New stats suggest you could pick up a bargain before Christmas
At this time of year, you’re probably preoccupied with festive parties, Kris Kringle and winding work down. But according to the latest Corelogic stats, you might want to spend less time preparing for Christmas and keep your eyes peeled for a property bargain…
According to the report, Sydney is experiencing its lowest clearance rates since 2012 with its market expected to weaken further over the next few weeks. And Melbourne is seeing more properties on the market and fewer buyers – an indication the market is shifting in favour of buyers.
Typically, buyer inquiries drop during the festive season and don’t pick up again until late January. But considering these slowing conditions, is it worth re-prioritising your festive preparations to secure a bargain before Christmas?
Here are 8 things to consider:
1. The golden rule—location, location, location
According to Corelogic’s report, Sydney’s highest clearance rates have been in the more affluent inner west and eastern suburbs. In Melbourne it’s been a similar story.
Buyer’s agent, David Morrell, recently told the AFR, “Anything out there that is AAA is going through the roof. If it’s really good, they’re still going for it hard. The ones that aren’t the property everybody wants, people are bypassing”.
In softening markets, it’s often the case that top-end properties continue to perform well, while lower-end properties are harder to move. But citywide auction percentages aren’t always relevant to your immediate neighbourhood. You need to consider supply and demand at a local level for properties similar to the ones you’re interested in.
2. One person’s loss is another person’s gain
With slowing clearance rates, failed November campaigns could present opportunities with vendors keen to sell before Christmas. An offer on the table a month back may have been laughed at, but sellers with properties that passed in will be correcting their expectations and considering their next best option. This puts you in a strong position to negotiate.
3. Seller’s motivation
Let’s face it, if a vendor is selling at Christmas odds are they have a reason for it. Maybe they’re moving overseas or they’ve bought and need to sell quickly to avoid a lengthy bridging loan. Whatever their reason, it means they have strong motivation to sell and that’s a positive to you as a buyer.
4. Take advantage of the Christmas lull
Fewer properties tend to come on the market late December and early January with many people away on holiday or taking things slowly. When activity increases come February, so do the pool of people looking to buy and competition can be tougher.
If you’re keen on a property and it’s not scheduled for auction until February, it may be worth putting in a prior offer. Much of your competition will be distracted by festive activities and the seller might be willing to accept so they too can enjoy the Christmas break.
Any problems you face could be more on the practical level with businesses such as solicitors and mortgage brokers closed for the holidays.
5. Investors beware
If you’re buying an investment property, consider how quickly you need to rent it out. Because at Christmas people tend to be winding down and dreaming about holidays – traditionally it isn’t the easiest time to find tenants. In the past, landlords have resorted to offering discounted rent and free rent periods as an incentive.
So, if you’re looking to buy before Christmas, make sure you factor in the possibility of a period without rent.
6. Stats aren’t everything
It’s easy to get sucked in by stats, but you need to have realistic expectations. The property market can be fickle with huge variances from one property to another. While one buyer may find a bargain, another will be disappointed as a property sells over the reserve. Sometimes it’s about gauging the level of interest on a property-to-property basis.
Also, stats need to be interpreted carefully. Corelogic warns that although clearance rates in Sydney and Melbourne are lower than they were 12 months ago, they haven’t necessarily been all that much lower than previous years. To get the most value, you need to consider how metrics compare across a number of years.
7. Selling as well as buying?
Unless you’re a first homebuyer or investor, you may have to sell your existing property in order to buy a new one. So essentially, you need to judge market conditions from both a buyer and seller point of view. If the market is favourable to you as a buyer, it’s likely to be unfavourable as a seller. And what you gain on one property, you could lose on another.
8. Don’t rush in
When you think the odds are in your favour, it’s tempting to rush the process to secure the deal. But you still need to read carefully through the contract and do all the necessary checks. There’s no point securing a property for a great price only to find out it’s plagued with costly defects once you move in. Do your homework and be prepared with 6 things to consider before buying a house.
Whether you choose to buy before Christmas or wait until the New Year depends on your own motivations. Researching and buying property takes time and energy – two things you may be lacking around the Christmas period.
If you decide you want to give it a crack, do your homework, be prepared and get smart advice before you dive in.
Ever bought or sold property at Christmas? We’d love to hear about it – share your lessons with us.