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Listing spike presents opportunities for investors
With listings climbing and asking prices falling across most capital cities, investors find themselves with a lot more leverage heading into the spring market.
As the property market begins to heat up following the winter slowdown, investors find themselves in a stronger position to capitalise on the increased choice of assets at lower prices.
The latest data from SQM Research found that total property listings rose by 12.4 per cent in July, reaching its highest point in over a year at 278,984.
The rise in total listing figures was spread across new and old listings, which climbed by 5.1 per cent and 8.1 per cent respectively over the month.
SQM Research managing director Louis Christopher said buyers were presented with more choice as listings began to pile up, while properties were also taking longer to sell.
“More properties are coming onto the market, but they’re also taking longer to sell. This is the typical read you see in housing market downturns – listings start piling up on top of each other,” Christopher said.
“At the same time, asking prices have softened as supply has increased and buyers have departed the market. The flip side is this should provide buyers with greater negotiating power heading into spring.”
LJ Hooker Terrigal director Matthew Farrugia said the jump has had a significant impact on perceptions of the property market.
While listings were on the rise nationally, Farrugia said that both vendors and buyers had been hesitant to come to market.
“What I am hearing, speaking to both vendors and buyers, is that the sentiment is starting to align, which we all feel is that we’ve probably hit the bottom of the market,” Farrugia told SPI.
While recent data showed that the discount rate had risen across the capitals, Farrugia said there was likely to be little price correction over the coming months.
“There aren’t going to be significant discounts by waiting for three to six months, and there likely won’t be a significant uplift either.”
“I think the reality is that if you have real estate plans, now is as good a time as any.”
An opportunity presents itself
According to Farrugia, while the increase in listing supply would see vendors fighting for the attention of a smaller pool of buyers, it was a positive result for the market overall.
“I think with listing numbers on the rise, it helps everyone. It might not always feel that way as a seller when you see comparable listings come to market, but I think that ultimately, more choice brings more buyers.”
When there was less supply for buyers to choose from, Farrugia said they often elected to sit back and wait.
He said that many were afraid to transact for fear of selling their property and ending up without a new one to move into.
“In a hot market, everyone’s so confident to put their property on the market and sell it for big bucks, but then they have to go out and buy something in an inflated market that is on the rise.”
Farrugia said that sellers should remember that a softening market would provide them with the opportunity to purchase a higher-value asset that had also come down in price.
“You have the time; you can be patient; you are not going to be pushed out of the market,” Farrugia concluded.
Similarly, LEVR property investment director Josh Crealy said that more competition had created a buyer’s market, where investors could achieve strong results if they were patient and understood that they held the power.
“They are able to take longer to consider their options and have time to negotiate with vendors to secure a better deal, meaning the discounting rate has been moving up,” Crealy said.
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