The spring market is nearly here and there are several key market indicators that will determine how the market fares between now and then.
Availability of credit
The current market slowdown has been a manufactured slowdown, driven by a credit squeeze through the retail banks. The respective bank’s willingness (or lack of) to work with home buyers will have a huge impact on the market conditions. Buyer sentiment in terms of enquiry and inspection numbers has remained surprisingly healthy during this downturn. The hesitation of buyers to follow through and make an offer/bid has become a hallmark of the current market.
Stock levels on the Spring market
If there is a considerable surge of new listings in spring, the question will be whether there is sufficient buyer demand to absorb the stock. Good demand relative to stock through Spring will be a welcomed signal that the market has stabilised at the current price points. If supply swamps demand, vendors may face the prospect of reducing their price to achieve a sale.
True clearance rates
Not to be confused with the auction clearance rate quoted through the media. The auction clearance rate is a fudged number with agents having a bias for promoting their successes and burying failed campaigns through nonreporting. Most transactions in the market occur by negotiation and buyers are conscious of the performance of listings in their market niche. If buyers see properties selling, it promotes confidence in the overall market. The only thing we have to fear is fear itself.
Clearance rates directly impact market sentiment. If buyers feel the market has stabilised, the risk of buying a home that subsequently drops in price diminishes. Buyers are pragmatic enough to know that the market is unlikely to boom anytime soon. Housing is a need first and foremost. Market performance is not necessarily a home buyer’s primary motive. If you buy a home that you intend to live in for the next 10 to 20 years, there will be periods where it rises and falls in price. Many prospective buyers are simply looking for definite signs of stability in prices and then they are ready to act. The Spring market may be more resilient than many anticipate.
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Managing Director Stephen Aitken began trading as Aitken Real Estate in 1989. Independently owned, the strong emphasis of company culture dedicated to excellent results and total client care have ensured Aitken Real Estate is the dominant private sale specialist for the local area encompassing Cheltenham, Mentone, Parkdale, Beaumaris and Dingley.