Spring. It’s often seen as the season of renewal and new beginnings and, as a result, often lauded as the prime time to put your home on the market. But is the hype around selling in spring real, or are opportunities blossoming year-round? Here, we look at seasonality in real estate, what’s behind the success of spring sales, and seven crucial market factors to consider in any season.
A closer look at seasonality
While spring (September to November) and summer (December to February) are typically the primary and secondary seasons for property sales, it’s important to note that the real estate market can experience activity year-round and the best time to sell, may not be the best time to buy. For example, if you’re looking to purchase property in a coastal or holiday destination, these are best considered in the winter months when the market is less competitive. If you’re selling in these areas, you’ll want to make the most of summer property fever.
Why does spring reign supreme in real estate?
A combination of factors influences property sales, but spring still reigns supreme when putting a home on the market. So, what is the driving force behind the spring selling advantage?
- The weather factor – milder and more pleasant weather has us venturing outdoors, exploring new neighbourhoods, and viewing more properties.
- Increased curb appeal – flowers are blooming, the lawns are greener than ever, and the trees are budding; spring is often a time for front yards to shine!
- Longer days, more opportunities to view – increased daylight hours mean popping to an open home after work isn’t out of the question. Extended daylight often leads to increased foot traffic and more time for buyers to browse.
- Tax refunds provide a financial boost – many people receive tax refunds in the spring, which can provide the boost needed for a down payment.
- Spring cleaning, homes are gleaming – once a home has been spring cleaned and decluttered, it’s the perfect time to pop it on the market and showcase its best features.
- Market momentum – the perception that spring is a good time to buy, or sell can create a self-fulfilling prophecy. As inventory increases, a wider range of buyers are attracted.
Remember that despite seasonal factors, real estate markets vary significantly by location and economic conditions.
Year-round real estate realities – market factors to consider
2023 has been an interesting year for property investment. Off the back of low-interest rates during the pandemic causing a surge in demand, we’ve now seen a major spike in these rates, significant inflation, and a rise in the cost of living across the board. This has snowballed to land us double-digit increases in property values and wage increases that are not keeping pace. As a result, housing affordability is now at the lowest it’s been in 30 years.
It leaves many of us wondering when the right time to invest is, and unfortunately, it depends on many factors – some within our control and others outside of it. So, instead of waiting for divine inspiration, the best approach is to be proactive and educate yourself on seven of the key drivers – so that you can get a step ahead.
- Economic Conditions
The overall state of the economy has a significant impact on property sales trends. GDP growth, employment rates, and consumer confidence can all affect property demand. In times of economic growth, there is often increased demand for real estate.
- Interest Rates
The Reserve Bank of Australia (RBA) sets the official cash rate (OCR), which affects mortgage interest rates. Lower interest rates can make borrowing more affordable, encouraging property investment and increasing demand. This year, we saw a surge in the OCR; however, economists predict that we could see a significant drop as soon as March 2024 – this is merely a prediction.
- Population Growth
Population growth, both from natural increases and immigration, is a significant driver of demand for housing and, as a result, impacts on property sales. Australia has seen rapid population growth in 2023, and it’s predicted that over 650,000 migrants are expected to arrive in the next financial year.
- Housing Supply
Housing supply is a significant factor driving property sales fluctuations; with predicted population growth, supply can quickly become strained. In addition, the pandemic caused major delays and restricted access to essential building materials, causing the supply of new builds to be majorly impacted.
- Government Policies
Government policies and regulations can impact property sales. Incentives such as first-time homebuyer grants or tax breaks can boost demand, while stricter lending rules or changes to property taxes have the opposite effect.
- Interest from Foreign Investors
Australia often attracts foreign investors, and changes in foreign investment regulations and interest rates in other countries can influence property sales trends and contribute to the peaks and troughs in the property landscape in Australia. Some studies predict an upcoming boom in Chinese investors, with Australia as the number one overseas destination for Chinese property hunters.
- Global Economic Conditions
International economic conditions, such as financial crises, pandemics, and wars, can impact foreign investment in Australian properties. This was extremely evident during and after COVID, with global trade and supply chains putting a strain on our economy and, in turn, affecting the property sector.
There’s much more at play than seasonality
Property investment isn’t solely about the seasons, or a date marked in the calendar. And while it’s true that spring can be a time of increased activity, it’s essential that you consider market factors and, of course, whether it’s the right time for you personally. Use this time to research investment red flags, play around with the ‘Your Patch’ tool and read why we think property investment is still accessible to future generations. And if these resources aren’t enough to leave you feeling confident in your property investment journey, contact your local First National Real Estate agent for expert advice and guidance.