When Do I Sell My Property?

Many property owners contemplating selling wonder when the best time is to list their property for sale.  Do you wait for summer?  Is it best during school holidays?  Do you wait until the market improves?

These are good questions, and as with any investment, your return depends very much on your timing.  So just when is the best time to list your property?

To a large extent, this will depend on what you intend to do once you’ve sold.  For example, if you are intending to upgrade to a larger or more expensive property, then waiting for the market to improve means that you may well sell for more by waiting, but you will also have to pay more when you purchase.  The corresponding increase in your purchase price will be more than the increase in your selling price – thus costing you more.  In such an instance it may be better to sell now when the cost of upgrading is less.

The converse is true if you are downgrading to a property less expensive.   Your gain by waiting is greater than the additional cost of purchasing a less expensive property later.  We’re assuming property values do escalate.

Is it better to list in the summer months?  Whilst it’s true that a home shows better when a garden is in bloom and the sun is shining, the impact of the weather is far less important than the state of the market.  We’ve seen the market at its’ hottest in some winter months.

The best time to sell is when buyers are buying.  The state of the market is dependent more on the economy than the weather.  You will sell for maximum market value when buyers compete for your property.  This means that you should sell in a market where there are more buyers than sellers.

There are a number of economic factors that impact the appetite buyers have for property.  They include the interest rate and the inflation rate – which have a direct impact on buyer affordability.  When these rates increase buyers qualify for less finance – and this has an immediate impact on what they can offer for property.

Additionally, the appetite the banks have for home finance has a significant impact.  When banks are more cautious and avoid high loan-to-value (LTV) bonds (such as 100% bonds), then many buyers fall out of the market.  Banks also price in their risk – so the higher the LTV the higher the interest rate, thus reducing the amount a buyer can afford.

The best time to sell is when the market is stable.  If panic sets in and the market is flooded with listings due to economic pressure on homeowners, then property values drop.

There is growing uncertainty as to the impact of our newly acquired “junk status” and how this will affect interest rates and banks’ appetite for finance. The smart move is to sell before these effects are felt.  Now is a great time to sell…

Steve Caradoc-Davies

Principal

Harcourts Platinum

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