There are few topics where property analysts and media commentators agree. However, there is no dispute that 2013 was a blistering year for property. In December, we were seeing signs that the market was cooling a little. Properties were still selling, but prices were not as outrageous and bidders at Auctions were not as bullish. Quite frankly, buyers were exhausted after a year of pounding the pavement and constantly missing out. Selling agents too were happy to take a much needed break after running endless sales campaigns at a cracking pace, often condensing the marketing from 4 weeks down to 3 or even 2 weeks.
Now that we are a few weeks into the New Year for the property market, it has become quickly obvious that the Christmas break was merely a short breather and not the start of a levelling of the market. At least this is the case in Sydney.
At one of the first Auctions for 2014, a 3 bedroom Unit in Chatswood quoted at “over $850,000″ sold under the hammer for $1m. There were approximately 15 registered bidders, with an opening bid of $740,000 going up in increments of $20,000.
At every single Open for Inspection that I have attended this year, numbers have been high. One sign that the market is strong is when a weekday Open for Inspection gets a double digit attendance. Another sign of a hot market is when Auctions start getting brought forward by a week.
For the past couple of Saturdays, several properties we inspected saw 50-80 groups through at their very first Open. I had to stand in line to enter every single property that I inspected. Buyers were overheard asking for one Contract after another and being quite open about their interest in the properties.
Savvy sales agents are intentionally trying to slow down their marketing campaigns and not taking offers in the first couple of weeks as they either want to push buyers to Auction or try to intensify competition pre-Auction. Many are providing Strata search reports for Units but not in a hurry to disseminate it in their effort to get more prospective buyers through. Many agents are also underplaying the level of demand for properties so as not to scare off buyers or raise their vendor’s already high expectations.
Time will tell if 2014 will turn out to be a rerun of 2013. Certainly the early signs show that buyer demands are strong. One factor that will determine whether prices will ease is the supply of new stock. As is human nature, when properties sell for a high price, home owners and investors are motivated to put their properties on the market. If enough supply enters the market, prices will level off. But for this to happen there needs to really be a continuous stream of good properties entering play each week. For now though, demand seems to far outpace supply and even the less desirable properties are selling fast and high.
Tips for Buyers: If you find yourself continually missing out, you may need to make significant changes to your search criteria and possibly look elsewhere. Consider hiring a Buyers’ Agent who can help you to figure out where the best opportunities lie. Most importantly, stay focused on buying a stellar property. Don’t buy a less-than-average property because you are fed up of the search process.
Tips for Sellers: If you are selling and buying again, try to minimise the lag time between the two transactions. In a hot market, it is often better to buy before you sell. Otherwise you might get caught out having sold well, but then prices rise significantly before you find something else to buy. Be sensible with your price and don’t let greed dictate your decision-making at the expense of other factors.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.