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With the property market red-hot right now, a number of property professionals have weighed in on what may be coming in winter 2021.
In conversation with REB, Mete Karan, the principal of Ray White Glenroy, said that the onset of the winter months could coincide with a market slowdown — even though the market these days isn’t exactly considered “seasonal”.
The Victorian agent said he has witnessed buyer inspections as coming down across the board, while the market has received “a huge influx of stock in the last four weeks”.
In addition, Mr Karan has flagged that his agency has noted many investors are now selling due to the Victorian rental reforms that went live at the end of March.
“A combination of reforms to the tenancy legislation and rental prices reducing is forcing many owners to sell,” he stated.
With more supply, there’s obviously going to be an increase to stock levels. The principal outlined that it “means less buyers per property, more options for buyers and, subsequently, less competition or desperation to purchase”.
Which all “has the effect of diluting recent price increases”, Mr Karan stated.
The above factors have led the principal to rhetorically query the sustainability of the current market trajectory, to which he answered that house values are “probably not” going to continue their upwards trajectory, with that slight shift away from boomtime conditions to also persevere through the traditionally strong spring period.
He was quick to acknowledge that while the current real estate landscape is in “uncharted waters”, it also shows “the same signs of any property cycle”.
“I would suggest agents keep a close eye on the supply levels,” he said, as well as the results had by competing properties.
According to Mr Karan, “this is often the first sign of a changing market”.
His sentiment is slightly different to that of Sydney-based buyer’s agent Michelle May, who is forecasting that the market “is going to keep running the way it is for at least the next three to six months”.
With “an astounding number of people” going through properties at the moment, Ms May told REB she’s “never been busier with the Sydney property market”.
“When looking at previous hot market history, we tend to see that potential vendors were encouraged by crazy sales results and decided to sell because they believed they were going to make a killing. This meant that more properties came onto the market, buyers had slightly more choice, and clearance rates dropped,” she outlined.
But this winter won’t be the same: “The difference this year is that due to previous lack of stock for sale due to COVID, some vendors are hesitant to sell, as they are concerned they have nowhere to go.”
According to Ms May, while some buyers are now leaving the market as it is just too much for them, “there are still many more buyers to properties for sale”.
While she’s personally hoping for a slowdown in price increases — and a flattening of the curve — she did concede to REB that she doesn’t think that there will be an overall slowdown in sales.
According to Marcus Roberts, a mortgage broker, it’s going to be a really different winter this year.
The Sydney-based broker believes that while it’ll be a slower May through June compared to the frantic few months just gone by for the real estate industry, that doesn’t mean agents should expect their usual winter.
“With buyers still attending inspections and auctions in large numbers, there’s still more demand for properties than available stock levels,” he argued.
And while in past years agents may have held some properties over until spring when the market and temperatures start to heat back up, the Brighter Finance broker flagged that, with market conditions as they currently are, “waiting three to five months may be a more risky strategy should the market cool down”.
Looking further down the track, Mr Roberts was coy on what the spring market could look like this year, stating that “it really depends on stock levels and buyer sentiment”.
“If quality stock is still low and we continue to have historically low interest rates, coupled with buyers looking to move and scared of missing out, it could continue without a break all the way through the back end of 2021,” he predicted.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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