Every year around August, real estate agents and news media start chattering about the upcoming “Spring selling season”.
The general theme is that this is the best time to sell, because flowers will be blooming and there will be optimism in the air as temperatures rise.
But the same people who proclaim this to be the best time for vendors, also declare that this is the best time to buy.
By definition, it cannot be both. If it’s a sellers’ market, it’s difficult to argue credibly that it’s a buyers’ market at the same time.
Such is the nature of hype and hyperbole in the residential property industry.
The truth is that there is no best season is which to sell or buy real estate.
The strength or otherwise of property markets are not dictated by the seasons.
It’s directed by the state of economy, the prosperity of businesses creating jobs, infrastructure projects and other developments generating economic activity and employment, and sometimes incentives injected into the market by governments.
Some argue that interest rate decisions by the Reserve Bank also have an impact.
Now, all of that occurs without any regard to whether it’s summer, autumn, winter or spring.
There’s also the reality that markets are essentially local and while there may be a booming market (great time to sell, perhaps) in one location, it will be the opposite in another location (good time for counter-cyclical buying) – all dictated by local economic conditions.
Looking back over the past 12 months, the Spring of 2022 was not a particularly good time to be selling in our biggest cities, as markets were weak and prices were falling.
In the past 12 months, the best time to be selling in many parts of Australia was the June Quarter, essentially the winter months – not because it was winter but because buying activity was stronger than at any other time in that 12-month period and prices were rising – caused by an array of economic factors.
Despite these realities, many purchasers and vendors are looking for the ideal market conditions before they are ready to make a commitment to either buy or sell.
And often consumers tie themselves in knots trying to get their timing right, particularly buyers.
So, what factors go into making a buyer’s market? What does that look like?
The best time to buy is when a market is at its lowest. This is when there’s little competition from other buyers and prices are down. This tends to give any buyers in the market a strong negotiating hand – they’re a rare and precious commodity in the eyes of sellers and their agents.
The problem is, most consumers are herd animals. While a down market is a great time to be looking for good properties at lower prices, few Australians are smart enough or sufficiently independent in their thinking to take action at times of negative sentiment.
They’d rather wait until they read or hear there’s a boom looming.
But that’s really not the best time to buy. A boom is a sellers’ market, with homes selling quickly and prices rising amid strong competition from other buyers.
You could argue it’s the worst time to buy, but that’s when most buyers want to be in the market. They like the comfort of the herd, even if they’re paying more.
Ultimately, given the long-term nature of real estate ownership, the timing of the purchase is not particularly important, provided you buy in good locations with the credentials for growth.
Ten or 15 years from now, the property is likely to be worth considerably more than you paid back then.
The oldest cliché in real estate is that it’s time in the market that matters, not timing the market. It’s a cliché, but there’s truth in it.
At the end of the day, there’s no point in agonising over picking the absolute best time to buy – i.e. finding that moment when the market is at the absolute bottom of the trough. As they say, no one rings a bell to tell when that moment occurs and few people have the knowledge and skills to get it right.
Getting the location and the individual property right is far more important than getting the timing right.