Despite significant shifts in Australia’s property market in recent years, there is one trend that continues to live on – the ‘Spring rush’ – a period where buyers come out of hibernation and actively get on board the property circuit to search and secure the ideal abode.
Ahead of the annual ‘buyer surge’, September typically sees more properties being listed and in higher numbers. In September 2015, 26,829 new properties were listed across major cities in the first 28 days of the month – a 4.8 per cent lift on the previous 12 months, according to CoreLogic.
Auction numbers equally tend to increase, with more than 11,600 listings sold at auction in September 2015, says Pricefinder. This trend is continuing as we move through September 2016, with auction clearance results in major cities including Sydney and Melbourne reaching 80 per cent or higher, according to Domain.
With more properties being listed and sold, is spring the best time to buy? Property investor Brenton Tidow says anytime is a good time to buy but expect spring to be a busy buying period. “While there will be differences across metropolitan and regional markets, spring is an ideal time to sell not buy. It’s a fine double-edged sword, as the surge in spring buyers brings about increased competition, which can hike prices and put pressure on budgets.”
An investor since the age of 21 Brenton says buyers, whether owner-occupiers or investors, need a strategic and less emotional approach to the property process. “While it’s been said before, I see too many buyers buying investment properties with their heart on their sleeve.
“I look for properties that are cash flow positive or neutral with great capital gains potential. My approach is to ‘buy and hold’ a property for at least one full property cycle, somewhere between seven and 10 years. While this is my aim, there are always exceptions. For instance, I recently bought a property in Newcastle NSW and sold this within the first twelve months for a healthy profit,” says Brenton.
Unsure about buying in spring? Here, Brenton offers five reasons why spring may not be the best time to buy. “Buyers can use this as a guide as they consider their options,” says Brenton.
Expect asking prices to hike: “It’s important that buyers plan for an increase on advertised sale prices in spring. If the type of property you’re interested in is appealing to a similar buyer demographic, then expect those properties to attract increased competition. In my experience, it’s ideal to be in the market before other buyers and to work with a trusted real estate or buyer’s agent that has access to a large number of listings on and off the market. If you can find a property off the market, you may likely get a better deal and beat the rush,” says Brenton.
Buyers have less negotiating power: Negotiating power usually lies in the hands of the seller in active periods such as spring, and properties sold at auction are often sold well above the asking price. “My advice to buyers is to negotiate hard and to negotiate like an investor. Also be prepared to accept the fact that your first and second choice in properties may fall through – but be objective, there will be other properties listed that appeal to your budget and ideals,” says Brenton.
Demand outweighs supply: In addition to a spike in seasonal competition, nationally we continue to experience a year-round supply and affordability issue. Brenton encourages buyers to not give up though. “There is a lot of re-zoning and infill activity currently underway, particularly along the fringes of major cities and CBD areas. Developers are buying large pockets of land and housing options are becoming more and more diversified. A great example is Kangaroo Point in Brisbane and Richmond in Melbourne,” says Brenton.
Buyers risk burnout: Buyer burnout can be a real symptom warns Brenton, often resulting from the buyer being overwhelmed by unexpected market competition and concerns over a budget blow out. “This can happen anytime there is a flurry in buying activity and can be distressing, especially for some buyers that are new to the property process, as well as families with children who need a property that suits multiple needs. In such times, I encourage buyers to be realistic and pull back. If you cannot find a purchasable property, consider renting for several months and return to the market after spring,” says Brenton.
Potential to impulse buy: “It is not uncommon to see buyers make purchasing decisions due to a fear of missing out on a great property amidst the competition,” says Brenton. “While you may miss out on your first choice it is unwise to be in a hurry to buy, or worse overlook the potential of the market in the months preceding Spring, when you may find a better deal. Ultimately, you want to buy a property that offers promising gains. For owner-occupiers and investors, if you can’t see yourself or tenants comfortably living in the property you’ve got your eye on, I suggest you don’t buy it.”
Brenton adds, “The property process is rarely smooth and straight. Finding the right property takes time, money and effort but it can be a lot smoother and manageable if you plan well. Ensuring you have access to a quality financial advisor, real estate or buyer’s agent as well as a property mentor, can help take a lot of pressure out of the process. Do your due diligence. Buying a property is a major life investment and is best done with a strategic rather than emotional mindset.”