Buying property in early winter demands a change of tack: Mal James

Mal JamesApril 16, 20120 min read

With Easter 2012 over, many of you will be suffering withdrawals not just from chocolate but also from information about the property market – and more importantly from a lack of homes to look at.

Winter 2012 seems to have come early in terms of lack of properties listed for auction. Even with the holidays now over, there are still only a handful of auctions listed for the weekends left in April. In fact this is shaping up as one of the lowest mid-year auction months that I can remember for some time.

That doesn’t mean that there are no properties on the market at all. There are still plenty of off-markets (unadvertised homes), pre-markets (before they get to market), private sales with no advertising and stales (homes that were advertised a year ago and are now either off the net or on the very last page of the listings).

However, what this does mean is that if you are a buyer looking for an A-grade result in April 2012 you aren’t going to get the best deals by sitting back, thumbing through the glossies and turning up on a Saturday.

As a buyer it is important you understand what is going on, and you are not necessarily going to get that from the Sunday papers. With no public pointers such as meaningful $1 million-plus clearance rates you are going to have to look deeper than the dailies for your market indicators.

For instance, I am still surprised at the number of market watchers who talk to me mid-week in coffee shops or at Sunday sport who think that because they’ve heard the market is OK that prices must have been going up. In 90% of the 400 or so transactions we’ve looked at this year, the sale price has in fact been at or below vendor expectations of last year, not above. And while there has been a good spread of solid auctions, they have rarely exceeded “trade” price expectations. The main reason the market was healthy pre-Easter was because vendors were meeting the market, not because buyers were leaping to ridiculous heights to grab the gold.

On the other hand, when demand is still strong and stock is down as it is right now, prices tend to stay firm. Before Easter our demand indicator Bidderman, which shows an average number of bidders per auction, showed us that there is a healthy level of demand out there when the 3Ps are right – price, property and position. So there is still plenty of competition out there when the property comes up at the right price.

Hence, to use a sailing analogy, your search for a $1 million-plus home in bayside and Melbourne’s inner east in the next few weeks may require you to change tack. As with sailing, you will need to look for the winds in different spots and possibly away from the crowds.

So, what can you do to maximise your chance of finding your dream home at a good price this month?

1)      Do your own research. You need to look past the highlighted sales results that skilled agents will present you. These may not be giving you the full picture. As an informed buyer you need to balance out this information with that from results not highlighted by the selling agent. As a buyer it is incumbent on you to do your own independent homework if a good decision making process one of your home-buying goals.

2)      The early bird who has clear and relevant goals catches the worm – it might seem a worn-out saying, but it’s super relevant in this market. Yes, turning up is three-quarters of life, but you still need to perform. Your winter home searching effort needs to include weekly phone calls to agents, short, sharp emails, letterboxing, Excel spreadsheets. The good homes are not just going to fall into your lap as they did before Easter or in previous years. If you do, you may get some chances other don’t.

3) Get a rental. With very limited stock on offer, you’ll need an extra level of patience to avoid making a mistake. If your dream home is not there, it’s not there. In that case a six-month rental strategy may be far better in the long term than a ‘quick draw McGraw’ 10-year buying strategy.

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.

Winter photograph courtesy of Flickr.

Mal James

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million.
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