I think it's fair to say that the past six to 12 months have been a trying time for the residential property market. After several years of prosperity, the conditions we are currently seeing such as rising interest rates and issues with housing supply and affordability, seem to have somewhat instilled a sense of trepidation in people when it comes to entering the housing market.
The interesting thing about this situation is that the current state of the market has actually resulted in quite an attractive environment for prospective property buyers.
Levels of buyer demand are generally lower than what we have seen in awhile, reported auction clearance rates are at historic lows, and there is a fairly large amount of stock on the market. Thus, for prospective purchasers, this is quite a practical time to be out there looking to buy.
According to Australian Property Monitors, recent auction results are showing surprisingly low national clearance rates, with 56 per cent of properties selling at auction in the last week of April. Additionally, the recently released RPData Rismark Hedonic Index found that national capital city home values noticeably decreased over the March quarter, dropping 2.1 per cent (seasonally adjusted).
So what does this suggest for home buyers and investors? Combined with the current oversupply in the market, essentially it means that those looking to purchase are in the enviable position of having the time required to conduct the research necessary to make a wise buying decision. Try not to ever purchase a property without assessing comparable data on other sales in the area – inexpensive reports from sources such as RPData can be purchased to do so.
These conditions also afford buyers stronger opportunities to achieve a discount on a property's asking price. The reduced auction clearance rates we are seeing don't necessarily mean that properties aren't selling, rather that they are being passed in at auction – they could very well go on to be sold by means of buyers submitting offers. I would encourage purchasers to take the time to submit offers on suitable properties, taking advantage of the discounts that may be attained.
Remember – property markets go through cycles and at the moment the environment looks to hold some advantageous opportunities for those looking to purchase. However, before buying, it is definitely worth taking stock of your personal finances and the goals of your purchase, to ensure you make an investment within your means and strategy.