There is no doubt that we find ourselves dealing with challenging economic conditions. The property market has generally been flat since early 2017 – and there is little indication that this will change before the general election scheduled for the middle of next year.
So just what does that mean for the local property market? Property values react to the universal market forces of supply and demand. When there is little supply and high demand, values increase. Conversely, when there is a great supply and little demand, value decreases.
What we’ve seen over the past year is an increase in the number of properties being listed. There hasn’t been a flood of properties on the market, as we saw in the Global Financial Crisis of 2008 – 2010. But stock levels are increasing, which means buyers have more options to choose from.
What we’re expecting to see is even higher levels of stock in the coming months, as growing economic pressure results in more property owners being forced to sell. Unless there is an equivalent increase in buyer demand, this will have a negative impact on property values.
Don’t hold your breath for much positive change between now and the election. A good result would be more of the same – In other words, no crisis, no violence and peaceful elections. After the elections next year, then certainty returns to the country and to the market… we could see a positive move upwards. But it’s unlikely this will happen sooner.
So if you’re a property seller, you have only a few options. If you don’t need to see and the market isn’t showing interest in your listing price, you could withdraw from the market and wait until quarters 3 and 4 next year in the hope that values would have escalated by then. As explained above, that would be the soonest we could expect to see real growth in property values – assuming all goes well.
If you need to sell within the next 6 months, then you’re left with only one option: Listen to the market feedback and adjust your listing price quickly. the sellers who respond fastest to market conditions will attract buyer interest and sell their property. Those who don’t respond, simply won’t sell.
The reality is that the longer you take to react. the less you will sell for. This becomes especially true when more properties come to the market, thus increasing supply in the market where demand doesn’t increase. The result could be declining market values. At best, values will remain flat until after the election.
When you take inflation into consideration, at approximately 6%, it means that in real terms, in a flat market you are 6% poorer if you sell for the same money in 12 months time. As hard as it is, you need to remove emotion, listen to the market and make the adjustment. swift action is required for the best result.
Principal, Harcourts Platinum