At Prudential Real Estate, we’re seeing indications that we’re approaching the bottom of the market. And we’re here to explain why this is good news if you’re looking to upgrade.
Have we reached rock bottom?
The real estate market has always been cyclic, and while it’s near impossible to pinpoint the true bottom, we’re beginning to see signs that this downward cycle is coming to an end.
Demand is starting to ramp back up, with auction clearance rates improving. On Sunday (19 February 2023), according to CoreLogic, the auction clearance rate in Sydney was 71.9%, which is a good result. This suggests that buyers are beginning to feel more confident about buying and they are willing to pay a fair price for the properties they want.
While demand can be influenced by a variety of factors, supply is often a driving force. We are experiencing a low supply of housing stock in the Sydney market right now. For example, in the last month in Campbelltown alone there were 42 houses available to a massive 2,076 interested buyers. This shortage of stock can create a sense of urgency among buyers who want to secure a property before prices go up again – or someone else nabs their dream home.
But don’t just take it from us, real estate entrepreneur John McGrath was quoted in a Sydney Morning Herald article on Monday saying, “looking at historical data it would suggest we should be at, or near, the end of the downward cycle, and if you look at what’s happening in the street at the moment, there is plenty of demand”.
But what comes next – and what does this mean for the price of your house?
When you’ve reached the bottom of the market cycle, it can only go one of two ways – it can plateau and stay the same, or it can go up.
Should you sell now?
If you’re looking to sell your current property and upgrade, you might be wondering whether it’s better to wait until the market recovers. However, we believe that it’s better to act now while prices are still relatively low.
Here’s why: if you wait to upgrade your property, you may end up paying more in the long run. For example, for simplicity let’s say you’re selling a property for $1 million and want to upgrade to a property for $2 million. If you hold off and the market goes up by 10%, the property you’re selling will go up by $100,000, but the property you’re buying will go up by $200,000. That’s an extra $100,000 difference that you will need to pay or borrow.
Additionally, traditionally, when we reach winter buyers can be less interested in moving house, and as a result sales volumes are smaller. With people more out and about now and coming into autumn, it can make it an excellent time to sell.
Finally, with school back, and the year well and truly underway, people have settled back into normal life. This can equate into a more stable market, less uncertainty and more active, focused buyers.
If you know you want to upgrade, but you’re on the fence about when is the right time to strike, it’s time to get moving. With indications the market is at the bottom of its cycle, it could begin to move upwards any day now. And every percentage increase could cost you thousands, or hundreds of thousands of dollars in the long run.
Statistics referred to in this article were obtained from publicly accessible and online data sources including realestate.com.au, CoreLogic and others.
Prudential Real Estate Campbelltown | (02) 4628 0033 | campbelltown@prudential.com.au
Prudential Real Estate Liverpool | (02) 9822 5999 | liverpool@prudential.com.au
Prudential Real Estate Macquarie Fields | (02) 9605 5333 | macquariefields@prudential.com.au
Prudential Real Estate Narellan | (02) 4624 4400 | narellan@prudential.com.au
