Market Watch – Feb 24

January 29th, 2024

Market Watch – Feb 24

2024-01-29 02:57

For two years from June 2020, Byron Shire experienced a ferocious bull run with a median house price jump of around 60%. After the floods of February 2022, the median price here took a hit of 33%. For most of 2023, it was the quietest market I have experienced in my 40 years of living here.

Since the Xmas break, things seem to be more active. Agents I have dealt with are describing it as “active” neither buoyant nor dead. Some open homes I have visited, especially in entry-level areas like Ocean Shores or Byron Hills, are very active. One with a listing price of around $1 mil had around 20 people at the open and had two offers above the listing price.

New Listings

Many potential vendors have been delaying listing until the buyer’s market has eased. I was interested to see if we would have a rush to market after the Australia Day weekend. But even though the market is a bit stronger, there seems to be no sign of a rush of new listings.

For Buyers

New buyers entering the market now will see they are on the tail end of retreating prices. There will be opportunities for buying under market value, especially with listings that have been online for a while. The top end, over $5 mil, which was so strong during COVID-19, is where most of the price reduction is occurring.

For Sellers

It has always been important to list with an accurate listing guide. Like Goldilocks – not too low, but not too high. Listen to your experienced agent’s advice and not to an agent wanting to “buy” the listing with an exaggerated estimate.  Sellers may choose to go for an EOI (Expression of Interest) or even to research the sale price with an off-market period before listing. This is sometimes wise if you have a distinctive property that is hard to price.

Both buyers and sellers are curious to know how this year will play out as far as the optimum time to buy or sell. Are we heading into a rising, flat, or falling market? Anyone looking to buy and hold for longer than five to ten years should ignore trend lines and property clocks. Buy what you like, what suits your needs, and is at fair market value. If you are at your budget ceiling, learn to manage compromises, or the market could move on you.

Don’t get stuck in analysis paralysis. As a buyer’s agent, this is my only regret at times, not encouraging clients more forcefully when I know something is right for them. For sellers wondering whether to wait for the market to rise sufficiently before going to market. I would not bother as I believe we are entering a stage without big changes in either direction.

The Media

The mainstream media loves to use property articles to generate clicks and keep real estate advertisers happy. They love to use headlines like Property is Booming or Property Is Bust. Here are just a few of the recent pronouncements and as you can see, there is no consensus.

Australian Financial  Review

This recent AFR article was headlined House Prices on the Coast Plunge $600K.  Most of you will be blocked by a paywall but it lists the ten coastal towns that have plunged the most. Byron Shire towns, plus Lennox Head, were 6 of the ten worst price decreases. The chart is copied and pasted here.

Somewhere in a similar article was something showing that old chestnut: the property clock. This shows where your region is on the property cycle, with a top value at the top of the clock and prices have bottomed at 6. It positioned Byron and Northern Rivers coast at 3 o’clock, with more falls to come. Assuming I did accept the notion of a property clock, I would position us at a 5 or 6.

Domain

Or you could take your cues from this Domain article. It headlines The NSW sea change towns where house prices fell most.  It shows that Lismore has collapsed the most at over 19% since Dec 22 and Dec 23, with Byron Bay losing 2.6% in the same period. Most of our falls happened in 2022. It also states that most regional markets have been stable for the last 6 months. The first time we have seen two quarters of flat property prices since 2010 – and that should be a good thing.

Domain Predictions

This Domain article goes so far as to make five predictions for the year.  It believes we will have reasonable property growth this year. Spurred on by ongoing immigration and more demand if/when there is an interest rate cut later in the year. It thinks that the government’s Help to Buy Scheme will also be a big help to first-time home buyers. I do not agree with that and hate these gov schemes that are all about window dressing, do not face the housing crisis, and only increase house prices by giving taxpayer funds to sellers. It also sees YIMBYs getting traction over NIMBYs in the housing crisis debate.

SMH – Sydney Booming

If you want a more positive spin, this SMH article states that Sydney suburban prices are already having a run. Some suburbs have seen price growth of 20%. We usually follow Sydney trends after 6 months or so, but this time I think our market will be more sedate. Sydney is in high demand because the lack of housing is being pressured by large numbers of migrants and students. We do not get that here.

Conclusion

We are in interesting times. As you can see, there are many differing opinions on what is going on. No one knows for sure, but my sense is the market will strengthen slightly but without much price growth. Good properties listed at fair value may encounter competitive bidding, which could deliver better than expected sales prices.

Buyers looking for bargains may be disappointed as the window of the buyer’s market will be closing. Owners who are flood-affected or who bought at the peak and need to sell may be forced to take a hit. Some deals are going to get sticky because of rising insurance policy costs. Sellers who are unsure should listen to good advice from an experienced listing agent or vendor advocate who will be able to navigate this market while it is still hard to read.

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