Should you list before Christmas? The experts have their say
With the spring auction season over and the heat of summer upon us, property buyers and sellers are facing the inevitable question. With the holiday season around the corner, is it best to list before Santa comes around? Or should you wait until after the champagne pops and 'Auld Lang Syne' has been sung?
Property Observer went out and asked the experts: Should you consider putting your property on the market now or wait until after Christmas? And if so, when is the best time in 2014?
What's your thoughts?
Peter Bushby – President of the Real Estate Insitute of Australia (REIA).
THERE IS A BENEFIT, BUT PRIVATE TREATY IS THE BEST PATH
I often think that there is a benefit in listing prior to the New Year as a lot of people hold off and you can stand out more in this period before others list. I wouldn't auction over the period but private treaty listings are most suitable!
The reality is a lot of people have more time over the holiday break to check out what is on the market and others potentially are doing preliminary work before starting - you are in that space ready to go as the volume returns after the break.
I have found over my 40 years experience selling properties that while there are usually fewer buyers about from mid December to mid January, those that are around seem to be much more committed often wanting to use this time to get organised ready for their move. Issues like buying in an area so they can identify what schools kids may attend so they can get those issues of uniforms, etc bedded down, even if they don't settle immediately.
Frank Valentic – Managing director of Advantage Property Consulting
DEPENDS ON WHETHER THE PROPERTY IS TENANTED
I think it depends upon whether you have a vacant investment property versus if the property is a tenanted or owner/occupied property. I would put a vacant property on the market now as a private sale/forthcoming auction with prior offers invited, to try and keep holding costs down and reduce interest payments with the possibility of still making a sale over the Christmas/New Year period.
Otherwise, if you were to wait until after this period before launching it, you would have five to six weeks of interest payments and if it takes around 34 days afterwards which is the average days on market for a property in Melbourne, your holding costs would be doubled.
If the property was owner occupied or tenanted so the holding costs would be reduced or not as relevant if you were living there, I would hold off launching the property until mid-January to cash in on the pent up demand that usually sees strong results in the early February auction period.
Most years the market starts strongly with many people relocating, New Year’s resolutions and sometimes even a February interest rate cut to spur things on. I would definitely wait to capitalise on the strong current Melbourne auction market and see competitive bidding for a property where holding costs weren’t an issue.
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Ben Kingsley – Chair of Property Investment Professionals of Australia (PIPA)
AS A BUYER, NEW STOCK IS ALWAYS WELCOME
Speaking from the buyers side, as an independent property investment advisor and director of a buyers agency business, my team and I are constantly on the hunt for properties that meet our clients briefs. So speaking from a buyers position any new stock is welcome for analysis and inspection, especially in a sellers market which is what we are experiencing in the Melbourne and Sydney markets even this late in the year.
In the current market, The facts are that good quality properties in superior locations and suburbs are still attracting strong interest and are being bought under stiff competition by highly interested buyers, so any new stock is keenly sort and reviewed.
Speaking from the sellers side, the best way for a vendor to determine if now is the right time or if early 2014 will be better will come down to two things - firstly how much you have been watching the buyers interest in your localised area and more specifically the level of interest in 'like' properties to yours.
Secondly, how much faith and trust you put in the skill of your selling agent. They are in the market every day, so the best agents will have a real finger on the pulse in terms of the level of underlying demand right now compared to what their experienced tells them about the upcoming autumn selling season.
It a simple case of 'horses for courses'. In some areas now is as good as any to sell up and start to plan for your next move in 2014, but demand should be very strong to consider this. If not sure , then the smart money would be to wait until early 2014, as many people use the festive season break to make big decisions about their future - and property is a big decision, so this often leads to higher levels of underlying demand as the selling season kicks off in early autumn.
Andrew Wilson – Senior economist, Australian Property Monitors
MARKET ACTIVITY IS LIKELY TO SLOW DOWN IN 2014
Housing markets traditionally wind down as the Christmas holiday break approaches but the level of the wind-down is dependent on the nature of the local market dynamics.
The Melbourne and Sydney housing markets are currently being characterised by an unprecedented end-of-year surge in auction listings with thousands of properties due to go under the hammer right up until the last Saturday before Christmas.
Melbourne and Sydney home buyers are keen to take advantage of the strongest market conditions since 2010 and wary perhaps that next year’s market conditions may not be as strong. And they are likely to be correct.
Declining economic activity is likely to moderate buyer activity in Sydney and Melbourne next year even if as is increasingly likely interest rates are cut again in the New Year.
The autumn selling season of 2014 however will remain relatively active in both Sydney and Melbourne although auction clearance rates are likely to be below current levels – particularly in Sydney.
Prices will still increase moderately over the year but not at the same levels recorded in 2013 and with most of the increases occurring over the first half of the year.
Other capital city markets should perform close to current levels although buyer activity and house prices in Brisbane are set to rise on the back of an improved local economic performance in 2014.
The market is clearly signalling that now is a good time to sell in Sydney and Melbourne with selling conditions in most other markets likely to remain consistent at existing levels well into 2014.
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Paul Biller - Principal of 1st City Hasemer & Caldwell-Eyles
SERIOUS BUYERS ARE ALWAYS LOOKING AND THE HOLIDAYS ARE NO EXCEPTION
With the holidays fast approaching, sellers often wonder if they should list their properties now or wait until the New Year.
The conventional rule used to be that you shouldn’t list your home during the holiday season. Potential home buyers were too preoccupied with attending parties, buying presents or planning vacations. But with the Internet and the marketing process having become far more sophisticated than in previous times, buyers for good quality properties can be found all year round making the issue of timing less critical today than in the past. Serious buyers are always looking and the holidays are no exception. Buyers can check out the latest listings from their mobiles or tablets on the go.
Due to our work commitments and hectic lifestyles, many serious buyers will use the holiday period to monitor real estate more closely than they may do during the year. Many sellers however believe that buyers disappear over this period and choose to wait until the New Year to commence marketing their properties. The effect for those that are on the market during this time often results in high prices being achieved as there is far less competing properties for the buyers to choose from.
In reality, all that really phases out over Christmas are the auctions. Private treaty sales continue unabated with many properties being marketed “on the quiet” to great effect.
Another benefit is that lenders can process loans faster as they are typically not as busy at this time of year enabling prospective buyers to act quickly in finalising a purchase.
My advice is that if you are considering selling – start the process now in order to capitalise on the low levels of stock. If you are not able to close a sale by Christmas, market the property for a February auction.
Kevin Lee - Buyers agent at Smart Property Adviser
TAKE YOUR CHANCES IN THE NEW YEAR
Ho, Ho, Ho - Santa is about to arrive for some! Maybe......
It's the $64,000 question on everyone's lips. Should I sell now or should I wait till 2014? Normally there's not much happening in the thousands of residential property markets across Australia between the end of November and mid to third week of January.
Australia tends to pretty much have a complete 'shut down' mentality when it comes to school holidays, Christmas and New Year all combining into one hot summer. The only things guaranteed to be still on every year though, are the Boxing Day sales; Sydney to Hobart Race; the cricket and the great Aussie BBQ.
This year however there are plenty of properties still on offer, with auctions scheduled right up to the afternoon of Saturday December 21st. And I think we'll see hundreds of new listings and/or auctions in the second week of January.
Anecdotal evidence I have is that the old 'supply and demand' equation has been hard at work in many parts of Australia - especially in my home town of Sydney. Here's what you need to know and what you need to prepare for:
1) Over the past four months or so, in Sydney we've witnessed the lowest number of properties for sale in 14 years.
2) Due to a long period of super low three-year fixed rates - between 4.69% and 4.99% for seven months - thousands of overzealous or uneducated buyers in Sydney have paid above the odds for some very average properties
3) Vendors in many parts of Sydney are getting caught up in the frenzy - and reacting by asking ridiculous prices.
4) Thousands of people who just managed to purchase their first property with a sub 4.99% interest rate are not at all prepared for an interest rate increase.
5) This group don't understand that on a $350,000 mortgage, a mere 2.0% increase to their rate, in fact represents a 40% increase to their interest bill each month.
6) They don't 'get' that their principal and interest repayments on that $350,000 mortgage will go up by $449 per month, from $1877 to $2326 - for owner occupiers this is after tax money people.
7) So you're a first time investor? Sorry - for you that 2.00% increase to your interest rate equates to an extra $583 per month!
Parts of the Sydney property market are 'insane' right now; others have seen an uplift that was literally years in the making. Whilst others are still having to cut their asking price by $500,000 or more - it's all relevant. Three or four months ago was possibly the best time to sell; I'm seeing that now.
There's certainly a lot of mixed messages out there right now, it's hot and cold in different suburbs - including within the auction space.
So, rather than take my chances next year, a couple of weeks ago my wife and I decided to sell our 100+ year old investment property in Sydney's northern districts pre-Christmas via auction. Due for auction last Saturday, and although it drew strong initial interest that dwindled away (damn lawyers!!!) so we withdrew it from the auction process on Monday a week ago.
Having a great agent though (Amy Kaslar @ LJ Hooker Beecroft) means that we exchanged contracts yesterday for a price that wasn't great; but it wasn't bad either. In this instance we just didn't want to wait and see what the New Year might bring.
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