OPINION: Housing Market Challenges May Well Be Behind Us

OPINION: Unquestionably, the real estate market is stirring, and the announcement by the Reserve Bank that it is reducing the Official Cash Rate (OCR) is likely to accelerate the market’s recovery.

As a nation we take a great deal of interest in housing – whether it’s television programmes about renovating, buying in exotic locations, or finding the right home (as personified by Location, Location).

Then there is the media’s more mundane, monthly scrutiny of movements in prices and sales levels.

For most, interest in house price movements and activity is passing. While interesting, the information is not that important to their daily lives.

However, for those who are at the point of selling or buying, understanding where the market ‘is at’ is of vital importance, as for most, their house is their most valuable asset. For this group, understanding whether prices are rising, falling or static is a ‘must know’.  

While knowing what is happening to prices nationally, or in their region, is helpful, of far more relevance is what is happening locally – what are prices doing within two or three kilometres of where their house is located, or where they are looking to buy.

For this group, media coverage can be perplexing, confusing or even misleading.

The most valuable free-of-charge information available to consumers in my opinion is the monthly Real Estate Institute Reports, which are based on commission paid sales. It’s normally available online within 14 days of the end of the previous month.

The Institute also publishes a House Price Index that seeks to smooth out the various monthly variations that can affect prices.

QV and CoreLogic also provide detailed information on monthly price movements but the level of information available for free from these sources is more limited.

While the Real Estate Reports are of far more value than media coverage, they still give a broad brush feel for the market.

For the real gold standard information nothing compares to that available from a good, local real estate agent.

A good agent will be able to give you information about prices in your specific area – which local houses have sold recently, and the price achieved compared to their rating (capital) values. They will also be able to explain the factors that caused each to achieve the price they did.

Such insights are invaluable for those selling or buying by auction as it assists in either setting an ‘on market’ price or a buyer determining their price ceiling.

My overall take on where the market is at presently is that vendors and buyers have reached a consensus that the market is stabilising price wise, and that the more mortgage interest rates ease back, the more active the market will become.  

My conclusion: Now is likely to be as good a time as any to move forward with decision making around housing.

Supporting that view is the level of commission paid housing we are selling.

Mid-winter is when we invariably sell our lowest number of homes, yet this July was our third best month for sales this year and, if we exclude the years 2021 and 2020, when the market was trading at record levels, it was our best sales month in a July since 2016.

This year to date our sales are more than a quarter higher than they were last year and within 1% of those for 2022, when first quarter sales were still feeling the benefit of record trading in 2021.

The market is stirring, sales  numbers are good, and with the spring and summer selling season ahead of us there is every reason to believe that for the housing market the more challenging times are behind us.