Sydney property buyers beware of September!
Let’s face it, it’s been pretty difficult for property buyers in Sydney over the past few years and the beginning of spring is the trickiest time of all! You see, September brings the perfect storm for real estate agents: when low winter stock levels and extreme FOMO collide.
Buyers expect that the spring market will kick off on September 1 but the reality is that it takes a while to get going. Once the warm weather inspires an owner to put their property on the market, the preparation & listing process actually takes a few weeks – and then the school holidays get in the way, so the bulk of new property actually hits the market in October.
Meanwhile, buyers are getting desperate. They have just endured a winter with few listings to choose from and witnessed high auction clearance rates and price growth. They think they are never going to buy and often they panic.
Last Saturday I saw this panic in action at an auction for a terrace in the Eastern Suburbs. Aggressive bidding saw the reserve reached in only two bids, a third bid came in $150K over that and then another at $50K more. Four bids and 4 different buyers – the three after the opening bid each trying to smash the previous one out of the park. The 3rd bidder came in and trumped the underbidder with a $25K winning bid. I watched that guy’s face with interest and I swear he only realised he had actually offered $2,575,000 after he had made the bid. I fancy that he hoped someone would actually bid against him, but nobody did. The agent confirmed later that the vendor’s reserve was $100K over their bottom line – they must have been stoked to get an extra $325K!
At the end of winter people think they are never going to buy and often they panic. Click To Tweet
Here’s a rough little video I recorded just after the auction: See it here on our Facebook page
This is interesting not only because of the high sale price but because the manner of bidding smacked of desperation. I really wanted to say: “calm down people, this happens nearly every year, there will be more opportunities soon!”
I have now been in real estate for 16 years and over that time there have only been 2 years where the market did not peak in September. So, in my experience, there is an 87.5% probability that it will happen again this year.
For example, last year, Sydney auction clearance rates dipped in mid-October to 65% and stayed low until the end of the year. Prior to that, they had spent a couple of months over 80% and then throughout August and September had still been strong at well over 70%.
Here’s what I wrote about the spring market last year:
Last August I bid at an auction for a terrace in Newtown for an investor client. I saw reasonable value between $1.825M and $1.875M and yet competitive bidding resulted in a sale price of $1.945M. It was a good property and we were disappointed not to buy it, however, we couldn’t justify that price. Patience paid off and in November I bought an off-market terrace for this client one street away for $1.865M. The one we bought was larger, more renovated, had an additional bathroom and the street was better.
The moral of this story? There was no need to panic in August or September because the tide turned in October. I really believe that something similar will happen this year.
If you are unaware that in the near future there will be more stock on the market and clearance rates are highly likely to drop significantly, you will be inclined to think you will never buy a property unless you pay whatever it takes.
Please take a deep breath and be very careful. If you have found the right property for you, work out what it’s worth before you go to auction and don’t get caught up in the frenzy of other people’s FOMO.
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Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.