What do Melbourne’s Falling Clearance Rates mean for Vendors?
Falling clearance rates have made selling your home in the current market environment (Winter / Spring 2018), a nerve wracking experience.
As Melbourne is affected by falling clearance rates, some weeks by more than 10-15% on the same time in the previous year, the reality of discounting your property is beginning to set in.
The peak of the market appears to have been around September last year according to some financial analysts, like David Koch. Vendor’s are experiencing:
- Increases in the time it takes to sell their home, although this remains variable depending on your location and property type
- Reduction in interest levels in their property with fewer people even bidding at auction or showing up to home opens
- Reduction in clearance rates from the high 70%’s to the low 60%’s on average
- Increase in the discounting (price reductions) on listed properties. In Melbourne discounting on property (ie dropping the price to get a sale has increased from 4.5% to closer to 6%.
Many prospective property buyers are withholding offers prior to auction that they would have previously made, they are willing to wait it out and see how much further the overall property market may drop.
This environment isn’t always consistent.
There is still strong competition for homes that meet the criteria for Stamp Duty savings on offer to first home buyers. If you have a home for sale in the sub $750k mark you are likely still experiencing competition at that price point.
Conversely celebrity Buyers Agent Nicole Jacobs highlighted as early as May this year, that tough times are ahead for the premium end of the property market. The entry level for this category is around $2.5 to $3m but in terms of property we have been styling we are seeing the market being affected once concessional rates for stamp duty savings drop out. This is generally $750k upward and it’s certainly affecting the $1m – $2.5m price category.
Nicole Jacobs noted that:
“Vendors needed to meet the market on price once you get into this bracket of property. Once the market is met, competition takes over and the result is usually still weighted in favour of the vendor. Get it wrong and the property no longer attracts competition among anxious buyers.”
Under quoting also hasn’t completely left the scene, it remains a culprit in this situation. In passing property in, often on a Vendor Bid, you will then see the same property advertised for Private Sale most often with an asking price over the original quoted price range.
Moreover we’d argue that you’d also need to do the work to the property to meet the Buyer’s expectations.
Gone are the days of putting a property to market in any condition and expecting a quick sale for a premium price.
Not only do you need to meet the market on pricing, preparing the property for sale with cleaning, repairs, cosmetic improvements, landscaping and property styling, is often the most reliable way to a) get your property sold and b) achieve the price you are hoping for. Nicole Jacobs noted that properties which are compromised by way of either location or being un-renovated or with maintenance issues, will find it tough compared to properties that aren’t compromised in this way which are still achieving sales outcomes within their stated ranges.
In response we are seeing a couple of trends emerging;
- Withdrawal or delay of plans to put a property market – if people don’t have to sell they aren’t
- Higher degree of investment in property presentation in addition to property styling
- Extended sale campaign periods with often more significant post auction periods of negotiation
- Increased shift away from Auction to Private Sale with greater planning for potentially longer campaigns
If you are going to market any time soon and this is your market, make sure you have prepared your property as best that you can.
Be realistic with the price and know your competition.
You are more than likely to be buying back into the same market, so in order to move forward, you may need to compromise on one end to buy at the other.
The clear message is: meet the market or be on the market for some time.
The market is changing and it is now time for buyers to have the upper hand.
If you would like assistance to prepare your property as best as you can for sale, feel free to call us on 131 546 for a complimentary consultation. You could also leave your details here and we will send more information.
Our main aim is to reduce the stress of styling to sell your home and save you time and money. We can act as a one stop shop to organise everything from repairs, to minor renovations, landscaping, cleaning and more. We also provide a Style Now Pay Later service so you can get all of this work done using our Layby service.
Download our E-Book – The Jim’s Guide to Selling your Home for More for a step by step guide to help you deal with the challenges of the property market in 2018.
Here are just a few of the strategies you need to get right covered in detail in the guide:
- Know the market better than anyone else.
Don’t rely on the advice of well-meaning friends and family to tell you what your property is worth. Consider getting your own valuation or subscribing to a property information service that gives you inside information on recent sales in your area.
- Choose the right agent.
The right agent is not the one quoting the most your house might sell for. If you’ve done step one you’ll know yourself what is a realistic appraisal and you won’t be tempted to simply go with the estate agent who suggests the best price.
- Prepare your home for sale.
This should include at least a major declutter, extensive cleaning, repairs and you might want to consider some quick cosmetic improvements that are most likely to give you a reliable, strong return on investment.
The Guide is supported by Jim’s Interiors who now offer professional home staging services. Importantly we are making Home Staging and property styling available to everyone with LayBy. Just a 10% deposit, no interest ever and the ability to pay it out in full whenever you want means you can package up professional advice and trades to help you sort, fix and stage your home.
We’re offering any Jim’s customers who are planning to sell their home in 2016 a free Home Staging consultation and report outlining what they can do to maximise their sale price. To claim the free consultation worth $440 click here.
If you know of anyone passionate about property, renovating and interior design we are quickly expanding nationally and are offering franchises as well as just one Regional Management opportunity in each state.