A large percentage of home buyers usually make their move in the warmer weather, simply because spring and summer is a more pleasant time of year to be out and about. Rightly or wrongly, people are more likely to get out and shop when the weather is nice. However, if you want to potentially bag a great buy, you should look to buy counter-cyclical.
The concept of buying counter-cyclical usually refers to buying during a market downturn (which was the case until very recently, particularly in Melbourne and Sydney). However in my opinion buying counter-cyclic should also apply relating to the weather seasons, when buying against the herd is likely to result in a great buy.
If you’ve been contemplating making your move, here’s a strong hint – now is a great time to buy counter-cyclical as the market appears to have turned the corner, and winter has well and truly kicked in (at least in the southern parts of the country such as Melbourne and Sydney).
Buying during winter is not for everyone, and it may provide less options as stock levels are typically lower. However if you put in the work and effort, or even better if you engage a reputable Buyers Agent with experience to do it for you, you may bag yourself the perfect home for a great price.
Here are 7 reasons to consider buying a house this Winter 2019 (particularly in Melbourne and Sydney):
- Confidence has unequivocally returned to our property markets
- Days on market is longer than in the past few years
- Melbourne and Sydney property values have lifted for the first time since 2017 (as reported in the Sydney Morning Herald 1 July 2019)
- Interest rates are at historical low levels, with further cuts predicted – meaning the cost of money is the cheapest it’s ever been
- Many Investors are still restricted from accumulating more property as their borrowing power is much less than it was a few years back – resulting in less competition for home buyers
- High probability interest rate serviceability tests will improve given APRA’s letter to banks/lenders 21st May 2019 – which will likely result in increased competition over the coming year
- Every time there’s been a property downturn, there’s been a corresponding (strong) bounce back (refer to the CoreLogic Housing & Economic Chart Pack June 2019)
The most obvious sign that our property markets have turned the corner (particularly for Melbourne and Sydney) is the auction clearance rates over the past few weeks. For example, Melbourne recorded a clearance rate of 73% over the weekend 29/30 June 2019, compared to 62% the prior year, refer REIV. The clearance rate was around 50% before the start of 2019 and now it’s consistently in the high 6’s to low 7’s.
Days on market is usually another strong indicator of confidence returning to our property markets. For example, Melbourne homes took an average of 44 days to sell over the March 2019 quarter, compared to 29 days a year ago. Vendors are discounting their properties by an average of 6.3%, compared to 4% a year ago to effect a sale (refer SmartCompany update 28 June 2019). Days on market is likely to narrow over the coming 12 months as confidence is gradually returning to our property markets.
If you play the long game, your home (or investment property) is likely to reward you financially and timing your purchase is less important. However if you’re ready to make your move, and you’re simply waiting for Spring or you’re waiting to “see what happens” (whatever that may mean), then I would strongly encourage you to take the necessary steps to get the buying process underway ASAP.
If you find the buying process daunting, and/or if you’re time poor, we are connected with some of the best Buyers Agents this country has on offer. Feel free to reach out and we’ll point you in the right direction.
Disclaimer: This information does not take into account your individual objectives, financial situation and needs. You should assess whether the information is appropriate for you and seek specialist advice from a qualified and licensed advisor.