Is spring really the best time to buy property?
Beware of the spring selling season
As a keen participant in the property market over the past 20 years, I find it fascinating that the common theory in Australia is that Spring is the best time to sell. That’s when many residential properties look their best and emotional buyers get lured into paying a fortune when they fall in love with their new home.
At least, that’s how the theory goes. But from everything I’ve seen in my time, this is a big generalisation and is not always true.
What buyers should be looking at is the level of supply and demand in the area they want to buy and for the type of property they’re seeking. The real estate market lives and dies by supply and demand. Pure and simple.
Prices go up when demand is high, and supply is low, and prices flatten when demand weakens, or supply expands.
So, in determining what time of the year produces the greatest demand and the shortest supply, ask yourself the following questions:
- WILL MY PROPERTY LOOK BETTER IN SPRING?
Truthfully, a small minority of properties (no more than 2 per cent) look significantly more appealing when the flowers are blooming.
- WHEN IS THERE LIKELY TO BE MORE BUYERS FOR MY PROPERTY? WHEN WILL THERE BE FEWER PROPERTIES LIKE MINE ON THE MARKET?
I would strongly encourage you to speak to your real estate agent about this. In general terms, the number of buyers is fairly constant throughout the year. But the number of properties for sale increases significantly during Spring – because the talk around backyard barbecues is that Spring is the most profitable time to sell.
So, what happens year after year is that vendors wait until Spring to sell and like most of their competitors, they hit the market around the same time. This works perfectly into the hands of the buyers who then have far more to choose from. Yet the number of buyers does not increase in-line with the rise in properties for sale. In fact, buyer numbers generally don’t increase much at all during the year.
Most people are looking to buy for reasons unrelated to the season, so the supply versus demand scale tips in favour of the buyers during Spring as the number of buyers get divided among the growing number of properties for sale. This amounts to fewer buyers available for each property.
- WHAT PERIODS SHOULD I BE CAREFUL OF?
If you were not locked-in to relocating due to a job transfer or family reasons, wouldn’t you buy whenever it suited you (which is unlikely to be based on the weather)? Or, wouldn’t it make sense to buy when you had the least competition?
Some of my best buys were bought in the final days before Christmas; when vendors need a result or in the quiet first weeks of the New Year when most potential buyers – my competition – are on holidays.
Why do many real estate agents not advertise properties in metropolitan areas during January? Because they know buyers are a world away, having fun at the beach.
To use a share market analogy, being counter-cyclical is often profitable. Buy when most others are selling and sell when the crowds are buying. If going against the flow works in the stock market, why would it be any different for property?
It’s not.
So, what about the Spring of 2018?
I am generally very cautious about making predictions on the state of the property market but, I think it is fair to say the Spring selling season in Adelaide and Brisbane will be an indicator of the strength of these markets, whilst it will be interesting to see how Melbourne, Sydney and Perth fair considering their yearlong downturn.
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