It’s the time of year when would-be property buyers put their searches on hold to shift focus to enjoying the festive season and warmer weather. But that might not be the right thing to do – especially if you want to score a bargain.
Typically, from the first few weeks of December onwards, open inspections become quieter, some vendors postpone listing, and the number of home sales dwindle until well into the New Year.
“Housing market activity experiences a seasonal slowdown post-spring in the run up to Christmas,” PropTrack economist Eleanor Creagh said. “It’s been an exceptional year – in property and otherwise – but buyers will soon be distracted by the holidays. The economy has bounced back to life with vigour and with restrictions in southern states easing, many are ready to enjoy their new-found freedoms.”
For those who are in the market for a new home or investment property, buying is about to become the furthest thing from their mind.
But that approach could cost them an opportunity to bag a bargain and buy without the fierce competition that’s characterised most markets in 2021.
Whether would-be buyers should hold off making a move until the New Year is “the most common question” property expert Michelle May gets at this time of year.
“It’s easy for buyers to take their foot off the pedal in the race for their dream home – but that’s definitely the wrong move,” said Ms May, host of the Buy Your Side podcast and principal of Michelle May Buyers Agents. “If anything, the lead-up to Christmas is one of the best times to buy because a couple of very significant things happen.”
In the week ending 28 November, scheduled auctions around Australia rose 13% week-on-week, Ms Creagh said. Listing activity is also on the up after several months of limited supply, which put upward pressure on prices and saw buyers scramble to get a deal done.
“The increased supply of properties for sale and extra choice available to buyers have released some of the heat from the market, with the pace of price growth already slowing,” Ms Creagh said. With a bit of that heat taken out of the market, the balance between supply and demand is beginning to even, she said.
On top of that, Ms May said droves of buyers are temporarily leaving the market as Christmas and summer holidays near.
“They put buying property in the too-hard basket as they hit the shops, so there’s always less competition in the market at Christmas,” she said. “…vendors and agents are very motivated to get a deal done before Christmas as everyone wants to relax and enjoy the holiday vibe.” Eager sellers and a smaller pool of potential buyers is an enticing combination for those in the market, she said.
Pete Wargent, co-founder of BuyersBuyers, agreed that December and January can be an exciting time to remain active in the property market.
“Often we see property buying clients losing a bit of interest at this time of year, as thoughts turn to summer holidays or more festive pursuits than kicking off with a property search,” Mr Wargent said.
“But with new listings rising, some buyers are sensing a window of opportunity to buy ahead of the international borders reopening in full in 2022, especially in Sydney and Melbourne.”
Talk about what property markets might do in 2022 has ramped up in recent months, with the consensus being price growth will slow next year. Nationally, property prices have risen about 20% over the past year, according to PropTrack data, while in the regions they’re now 25% higher. That rate of growth is expected to taper off in the New Year, before potentially slipping by several per cent in 2023.
Some would-be buyers are adopting a wait-and-see approach to get a sense of whether delaying a purchase could see them score a lower price.
“Buyers ideally shouldn’t become too focussed on small price movements since they tend to be relatively immaterial over a decade,” Mr Wargent said. “Try instead to think about where prices will be 10 years from now.”
Lloyd Edge, director of Aus Property Professionals, said buying should be done with a long-term focus.
“The property market is very resilient and it’s important to seek individual advice or expertise, as everyone’s situations and goals differ,” Mr Edge said.
“I’m still finding people holding off now as it’s ‘too hot’, but long-term investors know that you can’t time the market and when you’re ready to buy, you buy.”
He also pointed out that during the early stages of the Covid-19 pandemic, the generally accepted consensus among the major banks and economists was that prices were set to crash. “It caused people to hold onto their deposit and batten down,” Mr Edge said. “Some economists predicted a mammoth 40% crash. Well as you know, this certainly didn’t happen, and residential property prices rose 6.7% in the June quarter 2021, the strongest quarterly growth since the [Australian Bureau of Statistics] began recording in 2003.”
Those eager to strike while the iron is hot and get into the market over Christmas and New Year should get their ducks in a row now, Ms May suggested.
“It always takes longer than you think to dot all the i’s and cross all the t’s on your finances, especially as the banks are struggling to keep up with so many operating on skeleton staff,” she said.
“We’re also asking for longer settlement periods, so our buyers don’t get punished because of the banks’ go-slow.”