As we prepare to enter Spring – one of the busiest real estate times of the year – we take stock of the market and give you an insight as to the market conditions, level of stock availability and how not to pay too much. In today’s show we talk with Cate Bakos, who is a buyer’s agent out of Melbourne.
Kevin: It’s quite timely that we should be talking right now to Cate Bakos, who is a buyer’s agent out of Melbourne, talking about what’s going to happen as we enter into spring. This is the last Saturday, of course, before spring, and it’s a great time of year and a tremendous time to be out looking for property.
Cate Bakos joins me. Hi, Cate.
Cate: Hi, Kevin. How are you doing?
Kevin: I’m well, thank you. Happy almost-spring to you.
Cate: Yeah, almost. We’re just about there.
Kevin: Tell me about what’s happening with stock levels. Does it change as we move from winter into spring?
Cate: Yes, it sure does. The sheer number of listing alerts that are coming through on anyone’s search engine alerts should be demonstrating that.
We’ve had a reasonably tough winter. We have a stock shortage and, obviously, buyers who are out there feeling that they’re hard-pressed to buy and get good value at the moment. But as we come into spring, our relative number of buyers to properties is dropping, and that’s advantageous for buyers, because obviously, it’s diluting the buyer pool. Perhaps that will take some of the heat off some of those crazy sales results we’ve seen through July and August.
Kevin: They did surprise me – particularly out of Sydney and Melbourne – when we’re supposed to be going through not so much a lean time but one of the slowest times of the year. But it just seemed to gather pace and continue going.
Cate: That’s right. It’s a combination of sentiment. We’ve had a lot of media talk about records and crazy results. I think a lot of people have been feeling that if they don’t do something now, the market will get even further away from their fingertips. So we’ve seen some really desperate moves and some big stretches on the part of some of the buyers out there.
I don’t think that that’s actually the case this coming spring. I think they can not necessarily relax but look forward to enjoying a little bit of ease on the pace of the market and the competition.
Kevin: How would you describe the market at present? Is this a buyer’s market or a seller’s market?
Cate: It’s still most definitely a seller’s market, and our auction clearance rates indicate that.
Kevin: Any signs that that may change as we get further in towards the end of the year?
Cate: I don’t believe that we will see a buyer’s market this year, Kevin – I don’t even think that we’ll see it in the next year – but I think we’ll see not quite an intense seller’s market. I think things will ease a little bit. I anticipate that our auction clearance rates may even get below 75 and even touch 70, certainly for certain segments of the market.
I know that you’ve also addressed the APRA changes and how that’s affecting parts of the market. We might well see typical investor stock — for example, apartments and townhouses — ease off a little bit, but I think that houses will still be going relatively strong. I just think that buyers are in for a little bit of a pleasant surprise compared to some of the hardships that they’ve faced over the last couple of months.
Kevin: That certainly will be a surprise to a lot of people, and probably a refreshing change, as well. You must have seen a lot of disappointed buyers in recent times — even you — going along to auctions and being outbid.
Cate: Without a doubt. Trying to secure a property prior to auction is a lot harder. I’ve put a lot of emphasis into chasing off-market opportunities, because my auction success percentage has dropped over this period, as well, and that’s no surprise. It often does in winter, when things are really competitive. But I think buyers are in store for a little bit of a pleasant surprise. I certainly hope so, anyway.
Kevin: When you’re going to an auction, Cate – just give me a bit of an insight here – you obviously have a figure in your mind. How flexible are you about that, and do you set a limit underneath the figure that you’d go to?
Cate: I’ll always appraise the property and give the client a really robust understanding of what I think it compares to, and then obviously, you’re overlaying market sentiment. If you’re in a really tough, really strong market, you do have to be prepared for the next sale to break the last record.
Having said that, we always set our maximum price before the auction so that we’re not emotional when we’re doing it, we’re being sensible. I say to everyone if it’s an investment purchase, you don’t want to be breaking records – so maybe being prepared to stretch up to 3% from the top end value of where you think the property sits.
But if it’s an owner-occupier property, we really have to overlay the buyer’s sentiment around that particular property, as well. If it’s a really tough brief and they have very specific criteria, and that property ticks most of the boxes or all of the boxes, then we have to understand what the implication is if we miss out on the property, how much longer they’ll need to stay in the market and what that could do to the values in that segment.
Sometimes buyers will stretch maybe 5%. Generally speaking, I wouldn’t be excited to see someone go beyond 5%, because that is quite a bit stretch, particularly when you’re talking about a house towards maybe $1 million.
We obviously set every limit based on that particular client’s situation and criteria, but yes, as I’ve just said, you do need to be prepared to stretch a little bit in a seller’s market.
Kevin: Always good talking to you, Cate Bakos. Thank you so much for your time. Cate, of course, an independent buyer’s agent working out of the Melbourne market, Cate Bakos Properties.
Cate, nice talking to you, and we’ll catch you again soon.
Cate: Thanks so much, Kevin.