2 November 2023

Has the property market returned to 'normal'?

| Dione David
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Independent Property Group sold sign outside a block of homes

Rising rates took the steam out of the manic market but will likely be absorbed back into the “natural cycle” in the very near future. Photo: Independent Property Group.

The property market has been on such a rollercoaster for so long that many of us have lost sense of which way is up. Has the market returned to normal? And what does normal even mean?

It’s a hard thing to pin down, but Independent Property Group principal Mark Wolens has an informed answer.

“We all know the property market is cyclical, in terms of prices and activity, there are highs and lows, and it always swings back, so which point in the cycle do we call ‘normal’?” he asks.

“When properties stay on the market for 30 to 40 days and auctions have clearance rates of 50 to 60 per cent, those are indications of what we call a ‘measured market’.

“That’s a market that’s good for the buyer and the seller, where nobody is disadvantaged. That’s the kind of market most people would feel is ‘normal’.”

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Now that the unexpected frenzied activity of COVID is over, and rising interest rates have tempered confidence, is that the market we’re experiencing?

Mark reckons in just the past few weeks, yes, these are the figures we’re seeing in general – but buyers and sellers should know that certain pockets of the markets will perform stronger than others at different times.

“During COVID, the market swung dramatically in favour of the vendor and virtually every kind of property was going gangbusters,” he says.

“As interest rates went up, the market for established liveable apartments took off. For a long time that market, to me, had been very undervalued and hadn’t moved much, but we’ve since seen a 30 to 35 per cent increase.

“The very top end of the market has been impervious to most of the changes, but Canberra houses in the $2 to $3 million range – a market that was robust until very recently – while they’re still selling at market value are taking a little longer.”

Mark Wolens headshot

Independent Property Group principal Mark Wolens says regardless of cycles, a home should always sell for the current market value. Photo: Independent Property Group.

The rule at all points in the cycle, however, is that a house should always sell for market value. The only reason it might not is if it’s been poorly marketed or incorrectly appraised.

“A home will generally always sell for what an agent is appraising it at, sometimes higher,” he says.

“Sellers should really just be honest with themselves about what their property is worth to the market, but also, make sure the agent is giving them the proper information and has done their homework.

“That’s easy to double-check. We provide our clients with a detailed analysis of the market because if you overprice it, it will end up costing them money.”

Currently, the strongest market is for three-bedroom homes in the high $600,000s to $800,000 range in Tuggeranong and Belconnen.

“That would appear to be the range people are most comfortable with at the moment,” Mark says.

“Some of the attendance rates for these homes have taken us by surprise – you’ll get 30 to 40 people through in a half-hour exhibition.”

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Mark says while many believe the current market to be a buyers’ market, buyers should be wary of hand-wringing when it comes to the right home.

“We’re seeing a lot of buyers looking at rising rates and when they see a home that’s right for them, either sitting and waiting or making a low-ball offer. Then someone comes in with an offer at market value and they come back and try to ‘gazump’ them [make a higher offer after an offer has been accepted],” he says.

“When you have 300 to 400 properties coming to market per week as we do at the moment, it’s true that people have time to take a breath and look for the property that best suits their needs. But don’t misread the market – when you find that property, our advice is to make a serious offer.”

In Mark’s experience, Canberrans have a low risk appetite. But though rising rates took the steam out of the manic COVID market, that will likely be absorbed back into the “natural cycle” in the very near future.

“If we know anything, it’s that you can speculate all you want, but you don’t know what’s going to happen. Sometimes it plays out exactly as you predict, sometimes the opposite happens – as it did with COVID,” he says.

“At the end of the day, if you’re waiting for a certain kind of market – buyers, sellers, or ‘normal’, it might not work out as you expect.”

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devils_advocate12:26 pm 03 Nov 23

Building approvals are in the toilet and record immigration.

The window of opportunity to buy something is rapidly closing. Once the price boom gets underway it’s going to be rough.

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