Sally Morrison

The question of buy, sell or do nothing are strategies that are all important at different times of the cycle and often highly qualified on individual and geographical circumstances. So what are the key considerations?

Would I rather sell in a market that has lots of choice or limited choice? This is the buyer’s conundrum at present. The volume of property on the market has shrunk considerably during the Covid-19 pandemic as potential vendors who are under no financial duress have largely chosen the option of sitting tight and waiting to see what happens. By default, the level of choice for a potential purchaser is reduced.

Having stated that, some buyer’s may also feel like this is an opportune time to purchase taking the long term view that any correction in property values is likely to be short lived assuming the pandemic continues to be well managed in Australia. This countercyclical approach allows for greater opportunities to negotiate an improved outcome in a low interest rate environment. Buyers that bought in the peak of the highly volatile GFC period in 2007-2008 only had to wait between 2-3 years before values corrected back to their buy-in price. If you bought in Sydney during this period, as at December 2019 you would still have doubled your money, despite the significant correction of late 2017. If you had bought at the bottom of the cycle in early 2009 when sales were very hard to achieve, the gains would be even more substantial.

Buyers need to consider whether this is a strategic purchase or one that is tactical in nature, with the expectation of picking the bottom of the market and making short term gains. This strategy has been used to good effect by those with a less risk averse outlook that continue to leverage equity gains. Be aware though that the Banks are now more cautious in this space.

As a seller, the opportunities to sell in a market where the competition has been reduced can mean the ability to achieve a higher price than a crowded marketplace. Patience is preferable as the sale times will likely be longer at present, though by some accounts, May 2020 has seen a rebound in buyer inquiry levels. Should this be sustained, the seller advantage of a less congested market will evaporate quite quickly.  Remember that this is not a market downturn in the traditional sense of a recession. This is a market that was artificially slowed through closing borders and shutting down high contact businesses. As a result, easing restrictions enhances personal confidence and liquidity in the economy. Many industries have grown stronger during the pandemic, unlike a normal recession where almost all industries decline and there is no formal plan for re-employment. This is very different and the public know it. There is a level of trust in government that hasn’t been seen for a long time.

Whilst it is acknowledged that the market has shrunk in terms of listings, this has happened as a result of confidence and uncertainty, unlike a hot market where choice is limited due to the short period of time a property lasts on the market. A seller who wants to move will ultimately be buying and selling in the same cycle, though vendors will be expecting offers below, rather than at full value. If the recovery was not sustained, those selling today may in fact find themselves in a strong position if they were delayed in re-entering or perhaps even moving to a regional area where property prices are often significantly lower than capital city prices.