What sunny weather means for house prices

Dec 27, 2018

What sunny weather means for house prices

Seasons can play a significant role when it comes to house prices and summer is no exception.

Traditionally, the sunny months of summer have been considered an ideal time for buyers to snag a bargain, with house hunters facing less competition than in spring, autumn and winter.

This long-held wisdom is now backed up by research, with Monash University1 showing that house prices in Sydney – unlike many other Australian capital cities – tend to spike in the cooler months.

The research, which examined seasonality in property prices across Australia, found that in Sydney July tended to be the most expensive month to buy a house, while June was priciest for units.

Buyers face less competition in summer

While the reasons for this are complex, when it comes to summer one big plus for buyers is that there are fewer purchasers in the market, which can help keep a lid on prices.

However, while there tend to be fewer house hunters active in summer, keep in mind that those who are looking can be very committed, so bidding at auction can get fierce.

Sellers want to meet summer deadlines

Another factor benefiting buyers over summer is that deadline-driven vendors can be particularly keen to sell, meaning that they may be open to lower offers than otherwise would be the case.

While their reasons vary, vendors who list at this time of year often want to take strong action to finalise sales, especially before the end of the year, even if this means taking a lower price.

Fewer investors in the market

According to Ray White2, buyers can also benefit from fewer property investors being active at this time of year, which can take some heat out of prices.

The real estate agency says that investors in property, unlike owner-occupiers, tend to wait until the end of financial year before making their moves in the market.

“Investors don’t buy and sell according to their summer plans, they do so to maximise their tax efficiency. That explains why prices peak in July, the first day of the financial year,” Ray White says.

“If an investor sells at this date they’ll have 12 months to pay capital gains tax if they’ve made a profit when selling their property. During this time, they can enjoy full use of that money.”

Don’t get fooled

While summer may be a good time of year for savvy buyers to look for bargains, be aware that seasonal variations also impact the appearance of a property.

Some homes – those near the beach, with views or those that are colder – often show at their best in summer. Conversely, homes with great gardens look good in spring whilst homes that hot or face west appear inviting in winter.

As Sydney agency Morton writes3: “If your property is located in one of Sydney’s beachside suburbs our research indicates that the Spring and Summer months produce superior results, particularly October and February”.

Sources:

  1. https://www.monash.edu/business/economics/research/publications/publications2/5315seasonalityunitpricesaladkhaniworthingtonsmyth.pdf
  2. https://www.raywhite.com/blog/advice-and-tips/which-australian-cities-have-higher-house-prices-in-winter/
  3. https://morton.com.au/selling/selling-tips.php

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