Why not decorate a new home this Christmas?
The trees and decorations have started to go up. You’re beginning to hear snatches of “Snoopy’s Christmas” drifting out of department stores as you stroll past. And of course, supermarket shelves are suddenly flooded with fruit mince pies, sickly almond icing, and stacks of dense, nutty cakes.
That’s right, Christmas is upon us again, and with signs of falling property sales numbers across Australia and New Zealand, your family could find themselves trimming the tree in a new home this year.
The gift of falling auction clearance
After months of strong house price growth in Australia’s major cities, industry speculation seems to be pointing towards an imminent downturn. With research from QBE suggesting Sydney and Melbourne markets will peak in 2016 and start to trend downwards in 2017-18, alongside historically high median house prices (over $1million in Sydney according to Domain), buyers are starting to approach auctions more cautiously.
Your family could find themselves trimming the tree in a new home this year.
CoreLogic RP Data reported in November that, while auctions in Sydney and Melbourne still made up more than one-third of total sales, the clearance rates in both cities have started to fall. Rates in the remainder of Australian cities analysed by CoreLogic, never traditionally strong auction markets anyway, have also fallen over the six months to November – with clearances as low as 16.2 per cent seen in Perth.
What about across the ditch?
Meanwhile, in New Zealand, similar signs are emerging from recent auction results in Auckland, the country’s most volatile real estate market. The New Zealand Herald reported on 14 October that more than half of the houses for sale listed in three big auctions the previous week failed to sell.
However, these indications of falling clearance rates aren’t necessarily cause for celebration just yet. Speaking to the Herald on 14 October, Auckland mortgage broker Bruce Patten noted that while there had been a drop in clearances, it was coming off of unprecedented highs of about 95 per cent.
“There has been a frenzy of activity in the investment space,” Mr Patten said.
It’s not unreasonable to expect lower attendance at auctions around the city in the lead-up to Christmas.
So, should you buy over Christmas?
Christmas can be a busy season for most people in Australia and New Zealand, a time when you might be tempted to put your house hunt on hold. It’s perfectly understandable to do so, however keep in mind that if you’re thinking about taking a break, so is a potentially large percentage of your competition. It might in fact be a perfect time to double your efforts, and snag yourself a bargain.
It’s not unreasonable to expect lower attendance at auctions around the city in the lead-up to Christmas, as people find themselves swept up in the festive shopping onslaught. While prospective home buyers are stuck queuing in the local mall, desperate to get their hands on those essential Star Wars or Lego presents to put under the tree, you could be bidding on your dream home. It’s even better if houses have been failing to move at previous auctions, as sellers might be willing to lower their reserve to ensure they end the year with a sale.
What’s the catch?
Obviously, it’s not just new home buyers who might find it easy to get swept up by Christmas concerns – sellers themselves are also vulnerable to the festive rush. This could lead to a lower number of new listings on the market, so it’s important you get in early on anything new as interest could be high, even with lower buyer numbers.
The easiest way to keep abreast of new listings in the market is to forge a strong relationship with your real estate agent. Why not drop them a Christmas card, and signal your interest in houses for sale in your area? You could be just weeks away from putting the keys to a new home in your stocking.