Are we still in a buyers market or have sellers gained the upper hand?
Buyer confidence in Australia's property markets is increasing but there are still some significant factors that will shape whether buyers or sellers emerge in the ascendency in 2024.
Since the start of this year, property buyers have navigated rising interest rates, high inflation, cost of living pressures and falling consumer confidence.
Despite this, we have seen buyers taking the upper hand when it comes to negotiating.
In the spring selling season we have witnessed more buyers entering the market, particularly those looking for their first home and trying to secure a property before the market flips to being a seller’s market.
Leading up to Christmas, although we have seen more buyers enter the market, we have also seen a spike in the number of houses for sale, which will help cushion the increased buyer competition.
The sales results from the three months to September 2023 have shown that dwelling values across the combined capitals rose 2.2 per cent, as well as combined regional property values rising 1.1 per cent over the same period.
When we see increased buyer activity (increased demand for properties), and low availability of houses (decline in supply of properties), this is when the market flips to being a sellers market.
The main characteristics of a sellers market are that buyers begin to develop FOMO (fear of missing out), prices rise rapidly, and properties sell very quickly (low days on market). When buyer sentiment increases, because buyers have more certainty and confidence in the markets and the economy, this is when a sellers market emerges.
Is this the end of the buyers market?
With the RBA’s pause in hiking interest rates and speculation there will be no more interest rate rises this year, buyer confidence in the markets is increasing.
The expectation is that with rising competition sellers would soon be in the ascendency. However, there are many contributing factors to how the market will play out.
There is still uncertainty around Australia’s economy because inflation is still a problem.
If inflation doesn’t slow, then we could be expecting the Reserve Bank of Australia (RBA) to take measures tame inflation.
With the recent spike in fuel prices and house price growth, the experts are speculating a bumpy ride in interest rates for 2024. Many are suggesting one last increase before we are likely to see the RBA cut rates around August 2024.
Strategies to navigate current market conditions
It is important to constantly reassess market conditions, including comparable sales in the area and making sure they are reliable and relevant.
If you rely on sales prices from last year or even last quarter, you may risk paying too much as market conditions are constantly changing.
Before you put forward an offer to purchase, you should always understand the seller’s motivations and use this as an advantage during negotiations, such as being flexible with the terms in the contract to meet the seller’s requirements.
You should understand your competition and if there are any other interested parties. You should attend open homes to see if there is much interest in the property to aid in your negotiation strategy.
If the property is going to auction, see if there are many registered bidders and hold back before bidding to see if anyone steps forward.
But remember, if a property is passed in at auction or doesn’t meet the reserve price then the highest bidder will be called for private negotiation first.