Friday, June 18, 2010

Winter Sales put heat on Buyers

People are asking when to sell and the standard real estate agent answer is invariably ‘now’.

While real estate seems to genuinely be about selling in the ‘now’, it is winter that always has everyone questioning this. It is a fact that people tend to feel great at the fist sign of spring sunshine, and that gardens burst into life at this time, but there is more to selling a house than gardens and warmer weather.

By far and away the greatest driver of the market is confidence and the way our economy impacts on peoples minds. The second greatest driver of property sales is ‘supply and demand’ - the relativity between the number of houses available to purchase and the number of active buyers ready to buy. In winter there is always a reduction in the number of sellers, yet buyer demand remains pretty much unchanged throughout the year, with the exception of the Christmas New year period. We have the stats to prove this.

Currently the Toop Market Index (TMI) is at 3.64 - this is our way of predicting where the market is tracking 3 to 4 months ahead of time. TMI measures active marketed properties against new buyers entering the market, creating an ideal forecasting measure. It currently indicates that confidence is falling and a shortage of property is keeping the market from capitulating. In South Australia this should continue to be a seller’s friend HOWEVER we seasonally see a massive influx of properties from September to November, making this the most dangerous period for those selling.

Reports predicting strong price growth, such as this week’s from BIS Shrapnel, cannot be ignored. They rely on the underlying shortage of available property to drive demand over supply, however seasonal factors are what need to be considered for those wanting to sell in 2010.

In spring, buyer demand changes ever so slightly while new sellers flood the market. Open inspection numbers (active sales) go from winter lows of around 1500 to virtually double at just under 3000. The total stock levels found sitting on websites and agents books (stock on shelf) balloon even more.

The wild card to all of this relates to what is happening in our economy. Given we have no control over this, and are merely passengers of that critical market driver, what we are able to control is our timing.

So my answer on whether to sell now or in spring? Sell NOW.

Be sure to see Wednesdays Toop.TV where we cover end of the financial year preparations for landlords and investor.

Anthony Toop, Managing Director.
© Toop Real Estate Group

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