Current Market Insights
The Current Market Insights Podcast is brought to you by Harris Partners Real Estate.
Understanding the property market can be a challenging thing, with highs and lows, twists and turns. The media and agents tend to spread the news they want you to hear, with the advice they want you to follow.
Current Market Insights is an unbiased look into what is happening, what tips you can use to buy, sell, or rent, and that you wont find anywhere else.
Current Market Insights
Episode 74: Buying in the New Year's Property Market
Hosts Ciaran O'Brien and Peter O'Malley explore how to navigate the fluid and often unpredictable property market at the start of a new year. Peter shares expert advice on making informed decisions despite limited data in January and February, uncovering strategies to understand shifting market conditions and avoid relying on outdated metrics.
We examine the challenges buyers face during this transitional period, the impact of interest rate changes, and the importance of long-term thinking—especially for first-time buyers. With practical tips, including when to consider a buyer’s agent, this episode equips listeners with the tools to approach the property market confidently in the early months of the year.
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
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Speaker 2:Welcome to the Current Market Insights podcast brought to you by Harris Partners Real Estate. Each episode we chat with real estate author and industry leader, peter O'Malley, to discuss the current property market conditions and provide insights to assist you on your property journey.
Speaker 3:Hello and welcome to another edition of Current Market Insights. I'm your host, kieran O'Brien, and with me, as always, is my good friend, mr Peter O'Malley. Peter hello, hi, kieran, great to be with you. Great to be with you again, peter. I wanted to talk this week about a topic that I think is quite important and certainly should hopefully be a useful one for any of our potential buyers out there. I thought, given that we're in 2025, now we've entered the new year, I thought it might be a really good idea just to have a look or a bit of a talk about what buyers can do or how they can approach trying to understand the value of property in the market, particularly when we come into a phase, like a new year or after a long break or whatever it might be, where there isn't a great amount of data around that you could easily just grab to give you some access.
Speaker 1:Yeah, look, a big conundrum that one, kieran, and a great question that you raise. Because the market's been effectively closed or simmering for two months or near enough to two months. So a bit of off-market transactions happening, the odd listing here or there late in 2024 and early 2025. But in terms of having the whole dashboard available to buyers auction, auction clearance rates, watching multiple auction campaigns, going through core logic data commentary on the marketplace it's pretty skinny over summer and if you really need to and want to purchase a property early in the calendar year, that January February period can be challenging in assessing where the market's at.
Speaker 1:Historically, february's actually a really good month for vendors because the property market has been essentially closed, the demand tends to Buy, demand tends to be fairly pent up and those serious buyers in the marketplace are out of the blocks early. Real estate agents in Sydney particularly have perpetuated this thought pattern that the property market's closed until around Australia Day because everyone has January off. I don't know about you, but I don't know anyone that's having all of January off. Most people are back at it, certainly were back at it by the second week of January is fairly active for those vendors and buyers that are out there, but you won't get a proper read on the traditional dashboard settings, if you like, until late February. So if you are transacting between late January and late February, you are having to make offers with incomplete data and that is a little bit tricky.
Speaker 3:Would it be fair to say that buyers come into a new year typically with the mindset of attacking, you know, if they're really serious of attacking the market based on the data from last year, right, Because they don't really have access to anything else yet. And in your experience, if buyers are coming at properties, let's say, you know, mid to late January or even early February, based on a prior year mindset, are they, you know? Are they at risk of either overpaying and or completely, you know, underestimating the market and just getting demolished the market?
Speaker 1:will. Absolutely. All of that can happen and I can't tell people what will happen this February versus what happened last December, but what I can say historically is the market often resets over the summer. So I've seen a really strong finish to a calendar year open really weak the next year and vice versa. And the most noticeable year that I've ever seen was between 2020 and 2021 year in sales.
Speaker 1:With us at that time it was a fairly sluggish finish to 2020 and who knows what went out in the water over Christmas. But we started showing properties in January 2021. And there were queues literally down the street because you could only show two parties at a time or whatever the COVID restrictions were. And that was the start of the largest property boom that most real estate agents have ever seen 2021. But there was no indication in late 2020 that that was coming. Of the largest property boom that most real estate agents have ever seen 2021, but there was no indication in late 2020 that that was coming. So I'm not suggesting that the market is gonna have the mother of all booms in 2025, but what I am saying here, kieran, is 2024 is over and what happened in 2024 is irrelevant to what will or won't happen in 2025, and buyers must play the game accordingly.
Speaker 3:All right. Well, that's the point of this conversation today. So we accept the fact that a calendar year, you know, in simple terms, ends the sales cycle for people in Sydney and we're very much saying that about coming into 2025. On the podcast, we typically tell people go and do your research. Jump on the portals, have a look at what's selling, look at the auction clearance rates. Jump, you know, sqm research, blah, blah, blah. You know we give them a thousand different places they can go. You've written books on the topic. Where do they go? When they're? You know when you're effectively saying, well, there are no metrics at this point, or there are. You know, I feel like we're in a bit of a trailblazer scenario where you know one buyer has to go out and just say I'll do it. You know I'll carry the torch forward and buy something it can be a little bit like instead of benchmark yeah, it can be a little bit like that.
Speaker 1:I'll tell you a tactic that we caught on to was happening in the marketplace with some agents late last year and a property sold late last year and not with us and my colleague showed it to me, said have a look at this. And I looked at this sale and it was generic product, yeah, and it was a really, really high price. And I said to myself the only way that real estate agent was private, treaty off market. The only way that real estate agent sold that property for that price is they lied to the buyer by saying I've got another offer at X and you need to beat it if you want to buy this property and the buyer has been bluffed into paying that particular figure. Either that or they landed from Mars with a big checkbook and just paid it.
Speaker 1:Yeah, you've got to run with one of those two scenarios. This was four o'clock on a Saturday afternoon that I spoke with Tony in our office and had this chat. The very next phone call was a friend who rang me at 4 4 30 on the same saturday afternoon and said peter, I've been trying to buy a property in belmaine. I should have phoned you earlier. I'm sorry, but I thought I'd found one and I've missed out on it. The agent lied to me. I said what do you mean? Oh look, I really wanted this property. And he said to me if I want to buy it I've got to pay over 3.7. And I said I'm not paying over 3.7 for that property and the next minute it sold for 3.45.
Speaker 1:And then I rang Tony back and I said mate, that is exactly what's happening here is the agent is fly fishing with this really high price, saying to the buyers if you want this property, I've got another buyer at a much higher price and this is what you need to pay to get it. And my friend, who's a very seasoned lady, professional lady, called the agent's bluff and said no chance, I'm out, and the next minute sells for $250,000 below what he told her she had to pay. And she said if I had known it was around those levels I would have bought it. I was like, yeah, because they've invented an offer trying to see if they can achieve a record price from you. So buyers need their wits about them, kieran. As you say written books, we do podcasts. When buyers are out in the field, they need to play the game that's in front of them, and if that's all too complicated, they need to go and hire a professional that knows the game that's being played.
Speaker 3:I'd encourage anyone who just heard Peter's anecdote there and felt something to listen to our Fanta buyer episodes, because we certainly talk about this is a an issue across some you know agencies in real estate and I wonder then, just being a little bit pragmatic, I guess, if, uh, you know, sticking, sticking on the concept of doing your research before you buy, which, as we say, in a let's call it a data blackout period over the summer, what do you think is a reasonable timeframe for a buyer to say, go back into the previous year, to set a bit of a benchmark and I say that with a word of caution that of course we don't know how property, year on year coming out of the gates in January or whatever, is going to act.
Speaker 3:So it could be a 10% rise one year and a 20% drop the next year. We don't know 100%. But do you think, you know, with summer being statistically a bit of a two-month shutdown, do you think that there is a, I guess, a reasonable date where you could say to buyers who are trying to research into the new year look from this point onwards, you're probably somewhere in the ballpark.
Speaker 1:Late February, as I've described late February.
Speaker 3:So let's cut. But what about the year proceeding Like? How far back can they go to grab some data?
Speaker 1:Before it becomes irrelevant yeah, yeah, no. Look, if you can't handle transacting without incomplete data early in the year, go to the sidelines. Go to the sidelines and come back in March. If you're going to transact or looking to transact in the first six weeks of the calendar year, you are making an assumption or a bet of sorts as to you know how the market's tracking for the forthcoming year, or you don't care. You just want to buy a property at a price and then you're out of the market and you forget about it and you forget about it. If you want clarity, I don't think looking back is the way to go, because the narrative has changed over the summer. To answer your question, kieran.
Speaker 3:That's what I'm saying. Like we know it's changed, but is there a point where someone can get even just, I guess, a skerrick of somewhat reliable data to help them, knowing that the year could start anyway, right?
Speaker 1:Yes, look, I think you're better off looking forward than back. Okay, so, traditionally speaking, a lot of listings come to market after Australia Day and they will come to market with three or four-week auction campaigns. So certainly by the end of February, if not sooner, you'll get a sense of how the market's performing. How high are stock levels? What are auction clearance rates? What are the prices that are being achieved? Are buyers coming up to meet vendors or are vendors coming down to meet buyers? Does the RBA cut in the middle of February, as a lot of people are suggesting they may? They're all the questions that will be answered by the end of February. If you're going to transact before all of that happens, you need to accept you're transacting with incomplete data in front of you.
Speaker 3:Yeah, would it be fair to say you have to. You know, if you're going to buy before the end of February, you need to get comfortable with being a little bit uncomfortable, because you will have to make some decisions that are tough without, as you say, without a complete set of data behind you.
Speaker 1:Look, as long as you can live, you can live with the decisions that you make. So people made decisions during 2021 when mortgage rates were 2, 2.2% and it's worked out for some people and it hasn't worked out for others. But at the end of the day, if you transact, you've got to live with the decision you've made, because an unconditional sales contract is not reversible. You don't get to get six weeks down the track and say this is not feeling so good.
Speaker 3:So do you think, with that in mind, that it is a tougher time that? Would you have some advice for, I guess, less seasoned property players? You know first, home buyers, young couples. Would you say to them, you know genuinely, if they'd called you and asked you to be a buyer's agent or give them advice, would you advise them to buy in the first couple of months of the year? Or would you say, look honestly, for you guys it's probably better to sit back in and, you know, play when the field's a little bit, because I don't know how the market's going to play.
Speaker 1:I wouldn't get caught in a conversation where I'm advising them to buy or not to buy.
Speaker 1:Um, I think that would be too risky because the market could pop. If they do cut interest rates in the narrative after the january 29 quarterly inflation is yeah, rate cuts right on the, there could be a relief rally where the market rallies a few percentage points and makes back all the losses that you know it racked up, which was about 2% late last year. The market could pile that back on in a relief rally on the back of rate cuts. There's many fluid things to happen Now. I prefer to go with a more timely perspective is that you need to ask yourself how does this property look like if I own it in five years, 10 years, possibly even 20 years? That's the sort of conversation you want to be having with a buyer who's nervous about the current market is look further down the track, because there's always going to be this short-termism, market peaks, market bottoms, bounces up and down and you just got to be comfortable as to why you're buying the property and and understanding the fundamentals and how that property's fundamentals apply and benefit you.
Speaker 3:Oh, it just goes back to buffett's philosophy right, buy what you believe in and hold it correct. Yeah, so, as we wrap up then, uh, you've made some good points that it is challenging to. It's challenging to purchase anything. I think if you're a uh, an inquisitive person, it's hard to make a purchase of any substantial value, especially with incomplete data. It could be hard even with all the data uh, it's hard for a vendor.
Speaker 1:By the same token, it's hard for the agent. We're bringing offers to people and they're saying what should we do with this offer? And you don't always have a lot to reference. Right, that's right. Yeah, so is it. Everyone is transacting with incomplete data, not just the buyers.
Speaker 3:Yeah yeah, uh. So I guess, to wrap it up, would you say that the the best thing the buyers can do is is firstly, recognize that, uh, the first couple of months of the year is fluid always and no one really knows what's going to happen.
Speaker 3:Uh, it takes about, you know, six to eight weeks roughly, you know, roughly uh for things to kind of stabilize and give a bit of, I guess, indication of where the market's at. Um that you know the same resources and tricks and tactics that worked for you in the previous year may not work at all and in fact could be detrimental in the new year year, but ultimately that there's no pressure to buy, so you can always step back if you're not 100 confident. But if you, if you have to be somewhere, then you can always go out, look for a buyer's agent, find yourself a trusted consultant. You know you can get people who are a little more, I guess, experienced in the industry to come and give you some guidance, to help.
Speaker 1:But even they won't have the full picture right they won't have the full picture, but these are all annual trends for us, kieran. So when people, when people say to me, hang on you, you, you're, what are you're at your desk at january 2, it's because I've been, I've had 25 christmases selling real estate in belmaine and I know there's more people in belmaine that are active than the consumers realize that there is. So one of the properties that we've sold this year I spoke to the client on the 23rd of December and I said I want you on the market on Saturday, the 4th of July and he said call me when you're back at your desk in the second and we'll put it all in place. We listed it on the 2nd, we showed it on the 4th, we showed it on the 11th of January and we sold it on the afternoon of the 11th.
Speaker 1:That's a surprise to the client. He took a leap of faith. He came with me. That may be a surprise to people that are hearing that story. I knew that was going to happen. I've had many good clients where I've had them first to market for the calendar year and had them wrapped up before most agents have got back from their Christmas holidays because we've taken advantage of the lack of stock that's in the market. The big question here is how much stock comes to market from Australia Day onwards. That's when a buyer will get a true indication of where the market's at.
Speaker 3:Yeah, certainly an interesting path ahead every year, but particularly this year. A really great discussion today, peter, a topic I certainly have a lot of interest in and hopefully our listeners do too. Thanks so much for coming in and talking with us. Thanks, kieran, and thanks to everyone for listening to Current Market Insights. We look forward to speaking with you next time.
Speaker 2:Thanks for joining us on the Current Market Insights podcast brought to you by Harris Partners Real Estate, the podcast providing real estate insights you won't find anywhere else.
