We wanted to start this newsletter edition with some classic Ted Lasso quotes (if you haven’t seen this program yet then do yourselves a favour!).
“There’s two buttons I never like to hit: that’s panic and snooze.”
“You know what the happiest animal on earth is? It’s a goldfish. You know why? It’s got a 10-second memory.”
We include these because in real estate and in life, we appreciate Ted’s ‘glass half full’ approach to everything, and the reminder not to dwell on the past. There’s a lot we can all learn from Ted.
Real estate is basically one enormous recurring cycle. And at the moment, we believe we are nearing the top of the interest rate cycle, at 4.10 per cent is its highest rate in eleven years. Interest rates are tidally linked to the property market, with higher interest rates lowering demand and softening sale prices. If rates are indeed peaking right now, then we should be nearing the end of the price lowering cycle.
Another feature of the local real estate equation is stock levels. Low stock levels have the effect of putting a floor under house prices as buyers must essentially compete to purchase the few available properties on the market, and thus mitigating the downward pressure on prices.
In our region, there’s a real sense of the market finding its groove again. While the Covid FOMO period has definitely passed on, the subsequent period of latency has also passed, and we are emerging into a period characterised by relatively low stock levels, solid interest and steady property transactions. There is more movement than at the beginning of the year, and when the right property presents itself then good competition is achieving sound results for sellers.
Who’s buying? Interest is mainly confined to locals from the northern rivers, in the eternal upsizing/downsizing pattern. In a big change from the covid era, buyers from Sydney, Melbourne and Brisbane are relatively rare at present.
Established houses are really coming into their own right now, particularly when compared with new house builds which can be quite a drawn out process and also unexpectedly pricey.
Time on market has improved again. Earlier in the year we were seeing time on market of around eight – twelve weeks as the market was declining and buyers were holding off, but this time-frame has now been reigned back in to around four – six weeks. But note that every property is different and there is no one-size-fits-all rule on this marker.
Is now a good time to buy? Absolutely! There is an expectation that interest rates will soon peak and hopefully begin to subside in the near future. There’s no question that a lowering of interest rates – when it happens – will create more competition and push up prices, so moving now before this transpires will help put you ahead of the game. Other positives for buyers entering the current market is realistic pricing and a lack of rampant competition as witnessed during covid which means a calmer and less frenzied buying experience. In six months time, it may be harder to enter the market with prices expected to rise.
Stamp duty relief for first home buyers is also having a positive effect and stimulating demand.
Is now a good time to sell? Also absolutely! In this steady market, transactions are ticking over at a faster rate than earlier in the year. But getting the price right is absolutely critical to achieving a successful result. With low stock levels, there are less competing properties and your house has the ability to stand out from the crowd and really shine.
Middle of the market grey spot
The mid-point is proving an enigma in the current market. The middle of the market for our region is a price point of between about $1.1 – $1.4 million, and we are finding that properties in this bracket typically take a little longer to sell. There is more interest and activity around properties which are priced under $1 million. And anything priced over $1.4 million is also more fluid.
There are a couple of reasons for this discrepancy. Firstly there’s likely a bit of psychology around the magic million number, with a perception that it’s more of a bargain. There’s also an appreciation that getting borrowings is more difficult now and borrowing capacities have been reduced, while people in the $1.4M+ bracket have an advantage in that they may not be borrowing.
This does create a speed hump for middle of the market properties which ironically present as excellent lifestyle homes for buyers. However as we always say, a well presented and accurately priced property will always sell in any market; but in the current market sitting in the middle might mean it just takes a little longer.
View more in my latest newsletter . . .