The Myth of the Buyers Market

June 10 2011

It’s a buyers’ market, haven’t you heard?

For first home buyers, investors, downsizers and up-graders, the balance of power has shifted from greedy sellers to savvy buyers – flushed with savings or equity, eligible for big loans with little money down, and with prices on the slide and plenty of stock to choose from – your time has finally come.

Seriously, it’s a great time out there, better for buyers than it’s been in ages. Conditions are ripe to swoop in for a deal, and you’d be crazy to miss out on the chance. Don’t wait, it won’t last long. Now is the time to buy!

Sound familiar?

It’s the “buyers’ market” mantra – and right now its difficult to hear anything else above the din of so many industry players chanting it at once.

Out of favour is the previous refrain of “there’s nothing wrong with the market”, replaced in a near-seamless transition with a new message that is far more palatable and positive when worsening market conditions were proving persistently difficult to dismiss.

But does the label hold up? Is it a buyers market or just marketing for buyers?

Australia’s dwelling value (houses & units) is certainly down for the year to date, falling 2.5 per cent in the four months to April, according to RP Data-Rismark. The drop was about 1.5 per cent over the 12 months to April 2011.

Here’s how the capital cities performed over the year to April 2011:

Year to April 2011
Sydney 1.2%
Melbourne
-0.4%
Brisbane -6.8%
Adelaide -2.1%
Perth -7.1%
Darwin -7.0%
Canberra 0.7%
National -1.5%

Source: RP Data-Rismark

It’s understandable why some industry players would try to make hay with it, luring in buyers with prospect of a potential deal. And some individual purchasers will undoubtably find some good deals, or at least some better deals than were previously available.

But here’s the thing – the slide is only essentially returning dwelling values to where they were at the end of the boom-ish conditions that followed the global financial crisis.

Australia’s median dwelling value may have dropped 1.5 per cent in the year to April 2011, but it rose 12.2 per cent in the year to April 2010. The capital city results tell much the same tale, although for some – Brisbane, for example – values may have returned to where they were about two years ago.

Year to April 2010
Sydney 11.6%
Melbourne 18.0%
Brisbane 6.1%
Adelaide 9.2%
Perth 9.4%
Darwin 16.8%
Canberra 13.5%
National 12.2%

Source: RP Data-Rismark

A year ago, I don’t remember anyone claiming we were in a buyers’ market based on the prices that were being routinely demanded. In fact, the cry most often heard was just how unaffordable real estate had become.

Maybe it’s about supply, then?

There are a lot more homes on the market, with RP Data estimating there were about 283,690 properties listed for sale across the country in May – 34 per cent higher than at the same time last year.

That level of selection is certainly something that would appeal to would-be buyers, but it’s not as if there’s any sign of them jumping into the market as a result.

Note: CohenHandler is a buyers agent in Double Bay who act exclusively for people seeking to buy property in Sydney or rent property in Sydney

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