Australian homeowners are feeling more confident about selling their properties in a red-hot housing market as the COVID-19 situation improves.
Realestate.com.au’s latest Property Seeker report showed market conditions, led by booming house prices and record low interest rates, are now the key driver for sellers.
Realestate.com.au director of economic research Cameron Kusher said a lot of people decided not to sell last year, but that was now changing as the coronavirus situation improved and the economy recovered.
“I get the sense that many people decided simply to not sell in 2020 and now that case numbers are low and there is a bit more certainty this year, they are more comfortable selling,” he said.
“I expect supply to increase for the next few months and ramp up quite a bit during spring this year, assuming we aren’t forced back into lockdowns at some time.”
The in-depth study of property consumers, which involved an online survey of 6700 Australians in December 2020, showed the improvement in the coronavirus situation has prompted more people to put their home on the market.
Realestate.com.au market research and insights manager Kirstin Hodgson said it was not surprising that some vendors held off selling in 2020 due to the uncertainty in the market and low levels of consumer confidence caused by COVID-19.
Many vendors held off selling during the pandemic in 2020, but more are likely to sell this year. Picture: realestate.com.au/buy
She noted that Australians were out of prolonged lockdowns when the research was conducted in December, with only some short circuit-breaker lockdowns between then and now.
“As a result of the easing of restrictions and increased confidence in our handling of COVID-19, 25% of vendors said they were prompted to move from just thinking of selling to actually starting the process,” Ms Hodgson said.
Some 19% of respondents also cited work changes during the pandemic, such as working from home more allowing them to move to a different area, as a factor prompting them to start the sale process.
Ms Hodgson said the survey results indicated more people plan to sell this year.
“When we conducted the research in December 2020, the proportion of consumers either in the process of selling or considering selling their property was in line with what we saw in 2019,” she said.
“However, when we expanded this out to look at consumers who were planning to sell in the next 12 months, the proportion was higher than 2019, giving us confidence that we will see more people list their property for sale in 2021, provided COVID-19 remains under control in Australia.”
The property market is booming in 2021 as record demand far outstrips the supply of stock for sale, pushing property prices sharply higher and leading to homes selling faster and sales volumes rising.
The property market is booming in 2021, with demand still outstripping supply. Picture: Getty.
Mr Kusher said the volume of stock for sale remains low but is starting to increase.
“We are seeing a significant increase in the volume of sales so far this year compared to recent years and the supply of stock is increasing, albeit the rise in supply remains insufficient relative to demand,” he said.
Mr Kusher said as more people purchase homes, there may be a better balance between supply and demand later this year.
While demand for property in regional and lifestyle locations has surged during the pandemic, a lifestyle change is no longer the top reason people sell property.
Ms Hodgson said current market conditions are now the strongest influence for both sellers and buyers.
“Market conditions, including a change in property prices and low interest rates, are prompting more than four in 10 property owners to consider selling their property,” Ms Hodgson said.
“In contrast, when we last conducted this research in 2019 the strongest influence on selling consideration was to facilitate a lifestyle change such as a move to a new area, metro or regional.
“This is still an important factor in 2021 but is not as prominent as the well-publicised market conditions.”
Market influences were also the number one reason people would consider selling in the next year, cited by 43% of respondents.
Seeing a house they like on the market was the strongest market prompt for people considering selling in the future, influencing 22% of potential sellers. That figure was lower – 8% – for people considering selling now.
When it comes to the “chicken and egg dilemma” of whether to buy or sell first, half of all sellers intend to sell before they buy their next property.
But the pandemic and market uncertainty have pushed more people to buy before they sell.
Ms Hodgson said significantly more vendors planned to buy another home before selling – 31% in the latest survey compared to 21% in 2019.
“The increased savings ratio many potential buyers experienced in 2020 coupled with low interest rates has resulted in a competitive housing market, which is likely causing concern for those looking to move houses in that they may sell their property quickly but have more difficulty in securing a new property,” she said.
Mr Kusher said the stock shortage was holding some potential sellers back.
“Because there has been a low supply of stock for sale, that of itself becomes a bit of a self-fulfilling prophecy in that sellers say ‘I won’t sell because there is nothing to purchase’.
“Luckily it seems as if this is now starting to change somewhat.”
The shortage of stock has held some potential sellers back, but that is changing now. Picture: realestate.com.au/buy
A recent Westpac survey showed more Australians are now thinking about selling their home than before the pandemic, but half of would-be sellers are holding off listing out of fear they’ll struggle to buy their next home.
While a fear of missing out as prices rise is evident among buyers rushing to take advantage of record low mortgage rates, sellers are feeling a different sort of FOMO: a fear of moving on or having to both sell and buy at market peak.
“You have to sell and buy in the same market so you might get more for your property but the property you are purchasing also costs more, so it is a bit of a zero-sum game,” Mr Kusher said.
With property prices surging and tipped to rise by as much as 20% or more over 2021 and 2022, the amount sellers expect to get for their properties has also increased.
Ms Hodgson said the last time realestate.com.au conducted the research in 2019, vendors were expecting to sell their properties for $650,000 on average.
“In 2020, we saw fewer vendors expecting to sell in the sub-$400,000 range and more expecting to sell in the $1 million-$1.5 million range.
“Combined, that helped push the average amount vendors expected to sell their property for to $665,000.”
The survey showed deciding on the sale price was one of the hardest steps in selling a property.
Deciding on the sale price is one of the hardest steps in selling a property. Picture: realestate.com.au/buy
“Deciding on a sale price, choosing an agent and having confidence it’s the right time to sell continue to be considered by vendors as the hardest decisions in the selling process, each cited by one in four respondents,” Ms Hodgson said.
“When you look at vendors over the age of 60, the picture becomes even clearer with those decisions identified as the most difficult by four in 10 people.
“With a large percentage of the overall market and an even bigger skew towards those over the age of 60 finding these decisions the most challenging, there is a clear space for agents to demonstrate their expertise and guide vendors through the process,” Ms Hodgson said.