The Market is Flying

Here are 4 Easy-To-Understand Reasons Why.

We’re approaching the end of August and it feels like we’ve been here before. So many of us are working from home and from a housing market ‘boots on the ground’ perspective, things couldn’t be better for so many looking to transact. It just depends which side of the transaction you’re on. It’s been well publicised that there has been no hotter commodity than real estate this year and the reasons why are rather fascinating.

1- Cooped Up Consumers

It’s a situation that is not difficult to envisage and so many are living it right now. The ‘Smiths’ have been spending the majority of their day at home. They live in a three bedroom house with their two kids sharing a bedroom while the third bedroom is the makeshift home office/kids’ study. The kids are getting older and want their own space. Combine this with collective claustrophobia, boredom and a multitude of other factors and you’ve now got a family that’s itching for a bigger home to spend their lockdowns enjoying.

2- Cheap Credit

Prevailing governance unequivocally does not want a housing market crash, particularly now. Intervention through stimuli, while artificial, is helping the asset class perform strongly. The Reserve Bank’s cash rate is the most commonly referenced tool as money supply manipulation is a rather quick and easy way to sway conditions.

“Back in the 90’s we had to take out a mortgage at 17%”…

This isn’t exactly the case anymore. Anyone who is weighing up between renting and buying has their decision almost made for them at the moment. Why pay a landlord when for around the same weekly cost, I can go shopping with the bank’s cash and send them the money instead? 2% rates are well and truly available at present and talk of future rate hikes is only heightening the urgency to buy now.

3- Lack of Vendor Confidence

It’s not an easy call to make. Knowing that you’re wanting to call time on your tenure at the current address is step number one but the next step of pulling the trigger and hitting the market is certainly a tougher one to make. Being embedded in the industry every day (Sundays included) has helped paint quite a vivid personal outlook.

We all hear about how well the market’s going but uncertainty around lockdowns causes so many people to ride things out, hoping that things will be as bright when things are less scary. If you only take one thing from this piece, make it this. For vendors, things are great right now. You have almost nothing to compete with and conditions are favourable. The market doesn’t care how scared you are and it’s presenting favourable circumstances to pull the trigger.

4- Stock Levels

Those scared vendors from above make life significantly better for the 1/10 who do pull the trigger. The buyer pool now only has your house to bid for and will not suffer from goldfish syndrome that would occur when all the other homes hit the market. Even if the house that the ‘Smiths’ are looking at isn’t perfect for them, they are likely going to bid on it because their desire to buy outweighs their capacity to wait it out for the dream home. Now add nine other couples who are in the same boat. It’d be lovely in a utopian world if all ten couples could buy one of the homes each but this just isn’t the case right now and record results reflect this. Vendors have a large buyer pool to play with and this is a major reason why conditions are so great for selling.

There’s enough evidence now for me to state with confidence that lockdown rebounds are real and that being locked down is a sort of hibernation period, allowing the market to gather momentum before surging out the other side.

To learn how we can help you find the opportunities in front of you, just get back in touch. We’re always up for a chat.