Ep 39. The 2023 Spring Property Market
In this episode, Michelle discusses the Spring 2023 Property Market and what it means for both buyers and sellers for the last few months of the year.
Here’s what you’ll learn from today’s episode:
Why spring sees an increase in properties listed
The challenges faced by buyers due to limited house options and investor-driven apartment sales.
The role of auction campaigns in property market dynamics and its influence on market activity.
What new government initiatives mean in the short-term
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
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Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
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VIEW TRANSCRIPT
Hello, and welcome to another episode of the Buy Your Side podcast. The podcast to help you make smarter property buying decisions. My name is Michelle May, and I am the principal of Michelle May Buyer's Agents here in Sydney. Today I want to talk about springtime. Yes, the weather is heating up and hopefully the market also.
Well, by that I mean we're hopefully going to see more listings. It is typical for the property market around Australia to move with the seasons, and we usually see a lot less listings during wintertime. This has particularly been the case this year where listings have been few and far between.
Particularly if you are looking for a house, you will have noticed that there are not many options to choose from. There are a few more options in the apartment sector. However, we have seen many investors selling off their apartments with still many tenants in place and some with leasings in place until next year, which means that they're not really an option for those home buyers out there.
What spring usually means is that with the weather heating up, better lighting, just favorable conditions to show your property in its best light, we usually find that people put their properties on the market come spring, come September time, and then it'll be busy until about November when the listing starts drying up again; everybody gets ready for the party season.
Nothing much happens because particularly if you think about it here in Sydney, most properties are offered for sale through an auction campaign, which means four weeks of showings, and then on the fourth Saturday you have the auction happening. So when a property comes on the market, you know, you've got to think four weeks ahead.
Which means by around mid-November is really when you see the last new listings come on, and then everything dies down, and then really the market doesn't start again until the end of January, come Australia Day weekend when everybody resumes. Their focus has had a good break and goes, okay, well, 2023 wasn't my year, let's buy a property in 2024. And then typically February, March until Easter, that's when it all starts to cool down again.
So what are my predictions for this coming spring? Well we have had some good news where the government's been saying we want to inject 1.2 million new properties by 2029, which is up from a million that they promised to make and they're going to allocate $3.5 million. The federal government they're going to be funding this housing; it doesn't really help us in the immediate, or even short, to medium term because it obviously is going to take a long time for these properties to actually become available for people and to add a real difference to the market. But when talking to agents out there, what I've been hearing a lot is that whilst they're getting the appraisals for people who want to potentially sell their property, particularly the ones that are looking to buy a bigger home, they are hesitant to do so or even stopping doing so because they can't get the mortgage that they need to purchase that bigger property, and so they're sort of holding off until hopefully the interest rates come down a little bit and their borrowing power increases. The other side of the coin is that those people who are sitting on those bigger properties, three, four bedroom houses typically tend to be of the boomer generation.
You know, they're of a certain age where their children have potentially left the coop, they don't need the size of the property that they're sitting on, and they want to downsize. But of course those smaller properties are not available for the reasons that I've just told you. And also, when they are open to looking at, say, potentially three or two larger sized bedrooms in apartment land or torrens titles, strata titles, they're not the type of properties that typically get built, so they're very hard to find also.
So they're stuck. The younger generation is stuck and it's kind of a chicken and egg situation where nobody really wants to list until they find something or have already found something that they're looking to move into. So the agents are, persuading is the word I'm hearing, for these people to list their property with potentially longer settlements. So I think that's something I will be seeing in the spring market, that those listings that are coming on will potentially have longer settlements so that the vendors will have time to find something for themselves. So be prepared to be open to that, because obviously the vendors set the contracts and it is up to you as a buyer to make those contract change requests through your conveyancer or your solicitor.
And you may well find the perfect property, but then you'll need to find somewhere to live, in the interim until you reach settlement.
I don't think that we are going to have a huge influx of properties because of that mortgage cliff that everyone's been talking about. I think that, whilst there will be people in distress I don't think that there is such a large number of them that it'll actually change the equation to such a point where the market will be in equilibrium. I do think that buyer demand is still outstripping supply by quite a bit.
Every time I go through an open for inspection, I am queuing with others. Last Saturday I went through an apartment in Marrickville. It was on the second floor and there were people queuing in the street, up the driveway, all the way up into the apartment. That's telling you something, you know, because particularly apartments, there are more apartments to choose from. But again a lot of them aren't suitable because they still have tenancies in place. So the ones that are in great locations, vacant, are styled and presented properly are seeing a lot of demand and so of course that will drive the prices up.
Interestingly, I got an email from a very well respected senior credit advisor and he was saying that most banks are expecting an ongoing pause in the RBA cycle when it comes to interest rates and that the majority of the economists are forecasting multiple rate cuts in the first half of 2024 and expecting as much as a hundred base points by the end of 2024.
So what that will mean is that, obviously the interest rates are coming down and many lenders are already starting to decrease their fixed rates, meaning that interest rates will be lower in the near future. So that's good news for people looking to borrow. And it could potentially increase the borrowing capacity by approximately 10%.
So that's a fair amount of money. But as a result, I would say that then again, there will be more buyers coming back into the market as typically in spring, more buyers coming back anyway, but obviously more borrowing power means more people being able to get what they want and therefore more competition, property values will most likely increase further.
It will reduce mortgage stress and home loan repayments. And also what we are seeing is that investors will re-enter the market. So yes, investors are leaving, but others with greater borrowing capacity and financial stability will also re-enter the market. And that is also what we are already seeing right now. For me and my team, we are getting a fair amount of investor inquiry. And so, they're not put off by those interest rate rises of late and they're looking to seize an opportunity. And of course they've got a shallow pool of competition at the moment because they're not really competing with the owner occupiers, they're only competing with other investors when it comes to those properties that have those tenants in place.
So, overall, I think if you are looking to buy, make sure that you are prepared to compete. Be very mindful that you may have to be more open to different areas, different kinds of properties, just to get yourself on that rung of the ladder because it is set to continue to rise. Those prices are going to continue to go up, so you have to make that compromise between, am I going to compromise between where I'm going to live or maybe a smaller property or something that needs a bit of work versus hanging on and hoping and praying that you're going to get something in three or six months time, by which point you may well be priced out of the market.
So, something to consider. But also be mindful that obviously, of course, that the spring market only really lasts until November, and then there's going be a hiatus for about eight weeks or so. So stay focused. If you need help, always feel free to reach out if you've got any questions.
I look forward to helping you make smarter decisions. So, obviously love to help you with any questions you may have. Hope that was helpful and until next time.