How a slow spring selling season could benefit you
The property market has been uncharacteristically sluggish this spring, and if you're buying that could be very good news.
Spring is the traditional season in which Australia's property market heats up. But this year has been uncharacteristically tepid. The national auction clearance rate for properties has remained in the mid-60s to low 70s, while house prices have stalled and even begun to fall in some Australian capital cities.
If you're a seller, this might put you off bringing your house to market at the moment. But if you're a buyer, you could be set to see a serious windfall from this spring's slower pace.
Blue Fox Finance's Zak Avery says this market has put buyers in the driver's seat.
"A slower housing market ultimately means that there’s going to be less competition when buying a house. With this in mind, buyers may find it easier to secure properties at auction for a great price, or purchase a property via a private treaty at a lower price or with looser conditions than they otherwise could have," he says.
Zak shared with us some of his top tips for taking advantage of a slowing property market. If you're disciplined and shrewd, you could walk away with a great deal on the home of your dreams.
Don't be afraid to miss out
The key to getting a great deal on a property, Zak says, is to avoid getting too attached. Being willing to walk away doesn't always mean you will miss out, he explains.
"In a cooling housing market, the clearance rate is lower than usual. Should the bidding not pass the reserve price, you’ll have the chance to put in an offer post-auction and potentially get a discounted price due to the apparent lack of interest," he says.
Zak adds that if you end up with the opportunity to put in a post-auction offer, you should still be willing to pull the plug should a property go above what you're willing to pay. With so many good deals at the moment, it's highly likely another great property will come along, even if you miss out on your first choice.
When you head to auction, make sure you play your cards close to the chest, Zak advises. Above all, avoid needlessly driving the price skyward.
"I have seen far too many people bid high and pay too much as a result," he says.
A bit of patience can pay huge dividends in the long run. Instead of starting the bidding near your maximum, keep your first bid low. Zak says the phenomenon of coming out of the gate too strong at auction is all too common.
"The house next door to me was sold only last month at auction to the very first bid. Had he started lower he would have very likely saved tens of thousands of dollars."
Don't let your emotions run away with you at auction, Zak cautions. In a cooling market, there's no need to pay more than you're comfortable with.
"Have a budget and stick to it. Know what you can afford, know what you are willing to pay and don’t bid over that amount," he says.
And make sure you have the discipline to sort out your finance ahead of time, Zak suggests. While pre-approval is important, he advises buyers to be wary of bidding without a contingency plan, pointing out:
"Pre-approvals are not set in stone, and are still subject to a valuation and any other conditions. Being the successful bidder and later finding out the bank won’t lend because the valuation came in low is a very expensive lesson.”
Consider avoiding auction
With auction clearance rates falling and house prices heading downward in many capitals, a growing number of vendors may be looking to avoid auction altogether, Zak says, noting:
"With more properties being passed in today’s market, sellers may be more likely to sell pre-auction at a great price.”
A pre-auction offer requires a bit of savvy, and comes with its own pitfalls. But Zak thinks a successful pre-auction offer can also give you more bargaining power, commenting:
"Buying through a private treaty will also give you the option to add finance and [building and pest] clauses to the contract if you are unsure about anything."
Don't try to pick the bottom of the market
Above all, the best time to make a move on the property market is when you believe you're financially prepared. While house prices could fall further and buyers could find themselves with even more bargaining power in the future, Zak warns it's dangerous to count on this as a foregone conclusion.
"Never catch a falling knife," he says. "Buying now or later may be a great move. However, holding out for that 'perfect' time to buy will group you with many other buyers and isn’t generally the best strategy. Have your own strategy and stick with it."