{"id":41332,"date":"2022-12-29T10:20:04","date_gmt":"2022-12-28T21:20:04","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=41332"},"modified":"2022-12-29T10:20:04","modified_gmt":"2022-12-28T21:20:04","slug":"buyers-vs-sellers-who-will-win-2023s-real-estate-battle","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/buyers-vs-sellers-who-will-win-2023s-real-estate-battle\/","title":{"rendered":"Buyers vs sellers: who will win 2023\u2019s real estate battle?"},"content":{"rendered":"

PHOTO: The property market experienced a significant correction in 2022. FILE<\/strong><\/p>\n

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The downturn in the global housing market is set to continue in 2023, with most Australian cities expected to fall by double digits in what is shaping up to be the deepest property correction in more than 30 years.<\/p>\n

Few people are willing to buy or sell in a falling market, and stock is hard to find. But some investors are betting there is money to be made from buying property now, rather than waiting for the nadir in the third quarter of 2023.<\/p>\n

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Sydney-based investor Blair Gardner is looking to get in now while the market favours buyers.\u00a0Natalie Boog<\/cite><\/strong><\/em><\/p>\n<\/figcaption><\/figure>\n

Sydney-based investor Blair Gardner is among those looking to get in while the market tilts in their favour.<\/p>\n

\u201cThere\u2019s never going to be a perfect time to buy a property, so we\u2019re going in now while we can still access finance, and buy at lower prices,\u201d Mr Gardner said.<\/p>\n

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\u201cWe\u2019re planning to buy an investment property in a blue chip area and hold it over the long term so the near to medium term interest rate and price fluctuations do not worry us much.<\/p>\n

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\u201cIf you\u2019re waiting for prices to fall further, your borrowing power will be reduced too, as rate increases. If you\u2019re waiting for interest rates to fall, you can borrow more money, but there\u2019s more competition, and you end up paying more.\u201d<\/p>\n

Since peaking in April, home values nationwide have slumped by 7 per cent, slashing the total value of Australia\u2019s residential real estate by $641.3 billion to $9.4 trillion, according to CoreLogic.<\/p>\n

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In the 12 months to the end of November, dwelling values dipped by 3.2 per cent nationwide, marking the largest annual decline in more than three years.<\/p>\n

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Buyers are tipped to hold the upper hand as the market weakens, but the shortage of new stock and demand from migrants could give vendors a fighting chance.\u00a0Peter Rae<\/cite><\/strong><\/em><\/p>\n<\/figcaption><\/figure>\n

Shane Oliver, AMP Capital chief economist, said the Reserve Bank would likely pause after increasing interest rates for the ninth time in February and could potentially start cutting rates by the end of the year.<\/p>\n

\u201cThere is a good chance that by the time the Reserve Bank meets again in February, the economy would have slowed and this would enable them to go on pause from there,\u201d Dr Oliver said.<\/p>\n

\u201cWe\u2019re getting close to the top of the rate cycle, and I think we\u2019re probably about halfway through the housing market downturn.<\/p>\n

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\u201cSo we\u2019re expecting\u00a0home prices to fall further\u00a0as rate rises continue to impact, resulting in a peak to trough drop of 15 per cent to 20 per cent. But prices are expected to bottom around the September quarter, ahead of gains late in the year as the RBA moves toward rate cuts.\u201d<\/p>\n

Some experts say the market will continue to favour buyers in the next 12 months amid\u00a0weaker prices, despite lower borrowing power and scant listings.<\/p>\n

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Forced selling<\/h2>\n

The large chunk of fixed rate mortgages rolling into higher interest rates later in the year could also spark some forced selling and offer buying opportunities.<\/p>\n

Eliza Owen, CoreLogic head of research, said 2023 would benefit buyers who could afford to borrow as interest rates peak.<\/p>\n

\u201cThere are certainly challenges at buying in any point of the cycle, but this year will see less buyer competition, lower purchase prices, and potentially some more motivated sellers off the back of rising interest rates, and adjusting expectations around lower sale prices,\u201d Ms Owen said.<\/p>\n

Jack Henderson, Sydney-based buyer\u2019s agent and founder of Henderson Advocacy said buyers who were not constrained by limited borrowing capacity would win the real estate battle in the next 12 months.<\/p>\n

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House prices are expected to bottom out by the September quarter, according to AMP Capital.<\/strong><\/em>\u00a0<\/cite><\/p>\n<\/figcaption><\/figure>\n

\u201cThose who have the largest amounts of buying capacity will be the real winners because they can take their time and also wield significant negotiating power,\u201d Mr Henderson said.<\/p>\n

\u201cBut buyers who wait too long might miss the opportunity because the market could also turn abruptly into a sellers\u2019 market, like it did during the pandemic.\u201d<\/p>\n

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Shannan Whitney, director of Sydney-based real estate agency BresicWhitney, said while there was still demand for reasonably priced homes, vendors with unrealistic expectations would lose out.<\/p>\n

\u201cI think there will be more pressure on vendors to meet the market than buyers,\u201d Mr Whitney said.<\/p>\n

\u201cIf pricing is not right, then transactions don\u2019t happen. Buyers won\u2019t stretch their budgets to pay more. So to me, if there was a winner, I still feel that largely, the power is on the buy side.\u201d<\/p>\n

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A fighting chance<\/h2>\n

But vendors also have a fighting chance as new listings dry out and the return of migrants adds to demand, according to industry insiders.<\/p>\n

CoreLogic data shows new listings have dropped by 26.3 per cent in the four weeks ended December 4 from a year ago, and were down by 12 per cent compared to the five-year average.<\/p>\n

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\u201cI think there\u2019s still going to be a lack of stock after the new year and buyers who weren\u2019t able to secure something before the holidays will be returning, so you get the new influx of buyers as well,\u201d said Bronwen Lipscombe, a selling agent with McGrath.<\/p>\n

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The lack of fresh listings could tip the balance in favour of vendors, according to some experts.<\/strong><\/em>\u00a0<\/cite><\/p>\n<\/figcaption><\/figure>\n

\u201cSo assuming that the lack of stock continues, vendors are actually going to be in a much better position because of the increased competition.\u201d<\/p>\n

Cate Bakos, buyer\u2019s agent and founder of Cate Bakos Property, said pent-up demand from buyers waiting in the wings, combined with the increased migration would give vendors the upper hand.<\/p>\n

\u201cIf we didn\u2019t have the migration flood gates opening, I\u2019d have to say that buyers grappling with lower borrowing power and lower listings would be the winners,\u201d Ms Bakos said.<\/p>\n

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\u201cHowever, I feel that vendors will be the winners. With an increase in new arrivals, a slower rate of new builds and pressure on building materials, established home vendors will be the beneficiaries as the supply and demand equation switches back to favouring vendors.<\/p>\n

\u201cWe know of many buyers who can buy but have chosen to sit it out and try to time the market. When the RBA eases up with cash rate increases, we will see a flood of these buyers back into the market. Combined with lower stock levels, this will be a nice cocktail for vendors who have previously been facing softer demand.\u201d<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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