Four property myths that are keeping would-be buyers out of the market: Margaret Lomas

Research conducted by realestate.com.au has identified four common property market myths among Aussies:

1. The time of year doesn’t impact the success of buying and selling property
2. First-home buyers are being forced out of the market
3. Properties are currently overvalued
4. Low auction clearance rates mean houses aren’t selling

Myth 1: The time of year doesn’t impact the success of buying and selling property 

Consumer research indicates that over half of Australians (51%) believe the time of year bears no impact on the success of buying and selling property, with only 9% acknowledging autumn as the best time. However, autumn is most definitely the most opportune time to enter the property market. 

Realestate.com.au data reveals March and May were the two most popular months of the year for new property listings in 2011. The site attracted over 7.5 million unique browsers in May last year, the most of any month. 

Myth 2: First-home buyers are being forced out of the market 

More than three-quarters (77%) of first-home buyers in Australia believe they are being forced out of the market, yet realestate.com.au data suggests there are more affordable properties on the market now than last year. In 2011, there were 23,000 more properties at $500,000 or less listed on the site, compared to 2010. 

Today I see many first-home buyers entering the property market on a lower rung, as investors first. While many of the more exclusive suburbs of capital cities are indeed unaffordable to the first-home buyer, considerable affordability can be found in outer suburbs with excellent infrastructure and in larger regional areas which offer diverse employment opportunities and an excellent lifestyle. 

Myth 3: Property prices are overvalued 

Although 61% of Australians believe property prices are currently overvalued, this misconception has been perpetuated by sensational headlines that consider affordability only in relation to yearly household income – painting a largely inaccurate picture. 

We are at a time when housing is the most affordable it has been for a decade. From a peak of 34% of the average household income in 2010, average mortgage payments on the median-priced home have declined to 32% and are expected to fall beneath the long-term average of 30% by early next year.

Myth 4: Low auction clearance rates mean houses aren’t selling 

While almost three-quarters (74%) of Australians believe low auction clearance rates indicate houses aren’t selling. But the connection that is placed on clearance rates and market health is misleading. When comparing January 2011 to January 2012, there was a slight increase on days on market across the country. Numbers from RP Data indicate houses are selling, they are just taking longer. In New South Wales, days on market increased by nine days year-on-year, while days on market in Victoria and West Australia increased by 22 days. 

These days, buyers are much more educated and far keener negotiators. In my experience, auctions merely provide a backdrop against which interested buyers can gauge true market value and later negotiate privately for a sale. Few will commit at auction, yet many who attend later use what they witness as a suitable benchmark upon which to carry out successful, private negotiations.

Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and heads up the panel on Your Money, Your Call, both on Sky News.