Measuring the market mood isn’t always straightforward when property sales data isn’t heading for the stars, or dipping towards the floor.
Everyone’s an expert when buyer behaviour is obvious. But the mood is a little harder to capture in Australia right now.
Buyers and sellers have been hoping for more interest rate cuts, which seem a little more distant than originally anticipated. And there’s always a little hesitancy when a federal election is around the corner. (It’s been called for May 3).
For agents, we believe one of the best gauges of market intent is auction results.
If money talks, it probably speaks loudest at an auction.
So what is the market mood? Is it a good time to buy and sell?
When clearance rates hover around 70%, there is strong buyer optimism without the threat of a price break-out.
In the last few weeks, the trend in clearance rates has continued to rise and is settling at 70%-73%.
We have not seen such strong preliminary clearance rates across the Australian market for nine months (July, 2024 – 72.2%).
Signs of a pick-up are showing in Melbourne, which is not only auctioning the most properties currently but enjoying a 72% clearance rate.
Around 1500 properties are going to auction each week in Melbourne – the highest volumes since October last year.
Fewer homes are being auctioned in Sydney, but it’s still delivering clearance rates of up to 76%.
What does this mean for buyers and sellers?
It’s actually a good time to transact because the market is nicely balanced. Here are some additional observations:
Buyers
Overall view: We could be moving back to a seller’s market quite quickly.
Increased competition: Strong clearance rates suggest buyers are becoming more competitive. This can lead quickly to a trend towards higher prices.
Be prepared: Buyers should have their finances in order so they’re in a position to move quickly if they want to win a particular property. Pre-approval for a loan is essential.
Don’t rush: Conversely, the fear of missing out (FOMO) can lead to buyer’s remorse. You might purchase a property that you end up not enjoying, or you could overpay.
Due diligence: Even in a hot market, property inspections are still very important.
Sellers
Favourable momentum: The clearance rates indicate there’s a healthy demand for properties, which means you’re more likely to achieve a favourable sale price.
Realistic expectations: Set a realistic price, or auction reserve, based on comparable sales in your area. Over-shooting fair value will probably cause your property to languish on the market.
Presentation is key: Ensuring a five-star presentation of your property is the best way to maximise its value.
Move when you’re ready: Don’t try to time the market. Picking the optimal time to sell is almost impossible. Your personal circumstances should be the primary motivator. The best time to make your move is when you’re ready.