Why are Sellers Holding off?

The buy before you sell conundrum

For many years, and definitely when I was first in the market, vendors were encouraged to sell their home before they purchased their next property – after all, you didn’t want to be paying two mortgages!

However, with the shift of the market many sellers are trying to buy before they sell their property, which in turn is holding up the flow of supply in many markets across Australia.

Price growth

Price growth expectations are seeing potential homeowners sitting on their hands with the anticipation that their property will accrue more capital growth.

Investors short of choice

Savvy investors are fluid in the investment choices they make. Traditionally they would sell if another asset class such as the share market, term deposit and bonds offered a higher return on investment. However, these other asset classes are underperforming at present.

The combined capital growth and income return for residential property in Australia and the security of bricks and mortar are currently more attractive to investors than alternative investments.

However, despite these three limitations in listings homeowners are still reaping the benefits of active markets; with Sydney (11 per cent), Melbourne (8.5 per cent), Brisbane (3.1 pec cent), Adelaide (3.6 per cent), Canberra (6.1 per cent) and Hobart (2.1 per cent) all experiencing house price growth.

While investors may not be selling, they are still buying. Investor activity will continue to move as investors look to grow their portfolios, which will bode well for homeowners putting their property on the market this spring selling season.

First home buyers will also be drawn back into the market after August’s rate cut to take advantage of mortgage affordability.

When considering whether now is the right time to sell do your research to understand what the level of competition is in your local area and, some homeowners who have not had their property appraised in the last 12 months will be surprised to see the current worth of their home.

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