After the fierce competition amongst buyers in 2021 and the first half of 2022, the market in Hobart has now shown obvious signs of retracting.
Hobart property prices peaked in May 2022, and values have declined ever since. There has been a drop in house values of 6.9% in the 12 months to December 2022, with a drop of 4.9% occurring in Q4 alone.
In addition to has values, the below 4 indicators can be used as further proof that the market has cooled (obtained in the CoreLogic Monthly Housing Chart Pack – Dec 22).
- Sales volumes are down. The CoreLogic report showed a decrease of 8.4% in sales volumes in Hobart in the last 12 months.
- Vendor Discounting is increasing. The level at which vendors are having to discount their properties to obtain a sale is increasing. It sat at just over -3% in December 2021 and increased to -4.3% in December 2022.
- Number of listings has increased exponentially. There is a 85% increase in the number of properties on the market at any one time.
- Days on market. In December 2021 the average length of time a property was on the market was 8 days. In December 2022, it had pushed out to 36 days.
This last marker is perhaps the most telling. It demonstrates that the sense of urgency felt by buyers in 2021/22 is no longer there. Buyers are now taking their time to assess properties properly and to make more considered decisions, rather than jumping to submit offers on multiple properties, as quickly as possible.
So, what should you do to ensure that you are best positioned to buy a property in 2023 and most importantly, not to overpay? See our tips below:
Be ready. More than ever, it is important to make certain that you have your loan pre-approval in place. Banks are tightening on lending, and you need to ensure that you are searching for properties that you have the capacity to purchase.
Know what you want. Having a clear set of requirements is very important and ensures that you are focusing your search in the right areas. You should consider things such as location, house style, configuration, condition, size, and of course, price. Try to focus on at least 2 or 3 suburbs as having some flexibility will open more properties for you to consider.
Be active in the market. Purchasing a property can be a tiresome and draining process. But educating yourself on the market and understanding trends can save you big money. The best way to know what a property is worth is to inspect other comparable properties. Once they sell, it will help you determine value for future prospective homes. Therefore, it can be worthwhile starting the research phase a few weeks before you’re ready to buy, so that you are well informed on what properties are currently selling for. Don’t use sales from 6 months ago, the market was different.
Another benefit of attending open homes in the areas your searching is to get to know the selling agents and to find out about what else they have coming up.
Ask a lot of questions. Be sure to ask the selling agent a lot of questions. Why is the guide price where it is? Is it based on comparable sales or just on the vendor’s expectation? Vendors obviously want to achieve the highest sales price possible, but you should only pay what is reasonable in the current market.
Do your due diligence. The competitive nature of the market in 2021 and 2022 meant that there were a lot of buyers who weren’t taking the time to do the necessary due diligence. Purchasing a home is often the biggest financial undertaking of our lifetime and it deserves appropriate care and consideration. Pre-offer checks should include having a conveyancer or solicitor review the contract and title to advise you on such things as possible compliance issues, covenants or easements on the title, zoning concerns, overlays (heritage etc.). It is also sensible to have a building inspection prior to submitting an offer or make your offer subject to one being conducted. In this softening market it is easier to have these types of clauses included as part of your offer. Do what you need to protect yourself.
Know your market. In our own local experience, we have also seen that there are variations within the market in difference price brackets. For example, at time of writing, the price falls seem to be much more evident at the lower end of the market, as investor numbers have reduced, and first-time buyers are having more trouble securing financing. This has meant there are fewer buyers competing for the lower-end properties which is having a noticeable impact on prices being achieved. By understanding these kinds of trends can help better place you when it comes time to negotiate.
Get help if you need it. If you do not have the time, energy, or inclination to spend weeks or months searching for, inspecting, and researching properties then consider getting help from a professional. Buyer’s agents, like us, spend our days dealing with real estate agents to uncover opportunities and to access properties. We are inspecting properties most days and are therefore very well placed to understand what a property will likely sell for, based on an intimate knowledge of the comparable sales.
We are experienced negotiators and use our knowledge to secure properties for our clients at the right price.
At the very least, build your contacts in the industry. Connect with a conveyancer and building inspector so they are ready and able to assist when you need them. And work with the agents selling property in the areas you’re looking to try and uncover future properties they have coming up that may be suitable for you.
If you would like to talk further about your property aspirations, or the Hobart property market, feel free to contact me at angie@myhobarthome.com.au or call 0448 694 537.