In the lead-up to the launch of this year’s spring auction season this weekend, the Real Estate Buyers Agents Association (REBAA) is warning home buyers against ‘panic buying’ and falling victim to buying prior to auction for a record price.
REBAA president Cate Bakos said spring often presented prime opportunities for buyers to secure good quality properties prior to auction as agents were usually more willing to ‘clear their books’ when they were under pressure with extended auction schedules and high campaign numbers.
However, she warned that securing prior to auction was not always the best strategy, as vendors often expected a “knock me off my chair” price to do so.
“The secret is to ask a lot of questions – there is little point making a pre-auction offer if the agent is determined to run the campaign to auction day,” said Ms Bakos.
“Make sure the agent is in support of the plan and be very confident that the analysis conducted identifies the right price to offer.”
Ms Bakos also advised it was important for buyers to recognise that we weren’t necessarily in a ‘runaway market’.
“The lack of stock was the significant challenge for buyers this winter, but it will ease in spring,” she said.
“The state of our market right now highlights a recovery from our 2017/8 correction but by no means do the drivers underpin a crazy run. Our economic outlook and tight lending scrutiny are still overshadowing typical market drivers that would point to a strong market.”
REBAA QLD state representative Scott McGeever said spring had sprung early in the sunshine state with August winds blowing buyers in early.
He said while the $500,000 to $800,000 price bracket had largely underperformed in the Brisbane market over the last decade, this segment was tipped to be the most sought after this spring.
“This appears to be about to change given demand, lack of quality stock and the affordability of Brisbane housing close to the CBD when compared to other major eastern seaboard capitals,” said Mr McGeever. “We expect this type of buyer activity, certainly in the Brisbane Local Government Area, at least until the end of 2019.”
REBAA NSW state representative Shelley Horton said established homes and apartments will be in high demand this spring where cladding and major building defects were not a concern. Likewise, off-the-plan and near new apartments were expected to be given a wide berth given the recent media attention around complexes such as Mascot Towers.
“Buyer sentiment and participation has improved significantly post the Federal election and is expected to continue through until the end of the year on the back of historically low interest rates,” said Ms Horton. “All of this means more home buyers entering the market over the coming months. While this is a welcome sign, more buyers combined with historically low stock levels, could fuel panicked buying through a fear of missing out.”
REBAA ACT state representative Claire Corby said buyer confidence had improved steadily over the past three months with the average number of registered bidders doubling since early 2019.
“With the introduction of stamp duty concessions for first home buyers in July, there’s been a surge in competition in the sub-median $400,000 to $700,000 price point,” said Ms Corby.
“Upsizers and investors are readying their finances following the easing of serviceability by the banks and with this increase in demand on the horizon, the early signs are showing that spring is poised to be a strong market. To avoid overpaying this spring, buyers need to make decisions based on solid research and a well-executed strategy.”
REBAA VIC state representative Leigh McConnon predicted suburbs within a 15km radius of the CBD could see increases of up to 10 per cent this spring.
“This will not be widespread throughout Victoria as a number of the outer suburbs are likely to be under price pressures until the economy improves,” he said. “Suburbs that experienced the sharpest declines over the last 18 months, particularly in the more affluent inner Melbourne ring, have recently seen the largest increases in a short period of time.”
REBAA SA state representative Katherine Skinner said this winter had seen stock levels at an all-time low, fuelling heightened market sentiment for both owner occupiers and investors.
“We expect to see the swing from being a favoured seller’s market, to a buyer’s market with many more options and less competition for the one property,” said Ms Skinner. “Our recommendation for buyers right now – sit tight for the spring before making your purchase.”
In the regions, REBAA regional representative Matt Knight said subdued capital city markets had seen investors look regionally for the first time in several years.
Mr Knight predicted steady market prices in the regions for the spring season ahead.
“Regional options with tight rental markets and vacancy rates under two per cent remain the safest options for investors looking to invest as they will find tenants faster and at better prices,” said Mr Knight. “Buyers should focus on quality and value (not just a cheap price compared to the city) and ensure they target areas that are the most desirable to locals and new arrivals, as these should experience the best growth moving forward.”