This month, a common discussion with clients has been: Do we sell now or wait until 2023?
The answer is not simple, as we don’t have a crystal ball and predicting the future is a fools errand.
What we do know is that the market is good now. Properties are selling and buyers are active. Buyer activity has reduced, but the FMO of early 2022 was not sustainable.
The market now is the same as the market pre-covid. Sellers are selling and buyers are buying. At our weekly auctions, we are averaging 4-5 bidders per property and open home numbers remain constant between 5-10 per weekend and 30-40 buyer inspections per campaign.
The current negativity in the market is largely media-generated. On the ground, we are not feeling the real effects of the recent successive interest rate raises. I believe this is due to the fact it takes time for the interest rates to push through and take effect. Banks are quick to announce that they are matching the RBA’s interest rate increase, but slow to issue loan increase letters to their clients.
Some buyers are feeling the interest rate increases by way of reduced borrowing capacity, however, the buyers with good deposits and those who are not stretching their budgets to their extremes are active in the market and paying market price for properties. The madness of buyer activity in the first half of the year has dissipated, but the activity is still strong. We have a property on the market in Flow Apartments in West End, going to auction this week. We have had over 70 groups through the property and expect a great sale price, with active bidding. This is just one of the many properties we are achieving success with at the moment.
Back to the original question, when to sell? What we do know is that in 2020 & 2021 up to 40% of buyers fixed their home loans, based on the low rates at the time. A large percentage of these borrowers are fixed for two years, with the first tranche of these expiring in the first half of 2023. The combination of variable home loans increasing 2-3% in the last 6 months and the fixed term loans expiring and resetting to the current variable rate, may make some homeowners and investors re-think their positions and sell in 2023.
We are not negative on the 2023 market, however, we expect that there will likely be sellers that have to sell in 2023, instead of wanting to sell. The few distressed sales in the first half of 2023 may set lower precedents for market value.
If you have a 3+ year plan to not sell, these market cycles do not affect you.
If you are planning to sell in the next 18 months, then our belief is that sellers selling now will be rewarded accordingly. There is still plenty of time to take advantage of the 2022 market & sell before the year is out.
If you would like to discuss the market or the value of your property, please give one of our team a call.