Predicting the state of the property market has never been as popular as it is today. For many the ‘art’ of real estate lies in picking the bottom of the market to buy, or the top to sell. Most recent commentary surrounds whether our market will bottom out and therefore rebound.
Worthy of at least 45min debate at most neighbourhood BBQ’s, most appraise the market subjectively with how they ‘feel’ things are travelling. What we can say is that although marketplace sentiment has its role to play, there are far better indicators that can lead to a more accurate forecast.
In my experience, there are 5 clear indicators signalling we have reached the bottom of the market:
1. Auction Clearance Rates; We have seen a sharp rise in clearance rates, in advance of 60%
2. Days on Market; A common indicator as to how long a property takes to sell, we are noticing stock that has been available for an extended period of time sell in recent weeks.
3. New Supply of property to the market has tightened; Today we are seeing an incredibly reduced supply of new property to the market, noticeable in the various property press publications each weekend.
4. Interest Rates; In a falling interest rate environment, at some point the the genuine seller moves past the point from ‘sell’ to ‘hold’. Further reducing the new supply of property to the market
5. Rental Market will remain steady and/or continue to build; With vacancy rates below 1%, Holding and renting a property becomes a viable option as opposed to selling.
Certainly, the silent bells of the market bottom are now ringing, and more then likely will only get louder as the year progresses. Remembering that the significant rate reductions recorded late in 2011 and 2012 have yet to have their full effect on the market.
Ray White Maroochydore
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