Spring selling season not what it used to be
I think it is safe to say that the concept of seasonal activity has been nonexistent in real estate this year – any expectations we held based on historical trends have essentially been thrown out the window. Thanks in large part to continued interest rate uncertainty and in more recent months heightened concerns for global financial markets, the residential property market has certainly experienced a slowdown over 2011 and based on the sales activity that took place over September, the well-known “spring selling season” doesn’t look to be any different.
Around the country we are seeing that in general, properties are certainly on the market and although buyers are still out there looking, many continue to show reluctance to make a purchase. According to internal Century 21 data collated from our offices around Australia, there were almost 60% more properties listed in September 2011 than in September 2010, however the number of properties sold was down by just over 20%. Nationwide, our offices recorded a conversion ratio of approximately 58% for the month, as opposed to a ratio of around 85% seen in September last year.
Despite the reduced buyer activity there continue to be areas where properties are selling successfully. Not surprisingly, these include locations where there is little property available and no future land releases or subdivisions planned. Homes within the $400,000 to $800,000 price range also continue to be in demand, particularly for first- and second-home buyers.
In terms of the sales prices being achieved, values in the mainstream market seem to have settled, as this is where much of the buyer interest continues to be. Having said this, the market still looks to be lacking the rush of buyers that we have seen in the past. Vendor discounting continues for many properties at the top end of the market and in coastal regions, and in most cases is taking place when sellers are concerned about a lack of interested buyers. Many of those are not selling out of necessity look to be pulling their properties from the market if the desired sales price is not achieved.
The heavy discounting seen at the top end of the market may actually see properties in this range come back strongly – buyers can see the price reductions that have occurred and understand that if they wish to make a purchase now may be an ideal time to do it.
Market activity over the one and a half remaining months of spring will depend largely on levels of consumer confidence and certainty surrounding interest rates. With predictions that the Reserve Bank may move to cut the official cash rate at its November meeting, I’m sure that real estate agents and vendors across the country are hopeful that this news could be the push buyers need to make purchase decisions, with such movement potentially resulting in a pre-Christmas gain in momentum.
Charles Tarbey is chairman and owner of Century 21.
