When it comes to advising first home buyers what, when and where to buy, having unconscious incompetence can be dangerous. The person receiving the advice has little recourse and relies on the credibility of the source as part of confirming their decision to spend hundreds of thousands of dollars. Alternatively, receiving advice to delay purchasing could cost tens of thousands of dollars should the market suddenly increase.
What we have learned from the impact of COVID-19 is that forecasters garner the most attention when they operate at extremes. Removing the individual choice to socialise, participate in certain recreational activities and entertainment is confronting, however the results from our shared community sacrifice has proven effective. At the time of writing (27 April), there were 106 reported cases of COVID-19 in the ACT, of which 100 people had recovered. Property market analysts forecasting large falls in property values had failed to allow for a result like this.
CoreLogic’s daily dwelling value index for the combined capital cities markets showed during the 28 days to 23 April, property values had increased by 0.4%. Four of the five markets captured have the lowest levels of national housing and rental affordability. If there were to be steep falls in national property prices, these markets would be showing signs of decline first.
Canberra is moving into the seasonally quieter winter market. This generally leads to lower stock volumes which have been brought forward by several months, evidenced by the 18.78% decline in the weekly volume of new listings on Allhomes from the first to last week of April. Canberra’s strong economic fundamentals, combined with reduced supply, could end up delivering accelerated growth in values, which would deliver a shock to buyers thinking they can ‘time the market’.
Transaction volume in the off-plan market shows there is a significant portion of the local population who perceive now as a good time to buy. The market is sensitive to ambitiously priced properties, which is reflective of balanced market conditions. People actively looking to buy off-plan now have positive market sentiment, as they astutely identify some property developers are seeking to increase pre-sales, which is reflective in their pricing.
There is a proportion of buyers who believe they can time their purchase and transact at what they perceive to be the bottom of the market. The Allhomes ACT Property Market Report, tracking the median property price back to 2005, illustrates buyers seeking to achieve this take on significant risk, often with little market knowledge other than what can be gleaned from stories in the media.
After each fall in the median price of multi-unit dwelling values, the market increased by a far greater amount than what values had reduced by. The greatest decrease in the median price of multi-unit dwellings was $5,100 in 2015 which was followed by an increase of $10,100 in 2016.
Relative consistency of Canberra’s property market shows there is negligible downside to buying as soon as you can afford to. The most important thing property owners should consider instead of trying to time the market, is to extend the duration of their time in the market as property owners.
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