Spring is traditionally the busiest time of the year in the property world. More sellers tend to list their properties during this season, when gardens are looking their best and pleasant weather makes weekend open homes and moving house easier.
Many families also like to purchase in spring so that they can settle into their new home before Christmas and the new school year begins.
However, this year’s spring property buying season is shaping up to look quite different from previous years. Here are the key trends that buyers should know about.
The property market has softened
This spring arrives against a backdrop of softer housing market conditions. Properties are taking longer to sell and national home values have dropped for several consecutive months.
Serviceability constraints, high mortgage rates, reduced borrowing capacity and cost-of-living pressures continue to weigh on buyer sentiment.
Economists are widely expecting the Reserve Bank of Australia (RBA) to increase the cash rate again in September or November, which will further affect borrowing power.
While these conditions have made many buyers more cautious, they may also create opportunities. With homes spending longer on the market and competition easing in some areas, buyers this spring could find themselves in a stronger position to negotiate on price and contract terms.
Fewer new listings
As buyer demand softened over winter, homes took longer to sell and the number of properties available for purchase continued to build.
Across most capital cities, advertised stock is now sitting well above both last year’s levels and the five-year average. In the four weeks to 30 August, for example, total listings across the capitals were 24% higher than a year earlier and 8% above the five-year average.
Interestingly, while there are more properties available overall, the number of newly advertised homes declined towards the end of winter. New listings were 6% lower than a year ago and 8% below the five-year average.
As a result, experts expect the usual spring surge in new properties may be more subdued this year, with some vendors choosing to wait for market conditions to improve before selling.
Investors remain cautious
Following multiple cash rate increases and Federal Government changes to negative gearing and capital gains tax settings, many investors are reassessing their property plans.
Early signs suggest some are choosing to sit on the sidelines. Australian Bureau of Statistics data shows the total value of new home loans fell 5.4% in the June quarter, driven largely by an 8.6% decline in investor lending.
As a result, investors may play a smaller role in this year’s spring market, potentially reducing competition for owner-occupiers in some areas.
So, what does this mean for aspiring homeowners?
Conditions this spring may be more favourable for buyers than they have been in recent years.
With more properties available, less competition from investors and homes taking longer to sell, buyers may have more opportunity to compare their options and negotiate with sellers.
Rather than feeling pressured to make a quick decision, many buyers could have more time to do their research, attend inspections and find a property that suits their needs and budget.
While affordability challenges remain, those who understand their borrowing capacity and are prepared to act when the right opportunity arises may be well placed to take advantage of changing market conditions.
If you’re planning to buy this spring, talk to us about your borrowing options. We can explain your borrowing capacity and any steps you should take to prepare before you start your property search.
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