14 May  2010

Six interest rate rises, the unknown impact of a new resources tax, roller coaster share markets and a European debt crisis appear to have joined to form a “perfect storm” of uncertainty for Australian real estate buyers.

Add to this growing weariness from having to “weather” the ongoing economic uncertainty and people’s resolve seems to have melted a little.

We have noticed a shift in sentiment during the past few weeks from both buyers and vendors – and this is already offering some unique opportunities for buyers ready to make a move.

Melbourne
In Melbourne interest rates are definitely starting to bite. Melbourne sales are harder to achieve and agents are having to push buyers across the line. For their part, buyers have turned furtive, unwilling to give any indication of their hand and increasingly unwilling to bid at auction.

This doesn’t mean that properties are not selling. They are still, eventually, finding new owners. However, more and more homes are not selling until after auction and sometimes only after several days of negotiation.

Overwhelming the feedback coming from these deals is one of “grumpiness”. The buyers are pulling back and feeling increasingly unhappy about having to pay current prices. The next step from here is usually a withdrawal or slow down as property buyers decide: “No more, too high”.

Sydney
The Sydney market has already moved one step further than Melbourne. Sydney buyers have already shut down to a limited degree and prices have started to steady – if not reduce slightly in some situations.

A recent example is a property we identified on behalf of a Melbourne client which we had expected to purchase for between $850,000 and $860,000. On the day we bought the property for $830,000.

Conclusion
In both cities we had been getting constant feedback from buyer’s advocates that vendors are being too greedy. The advocates have struggled to buy properties within their value-based price ranges because most vendors want a higher result.

Now, however, in our own negotiations we are starting to see more willingness to get the deal done. There appears to be a strategic shift in the market.

Whether this is a temporary re-grouping before the market runs higher again or whether this is a consolidation where the market confirms its current level – is yet to be known. However, for buyers ready to make a move this hiatus looks set to offer some timely opportunities.