If you feel winter this year is colder than usual, not only you who think so. According to James Hancock (ABC News, 2019), winter in Melbourne in 2019 is the coldest since the last 36 years. In June 2019, average temperatures in Melbourne are as low as 3.9 degrees Celsius. Such weather causes Melbourne residents to spend more time at home or covered areas and limit outdoor activities. For readers, don’t forget what Demi Lovato once said:
“No matter what you’re going through, there’s always a light at the end of the tunnel.”
In the property world, the light at the end of the tunnel means the arrival of spring. Sunny and warm mornings, beautiful birdsong, and clear blue skies make the property looks better; property inspections are more pleasant, and moods are brighter. The best thing about spring is that all parties in the property industry from buyers, sellers or investors get their benefits.
However, don’t think just because it’s spring, you will immediately get the results you want so easily because there are still hurdles to deal with that don’t depend on the season, like lending rules and related tax costs.
According to Justin Doobov of Intelligent Finance, spring is a period where the properties sold will increase rapidly. For buyers, this is the right time to look at what is available in the property market before you lose your golden opportunity.
However, with a large number of properties, the competition will also be tighter. If competition between buyers gets tighter and property stocks get less, then prices have the potential to rise due to strong demand. For prospective buyers who want to get an edge this spring, it’s a good idea to budget and plan your finances. The finance preparation can be done by gathering all the documents needed to get a mortgage. This process is not that easy, because it requires time, complete documents, and sufficient financial capability.
Research from the Swinburne University of Technology explains that the optimal time to buy property in Australia is before or after winter. In Melbourne and Sydney, the month that tends to be more expensive to buy property in July, where property prices have the potential to be 3.2 per cent higher than the median property prices. Buyers who are actively looking for property may already know this pattern and will wait for spring where property availability tends to increase resulting in price adjustments if there is no strong demand. On the other hand, the months that tend to be cheaper to buy property in Adelaide and Darwin are June or July. You may be able to get a price below the average.
According to data from Corelogic RP Data in August 2019, the auction success rate in Victoria reached 72.1 per cent, from the auction of 498. Historically, the number and level of auction success tend to increase when heading for spring. Therefore, the auction-rate is expected to continue to increase in the spring of 2019.
With the recent changes in the property industry, this spring has the potential to be the best after all this time. Corelogic’s Lawless team reports that in June, property prices rose for the first time since 2017. Property prices in Melbourne have risen by 0.2 per cent for June and 0.2 per cent in July. According to Tim, there are several factors that support the rise in property prices in Australia, such as:
- Lower mortgage rates;
- Easement of the lending regulations;
- General elections that have ended; and
- New Government Regulation on tax.
These changes have a positive impact on property owners because they can sell their property at higher prices and lower taxes. On the other hand, property buyers also benefit from lower mortgage rates and changes in lending regulations.
In May, ANZ published a report discussing predictions of changes in Melbourne property prices until the end of 2019 and 2020. Their prediction for May is that property prices in Melbourne will drop 6.6 per cent in 2019, and 0.9 per cent in 2020. However, in the report which they published in June, ANZ changed their predictions and predicted that property prices in Melbourne will fall 2.1 per cent in 2019, but will increase by 4.3 per cent in 2020.
In June and July, the Reserve Bank of Australia (RBA) has lowered the cash rate by 0.25 per cent every month, which makes Australians think that the same thing will happen in August. However, in August, Philip Lowe of the RBA had taken the decision that interest rates would remain at 1.00 per cent. Although unchanged, 1.00 per cent remains the lowest interest rate in Australian history.
Also, there are many advantages to buying, you should also consider that with more properties in the market, the competition will also be tougher. With high demand, properties in the market will quickly decrease. As a result, property prices can also continue to rise. If you have thought about buying property, maybe now is the right opportunity before the price gets higher.
Not everyone agrees that spring is the best season to buy a property. I recommend that instead of thinking which season is right, you should think about whether now is the right time. Are you ready to buy a house with your financial capability? Taking into account the future of the property industry in Australia is also very important, so you must know the changes that are happening and will happen so you can make the right decision.
If you feel confused or need an opinion about the property industry, please contact me for further discussion.
CEA (REIV), CA (MFAA), TAA, CIT (M), CPS (RE), Dipl FMBM, B.Ec (Fin), FIML
Property Writer/ Property Consultant
Jeffrey Koby, B.BUS (MKT), M.MKT, CAR
Featured photo by : Kasuma and NTWRK, Pexels.com