This Financy article was first published on Yahoo Finance. The coronavirus pandemic is driving up demand among buyers for residential property, and private home-sellers in regional areas could be the biggest winners.
According to property data group CoreLogic, the median house price in Australia is $559,254. If we assume 2-3 per cent is payable in real estate agent commissions, that’s roughly $14,000 to $17,000 that you could expect to pay an agent or pocket yourself, if you sell privately.
Timing is everything when selling property and right now there’s a number of things in favour of home sellers, particularly those in regional areas.
- The seachange and tree-change phenomenon: A record number of people (over 10,000) made the move to regional areas in the June quarter, according to migration figures from the Australian Bureau of Statistics.
- Working from home: Covid’s mandatory lockdowns and improved technology have made it more acceptable and effective to work from home.
- Covid fear: that feeling of uncertainty has resulted in there being fewer property listings on the market, according to Corelogic. This has increased demand among buyers for existing supply.
- Government incentives such as the $25,000 home builders grant are increasing the level of interest among buyers to buy cheaper property and build or renovate properties, particularly under a total cost of $750,000.
- Record low interest rates is also keeping borrowing costs low.
In addition to this, regional house prices are now outperforming capital city prices on a quarterly and annual basis.
“The market is becoming more favourable to sellers,” said Eliza Owen, CoreLogic research principal. “Regional Australia is now outperforming the capital city market.”
The latest CoreLogic indices show values across the combined regional market increased 4.8 per cent over the year, compared with 3.7 per cent across the capital cities.
But selling property privately in Australia isn’t as popular as it is overseas and this is generally put down to the assumption that the process is complicated.
In the United Kingdom, around 20 per cent of people sell their own property, 40 per cent do so in the United States yet less than 10 per cent do so in Australia, according to Agent in a Box co-founder Craig Jarvis.
“I am somewhat surprised that more Australians aren’t selling property themselves,” he said.
“Most people in Australia believe it is a complicated undertaking when it’s not. It is a six step process that includes you engaging with a solicitor or lawyer to draw up a contract for sale.”
Jarvis said the six critical steps you need to follow when selling property yourself:
- Price the property to attract buyers;
- Present property to impress buyers;
- Promote the property to reach buyers;
- Qualify the buyers who respond to your marketing;
- Engage with the buyers at inspections and talking to them; and
- Negotiate the deal.
But the window of opportunity for sellers is impossible to hold onto forever and if it does close it may strengthen the case of selling privately to save on agent commissions in a low growth economic environment.
Many mortgage loan repayment holidays are set to come to an end before the Christmas this year, which could put the pressure on many home owners to sell amid predictions that loan delinquencies could rise.
Such a development, combined with slowing population growth could increase supply relative to demand.
“The current market has no baring if you want to sell your home. It doesn’t matter if it is a seller’s market today or a buyer’s market,” said Jarvis.
“It is purely about understanding the number one rule of property and that is buyers follow property, they do not follow agents. It is no different to selling your car privately, except with a bit more support.”