With the media forecasting nothing but interest rate hikes and doom for the property market, it’s understandable that many people are second-guessing their own intent to sell. However, as solid research and expert opinions show, now is actually a good time to put your property on the market and achieve great results.
Let’s take a look at why.
A history of rate-hike cycles
As research by Stephen Koukoulas from Yahoo Finance proves, historical interest rate-hike cycles over the past 30 years have not led to the property market crashing, despite small short-term dips coming around 12 months after the first hike of each cycle.
He notes that on the four occasions that interest rates have gone up over the past 30 years, “house prices were flat or higher – both one and two years after the first rate hike” and that “five years after the first rate hike in each cycle, house prices were on average around 40 per cent higher”.1
This suggests that any concerns that the RBA interest-rate hikes will result in crashing property prices are largely unfounded.
Supply and demand
Buyers are still very active and, especially in suburbs that offer lifestyle, proximity to services and business centres, and prestige homes, this translates to continuing high demand. People have saved hard over the past couple of years and are looking to lock in a mortgage while conditions are still favourable. If we combine these factors with the typical winter slowing of listings, we can see how tightened supply could lead to increased competition among active buyers, meaning that the potential to achieve a top sales price is still very high.
Gains over the past 18 months
Considering the meteoric increase in property prices that we saw over 2020-21, even the slight softening that we have seen in Sydney and Melbourne in the last quarter doesn’t make much of a dent in the massive gains that sellers stand to make if they sell now.
Let’s look at this a bit further. Since 2020, the average property price in Australia rose by 24.6% and some of our most popular regional markets, including the Southern Highlands and Shoalhaven, recorded the highest annual rise in home values at 37.7%.2 This unprecedented increase right across the country has helped create wealth for many Australians, which is fantastic.
Now, as with any cycle, we are seeing the market begin to soften. According to the recent CoreLogic report Sydney property prices have dropped by 2.8% over the last quarter.3 However, relative to the pre pandemic market, the prices are still up by over 20%.4
So, from the perspective of a homeowner, who may be working out whether now is the right time to sell or not, I think it is more about looking at the significant gains that many have benefited from over the last two years rather than the small dip from the top of the gain curve that we are seeing now.
If you are considering selling, now might be a great time to lock in those gains, before any potential further softening occurs.
The balance of upsizing
If you are selling your property to upsize or move into another home, now is the perfect time to achieve a great balance between a top sales price and a reasonable purchase price.
Within this current downwards cycle, we have reached a delicate balance between the ideal moments for selling and buying. The market has experienced some softening, meaning that as a buyer, you are likely to be saving a small percentage on your purchase, while as a seller, things are still strong enough that you are set to reap the benefits of the strong upwards cycle that we have experienced over the past few years.
In short – sooner rather than later.
For the moment, our interest rates in Australia are still relatively low despite the recent increases, and buyers are still very active in the market. Selling now means taking advantage of both of these points.
Demand continues to outstrip supply, especially in prestige suburbs, and even after the slight dips seen in the first half of 2022, resale gains are still very high, especially for those who bought prior to the astronomical upswing of the past few years.
History indicates that rate-hike cycles don’t tend to lead to market crashes, and our economy is robust. Having said that, it is likely that we will see further softening of the market in the coming months as the effects of inflation filter into our everyday lives and interest rates rise further.
All of these factors mean that putting your property on the market now will place you in a strong position to achieve an excellent outcome.
A final word on the value of a skilled agent in a slowing property market
A high-performing real estate agent will make all the difference to the outcome of a sale, noting that this is especially true when you are selling in a challenging market.
A top agent’s experience, carefully-honed skills, and in-depth knowledge of your local market come into play as they position your property for an optimum sale. So, it seems logical that you should draw on their craft to ensure your property sells to the right buyer for the right price.
With our long experience, the highly skilled team at Capital Residential understands all the potential challenges and rewards of a market like the one we are in right now and can guide you towards a highly successful sale.