We’re heading into spring – the peak season for buying and selling homes, and the latest price figures suggest that at present, buyers hold the trump card. Prices are flat or falling, and in this sort of environment, it’s critical for vendors to set a realistic asking price.
According to research group RP Data, on average, property values across Australia’s capital cities dropped by 0.6% in July. There were a few exceptions – prices were stable in Sydney (up just 0.1%), Darwin rose 0.6% and Canberra prices bucked the national trend climbing 1.9%.
Melbourne however has the unenviable distinction of recording the greatest property price falls of any state capital, down 1.4% for July.
Over the first seven months of the year, prices fell by a total of 3.4% nationally. Some market segments fared better than others. Prestige suburbs were worst hit, with prices dropping 6.2% to the end of July. Mid-price suburbs fell by 2.3% over the period, and cheaper locations came off comparatively lightly, with price falls averaging 2.1%.
Clearly it’s a tough market for vendors. And it’s not just that prices are falling – it’s also taking longer to find a buyer. The average time taken to sell a home is currently around 55 days compared to 45 days at this time last year.
If you’re selling at auction be especially careful when you set the reserve price. Auction clearance rates nationwide are about 50% at present, and having an inflated reserve is a very likely way to see your home passed in.
If you’re selling by private treaty, be prepared to negotiate. It’s a bitter pill to swallow, but according to RP Data, buyers are asking for, and getting, an average price discount of 7.2% right now.
Part of the challenge in setting an achievable price is that we tend to think our property is worth more than anyone else does. That’s because our homes are special to us. However when you’re selling, try not to let your sentiments inflate your expectations of what your home will sell for. If a climate of falling prices it can be better to secure a prompt sale rather than hold out for more money only to find market values have dropped further.
Hiring a real estate with strong local experience and proven sales record can make lots of sense in this market, and minimise the period during which your home is for sale.
Ask a number of agents for a market appraisal, in particular approach the agents who are actually making sales. ‘Sold’ signs and doing some homework on the internet will indicate their strike rate. Appraisals are free and agents should be more than willing to provide them.
Don’t automatically go with the agent giving your home the highest price appraisal. Some agents may deliberately inflate appraisals to win listings. Compare the values you’ve been told with prices being asked for comparable houses or units listed for sale, and most importantly compare the appraisals against the selling prices that comparable homes in the area have actually achieved.
Where possible, negotiate on key costs associated with the sale of your home including the agent’s commission. It means more money will go towards the purchase of your next home.