John McGrath – Is selling sooner better than later in 2022?
The first 6 months of 2022 will be slightly unusual, with several calendar events impacting the flow of market activity.
We have the usual Easter long weekend (April 15-18) and the school holidays (April 11-25), plus this year Anzac Day falls on a Monday, so that creates another long weekend. But the big one is the federal election, which has to be held by May 21.
Market activity typically quietens down in the month or so before an election, and based on the dates above, it appears likely that this period will commence during or straight after the school holidays. So, that may impact some activity for a few weeks.
It’s probably tradition that has people saying, ‘Let’s wait and see what happens after the election’. There’s a little bit of a stigma which, if you think it through, is unnecessary. But market sentiment is often not logical. Back in 2019, in the week leading up to the election, there were 811 capital city auctions compared to 2,218 the week before, according to CoreLogic. So, there was an impact.
Of course, back then property tax policy was a huge issue and the polls strongly suggested that Labor would win, triggering a change to negative gearing. So, investor buyers, in particular, were a bit on edge and sat on their hands to wait for the result. Their exit from the market prompted some sellers to wait too, given their buyer pool was reduced.
This time around, it will be the lack of predictability about who will win that will have buyers and sellers ‘waiting and seeing’. While we don’t yet know whether investment taxes or anything related to property will be on the agenda, it seems it’s going to be a tight race and that means a level of uncertainty. So, for peace of mind, some buyers and sellers will sideline themselves until it’s over.
If you’re in this camp and you want to avoid selling during the school holidays or pre-election period, then you have til the first Saturday in April (the 9th) to get your sale done – or you can wait till June.
If you’d rather sell earlier, then you have only 8 weeks, which is not a lot of time when you think about everything that goes into a property sales campaign.
The pre-planning for sellers usually takes a few weeks. You’ve got to research and interview a few agents, then select the best one, while also preparing your home for sale by organising repairs and any small (or large) renovations you want to do before selling.
Then there’s the styling, the photo shoot, the installation of the signboard and the printing of brochures and DL cards before the first open in your 3 or 4-week campaign is conducted.
So, if that’s your mindset, you best get started now. Alternatively, wait til after the election and any short-term sways in market sentiment thereafter, and you’ll be looking at a timeframe in June.
Now, there’s no reason at this point to expect the market will have significantly changed by June. All indicators at present suggest to me that property prices will hold at their current levels and very likely increase as the year goes on.
No matter who wins the election, interest rates will remain low, inflation is likely to keep rising and long-term pandemic-induced trends will be ongoing, such as sea-changing and/or upgrading to larger houses because people can work from home. This will likely keep buyer demand strong throughout 2022.
However, life with COVID-19 in unpredictable. Will there be another strain of the virus at play later in the year? We can’t possibly know. So, I see a potential advantage in selling sooner rather than later because at least we have some certainty around 3 key factors relating to market conditions.
- Omicron case numbers and hospitalisations are going down. That’s one of the reasons why the Federal Government has made the call to open international borders to foreign tourists from February 21. Things are relatively okay on the COVID front for now
- Current market momentum is strong, with every capital city and ‘rest of state’ market experiencing an increase in home values in January, according to CoreLogic data
- Supply is starting to increase, as was inevitable. More vendors who waited during 2021 to maximise their capital gains are listing now. CoreLogic says new listings were 5.7% higher nationally in January year-on-year. That’s not enough to change the supply/demand dynamic significantly, but if supply continues to grow, sellers could face more competition from other homes later in the year.
As my regular readers know, I’m not a fan of trying to time the market. People should buy and sell when it suits them personally and then hold their next home for the long term. That’s the way to win in property.
But if you’re the type of person who really wants to try and sell at the best possible time, then I see potentially more advantages to selling sooner rather than later.
Food for thought.