Bottoms up - But for how long
Bottoms up - But for how long
Market Update - June 2023
We made it to the bottom. Now how long will we stay here?
We appear to be at the bottom. Values are low but they don't seem to be getting any lower. There are the odd couple of lower sales yes, we are also achieving a few higher ones, but on average we are now moving sideways. So good news!
So how long will we be staying here, that's anyone's guess, however, my view is until the average buyer thinks it's safe.
So, what do I mean by that? Well, the reserve bank has just said an Official Cash Rate of 5.5% is the peak, we aren't going any higher (so interest rates), and now is the time to watch our tools do their thing.
So, the positive say... Yes, let's buy. (The few)
The negative says... When were you ever right, Reserve Bank, you stuffed it up in the first place!
So, it takes one maybe two quarters of data to come out, and the Reserve Bank not putting up interest rates, for the average buyer to go...Yes, I think it is safe. We are at the bottom. Time to buy.
Now of course with high-interest rates and higher costs of living, that's easier said than done. But I'm not saying a boom is coming anytime soon, we can't till interest rates fall which the market doesn't expect till mid to late 2024.
What I am saying is, I expect a slow increase in values once the average buyer feels confident that we are indeed at the bottom of the market and when this occurs a expect a slow increase in values to start..... (And then hopefully turn into a boom from there ha-ha).
My guess, and it is a guess, is 2 quarters or 6 months we will remain approximately here and then a lift will start except in a few pockets which just quietly could come earlier.
Pockets you say. Yes, we have very low apartment stock in some areas so just a small increase in demand could push up values at any time, however, that's for next month as I'm still gauging this and don't want to call it too early.
So, what about now?
It simply is good buying right now and unless you can make more money elsewhere or are selling for lifestyle or personal reasons you should not be selling. Of course, this is not what I want to be saying however this is how it is right now.
So, what about all the Auction room success reports are saying?
It all depends on how you measure success. Mine is if it sells by Auction on the day for a good result when compared to other sales methods the Auction was successful. But this is not how the industry measures success. Auction success is what is sold on the day PLUS what is sold the next day and up to a whopping 30 days after. The argument is the Auction campaign created the interest so a sale after the auction should be counted as success due to that Auction.
Therefore, high auction success rates are often reported.
Owners not getting what they want, lowering their expectations and if they need to sell then selling at values much lower than they initially expected is not my view of Auction success. But you may think differently.
Auction is a great tool but like any tool, it only works best in certain conditions and the bottom of the market in my view doesn't meet these conditions and I think you will be hard-pressed to find someone who can show otherwise.
So don't believe the hype and if you choose to sell make sure you choose an agent that will work hard for you and hustle, because that is what is required in this market to get a good result.
It was the same after the GFC. Values were down but like then the best results came from the agents who worked the hardest for their vendors, not putting them on the chopping block and letting the sales method do the work.
From last month's report
I can confirm rents are stabilizing higher than pre-COVID rates. So good. I'm hoping for rent levels to settle 10% higher, but it's looking more like 5%. Will keep you posted. My biggest issue is how this great news is being reported....and by that, I mean it's not - our market is being undersold right now.
So next month I am going to get into a few numbers and show this and why the rental companies and statistic agencies aren't reporting this market correctly. And then hopefully fingers crossed, everyone who reads it can tell a few others and we can create some more demand.
And as always