest of the nation. Over the first eight months of the year, Sydney fell by 3.5% and Melbourne is down a further 3.3%. National dwelling values are down 2.2% since September 2017.
"Controlling 40% of the combined national housing market, Sydney and Melbourne are dragging down the rest of the nation."
The premium housing market is seeing the deepest effects, and this is largely across Sydney suburbs and Melbourne’s inner east. Perth and Darwin are continuing to cool, although Darwin performed slightly better in the last month. Brisbane values dropped 0.2% over the last month after being up 0.1% in the month previous.
Regional markets aren’t faring as well as thought, sliding 0.6% over the rolling quarter. The most significant drags in the regional areas are in the mining states, with values slumping down 3.5% across regional WA over the past three months and dropping 1.0% across regional Queensland in the same period.
Under the hammer
More properties are now being sold off the market compared to just a few years ago when it was a seller’s market and buyers were in a frenzy to secure their slice of the pie.
There are substantially fewer auction sales than just six months ago and auction clearance rates are continuing to lag, signalling that it may not be the best time to sell under the hammer. The weighted average for auction rates is currently below 45%.
Houses are spending longer periods of time on the market - the median selling time across the combined capitals has increased to 52 days from 43 days in the same period a year ago.
Vendors are taking to heavily discounting their prices just to make a sale rather than suffer on the market. Discount rates have risen from 5.9% to 6.5% from the same period last year.
In Sydney, housing values are down a cumulative 5.6% since July last year, and are falling the fastest in nine years. The biggest price drops are on the lower north shore with an average price reduction of 8.1% for houses and 6.5% for apartments over the last six months.
"In Sydney, housing values are down a cumulative 5.6% since July last year, and are falling the fastest in nine years."
According to Domain, a vendor in McMahon Point had to reduce her one bedroom apartment from $1.2 million to $1.15 million to make a sale earlier this year after it passed at auction.
How to sell in a competitive market
All these changes to the housing environment are allowing buyers to relax and they aren’t feeling in any rush to buy - they can afford to be picky. This is creating tough selling conditions, which means now more than ever sellers need to stand out in the marketplace.
Here are some tips to help you sell your home in a buyer’s market:
Know your local competition
Check out the properties that are up for sale in your neighbourhood and what they have to offer. Find a list of comparable sales, which will help you get your price right.
Price your property appropriately and accurately
Take the emotion out of pricing your property by engaging the help of a talented, locally specialised agent. They will know the area and will be able to help you devise a strategic sales campaign.
Emphasise stand out features
Emphasise any stand out features that your home may have that other local properties are missing. Use it to your advantage as a major selling point. The key is to find an angle that makes your property different and more enticing, and sell that angle!
It could be that you’re situated on a larger block, or a nicer street. You may have solar installed or ample natural light within your home. Other features that can help you stand out could be a swimming pool or development approval.
Ensure your online property descriptions include the necessary keywords so buyers can find what they are looking for. Many people are searching for properties via the keyword search for features they are interested in.
Nail your home presentation
Present your home immaculately. Clean, clean, clean! Depersonalise and declutter your home of personal mementos. Know your buyer and create an emotional connection for them.
Engaging the help of a property stylist and staging your home will help you stand out from the crowd and get you the best professional photographs possible.
Be flexible with settlement terms. This will keep your pool of buyers wide open and help you sell faster.
Negotiate, negotiate, negotiate!
Keep negotiations on the table. Buyers are incredibly savvy at the moment and as long as they aren’t completely low balling you, it's a good idea to keep the conversation open. It can be frustrating, but it can also help you see settlement time come about sooner.
"Buyers are incredibly savvy at the moment and as long as they aren't completely low balling you, it's a good idea to keep the conversation open."
Lower your price
Reduce the price of your house rather than pay for repairs. Buyers are picky and may want a whole slew of repairs done. Get some quotes for the work and reduce the price of the house by the amount of the quotes.
Everybody loves a bargain
Buyers love a bargain. Slash the price on your home and you could achieve a much quicker sale. In this market you could sell lower and buy lower, so it may be more advantageous to sell quickly at a reduced price rather than let your property languish on the market and miss out on buying your own bargain.
Don't buy before you sell
If your property takes a long time to sell, this could put you in a bad position financially.
Advantages to selling in a downturn
There are some distinct advantages to selling your property while the market is cooling.
Yes, the general sentiment is that people are being more careful and watching the market closely so they don’t make any hasty or regrettable decisions. But while those sellers are sitting back and waiting, there are others out there pouncing quickly to take advantage of the good opportunities that may be there for a home seller.
For example, during a downturn an upsizer might actually get a better home for their money once they sell, especially if buying an off market property.
It's worth weighing up whether to sell for the opportunity to get a better property in the current climate. As mentioned previously, just make sure you sell before you buy!