If you’re on the market to buy a house, you’re probably wondering whether it’s the right time to make a move.
While personal circumstances will be the most influential factor when it comes to purchasing, depending on the types of markets you’re looking in, understanding selling seasons is important. It all comes down to supply and demand; you could end up bidding against plenty of competition in a market lacking listings, or you could be attending scores of listings with plenty to choose from.
So what sort of market conditions should you be looking out for?
There are distinct selling seasons in which the volume of homes for sale and clearance rates vary significantly. Tradition dictates that spring is when people put their homes on the market, and there is also a well documented uptick in listings in summer, but the reality of buying a home is a little more complicated.
Firstly you need to understand that every state, property market and suburb is unique, and has its own set of conditions. If you are looking at buying in an area with high investor activity - like a mining town or an area experiencing a tourism boom - there may be no clear selling season at all. Individual sellers also have different motivations as to why they choose a particular season or time of year to transact.
So when is the best time to buy a house? If you are buying your first home you may be surprised to know that the seasons play a part.
Conventional wisdom says if you put your home on the market in spring it will sell at a higher price. So, evidently, this is what people tend to do.
From a buyer's perspective there is a clear spike in listings in spring as people emerge from winter and spruce up their homes for market. This is great as you have a ton of properties to view, but the flipside of the coin is you will have more competition for properties - which drives up the final sale price. As a result, buyers need to be prepared to pay more in spring.
You can also make a case for buying in summer - especially the window before Christmas. This is when sellers are keen to offload their properties before the New Year, so they can get on with their lives. Sellers with children could also want to sell before the school holidays end - in late January, so you could strike a deal then. No-one wants to have to deal with a move in the week of Christmas Eve and New Years Day.
Listings tend to start picking up in late January and February. It’s the age-old behaviour of starting a new year fresh, and putting wheels into motion that tends to motivate sellers and buyers to make a move.
As a buyer, you also need to be careful not to get too seduced by the warm weather, sparkling pool and idyllic garden - and pay over the odds.
In the real estate industry, autumn is also a popular time to transact. Many sellers will have done their research over the summer holidays and will be getting ready to list. While not traditionally as active as spring, due to the significant holidays during the easter period, it is still a busy time in real estate.
If you’re an active buyer during this time, it’s critical to watch closely during the weeks preceding the Easter weekend when buyers may be thinking about holidays and planning to leave town. At this time it’s important to understand seller motivations and keep your eyes peeled, as there may be some wiggle room for negotiations. If there are fewer buyers in the market, it can be easier to haggle for a better price.
Ok, now time for winter. People tend to hibernate over the colder months, so not many houses are listed for sale. But - and this is a big but - there are also significantly fewer buyers out there. Be prepared though, because the buyers you're competing against are likely to be as savvy and determined as you.
There’s a reason sellers list their properties in summer and spring, and that’s because properties usually look their best during these months, so they’re hoping for a better result. In winter, properties may be more likely to be listed due to a significant life milestone that can’t wait. Sellers are therefore more likely to compromise on price, as well as the terms and conditions of the purchase contract.
But, if you’re looking in markets within Queensland or anywhere near the Top End, seasonal variations may not be as pronounced.
When purchasing a property, there’s a lot to consider besides the seasons. You should also be looking at other sources and performance metrics to help fine-tune your game plan.
A good place to start are listing sites like RealEstate and Domain, which offer expert advice, market insights and also rank the top performing suburbs in Australia.
For specific performance data, the days on market (DOM) metric is a good sign of a booming/cooling market. Be aware of your local market, however, as this figure can vary widely depending on the location and a number of other factors.
If a property has been on the market for longer than the market average time, the seller could be more open to negotiating the final sale price - and you could strike a deal.
Also watch auction clearance rates for the market you are interested in. This is expressed as a percentage of the number of properties sold at auction over a week/month. In our cities, clearance rates over 70% are generally considered to indicate a ‘hot’ market - where prices are rising (this can vary depending on the postcode and time of year).
Clearance rates under 60 per cent are considered low, and are described as a buyer’s market.
If you are buying to invest, look at rental yields, which details how much income/rent a property could fetch over a timeframe, as a proportion of its value. Rising rental yields are a good sign that there is strong demand for rental accommodation.
Likewise, vacancy rates will tell you how much rental demand there is for a property, with high rates indicating low tenant demand or a glut of rental properties on the market. Look for low vacancy rates as an indication of high demand for rental properties.
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If you have found a property that you like, make sure you research it thoroughly. Do not rely on the marketing blurb or what you see at a viewing. Start by making a list of pros and cons, and get a building report which will identify if there are any defects or issues with pests. This will enable you to make an informed decision about the property.
Ultimately the best time of year or season to buy a house is when it works best for you, though as we have discovered here, you need to keep local market factors and seasonal trends in mind.
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Disclaimer: Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk.
Disclaimer: Doorsteps Finance Pty Ltd ACN 648 541 879 (credit representative no.531036) is authorised under Doorsteps Solutions Pty Ltd ACN 654 334 246, Australian Credit Licence 537369. Any credit application made through Doorsteps Finance Pty Ltd is subject to approval, terms and conditions, fees and charges.