New analysis has revealed when the best time was to sell your home. Unfortunately for homeowners, that time was last year.
Skyrocketing interest rates have pushed buyer demand down to below-average levels this winter, but demand was already on the decline in most markets prior to that.
Domain analysis showed that the best time for homeowners in Sydney to hit the market was well over a year ago, when buyer demand for both houses and units peaked in March 2021; while demand for Melbourne units also peaked that month. Demand for Melbourne houses peaked in October, as did the demand for Brisbane houses and units, The Sydney Morning Herald reported.
Demand for Hobart houses was first to peak in February 2021 while some markets such as units in Adelaide and Perth took until February 2022 to peak.
The Domain Buyer Demand Indicator (BDI) measures search behaviour on domain.com.au to identify active buyers who are more likely to purchase, such as those who shortlist a property or send an inquiry. It tracks changes in demand over time.
Nicola Powell, Domain chief of research and economics, said the market had been cooling since last year, when demand hit its peak in October across the combined capital cities. In regional Australia, demand for houses peaked in the same month, and for units in January 2021.
“Largely speaking, if you wanted to have the highest volume of buyers for your property, that would have been during a month of peak buyer demand,” Powell said.
Buyer demand declined first mostly in Sydney and Melbourne, but had spread, Powell said, with demand easing across the capital cities and regional areas over winter and was below the three-year average in most markets over the 30 days to Aug. 20, the Herald reported.
Demand for houses in Melbourne was now 14.5% lower compared to a typical August. In Sydney it was down 11%, and 17.8% in Brisbane. In Perth and Canberra, demand dropped more than 20%.
Powell said that with the higher cost of debt and inflationary pressures hitting buyer borrowing capacity, demand had also softened. This as an increased supply of homes for sale had brought down competition.
Powell said that Sydney’s earlier peak reflected the harbour city’s affordability challenges and that it was further along the price cycle. She expected buyer demand to make a seasonal lift in spring but felt interest would remain on the soft side, presenting buyers with greater opportunities.
“The opportunities are there, we have overall stock rising, greater choice on the market, and days on market are lengthening out, which means buyers can come to the market knowing they have greater time to contemplate their purchases and make the right decision,” Powell said. “For sellers, it’s a timely reminder that the market has moved and pricing your property right is important, if they want to secure a quick sale.”
Besa Deda, St George Bank chief economist, said the market has been cooling since the first half of 2021. Rapid price increases had resulted in stretched affordability, and this combined with fixed mortgage rate hikes and a lift to interest rate serviceability buffer – which affected borrowing power – had cooled buyer demand, the Herald reported.
Deda noted that growing expectations for cash rate hikes earlier this year plus the four consecutive rate rises that followed had accelerated that slowdown. She expected demand would continue to weaken along with rate increases.
“Whilst you have that tightening [rate] cycle continuing, dwelling prices are going to soften, as will demand from buyers, because affordability is being impacted by higher mortgage rates,” Deda said.
Rich Harvey, chief executive of propertybuyer.com.au, said already cooling demand quickly dissipated as the cash rate climbed.
“The outcome is that there are significantly less people at auctions … a lot more prior [to auction] offers being accepted, and significantly fewer people at open homes,” Harvey told the Herald. “Last year we would have 50 people going through a home … I did some [this week] where there were three groups, on a weekend there might be five or six, or you might be lucky to get 10.”
His team saw buyer demand first decline in Sydney, followed by Melbourne, then more recently in Brisbane. Harvey noted, however, that good quality properties were still selling well.
While rate hikes had “an immediate and detrimental” effect on buyer borrowing power, property price falls meant some buyers could now purchase homes that were previously out of their budget, the Herald reported.
