How’s the Residential Sales Market going?
It’s a common question from potential buyers and sellers of Residential Real Estate. There are two gauges that give the best insight to the answer – what’s happened to property values and how should you sell a property?
Sales Prices have Gone Berserk.
What’s going on in the real estate market? If you are reading this, then you will have enough interest in real estate to know that for the past six months sale prices across Australia have been rising at a rapid rate to new record levels. We are seeing some auction results in excess of 15% above an evidence-based price guide. The reasons for this exuberance have been widely explained as the record low interest rates, the higher levels of personal savings, increased working from home, lack of investment alternatives and generally Australians’ continuing love affair with real estate.
Rentals are Back to 2016.
Remarkably, rentals have been having a very different experience. Wage inflation has been abysmal over the past five years, but salaries have easily outstripped rents in inner city areas such as Crows Nest. Residential rents are back at the levels we last saw in 2016 and 2017. The explanation for this is related to new developments causing an oversupply not being met by overseas students, working tourists and new immigrants, then reduced further by the exodus to regional areas facilitated in part by the ability to work from afar homes. Away from the City, the attractiveness of outer suburbs, beach proximity and particularly regional areas to work from homers have seen some strong rent increases in those markets.
Who’s Selling and Buying.
Based on the above, it’s no surprise that many investors are selling attracted by the rising market and happy to see the end of falling returns. It must be said though, that rental returns of 2% to 3% are still much better than bank interest. The majority of buyers are owner occupiers and many of them First Home Buyers. The pandemic has created winners and losers. The winners are those who held jobs, ate less smashed avocado, saved more for a deposit and found loans at sub-2% interest rates.
Selling in this Market.
There is more interest in off-market selling these days and it does have its place. However, in a market where we are seeing unpredictably high prices and multiple buyers for most properties, that place should be very, very small compared to selling by a best practice auction.
Talk to Stuart or Stephen about their Auction process that’s designed to deliver to you the best opportunity for a premium result in a reasonable timeframe.