We’ve been around as a company for 120 years. Never in that time has anyone or anything been able to accurately predict the future behaviour of buyers.
And thank goodness for that… it has kept us all in a job!
Our relevance stems from the reality that it’s folly to predict what buyers might do in the future. And so regardless of what commentators might believe will happen, our responsibility is to market property to find as many buyers as possible to create and maximise competition. We know from experience that making assumptions isn’t in the best interests of our clients.
There’s no better case in point than March and April of 2020. I remember being at home and logging onto the online auctions we were conducting as the world literally shut down. At the time, the ‘consensus’ was a minimum price fall of 30 per cent. Yet, on the screen the buyers were clearly making their own decisions. The bidding was intense. And all of this before there were any announcements of government stimulus.
Where did their confidence come from? Why was it that buyers were seemingly living in a different universe? Of course, we’ll never know for sure. It just happened.
This was the reason we started publishing Ray White Now. We’re fortunate that we have the largest network of agents all using the same data collection software supported by a specialist team of data scientists and engineers. The best thing we can do for our clients is to give them as much information as to what’s happening now to support their decision making.
So are the same commentators right this time? Is the market heading for a significant decline in sales numbers and sales prices given the recent and impending interest rate rises? We of course won’t get dragged into that sort of speculation because no-one knows and we don’t think the world needs another opinion!
But what we can say is that we sold $5.7 billion of property in April 2022. This was eight per cent up on the same month year. While the value of property sold was higher than last year, the number of properties sold was down six per cent. The average number of bidders per auction fell from 3.6 in April 2021 to 2.9 in April 2022. If we extrapolate our auction data, there’s evidence that in some, but not all markets, buyers aren’t as aggressive as they were towards the end of 2021 for some types of property.
However, overall, April was a month of strong activity and results, and well above long term averages. Indeed, a very different story to most of the news headlines.
All of this activity occurred when it was clear to all that interest rates were about to rise. Buyers were buying knowing interest rates were rising. And they are buying today knowing that it’s likely that the cash rate will increase another 100-150 basis points.
With new listing numbers still strong, it promises to be a fascinating period of time for the Australian market once the federal election is behind us.
Dan White
Managing Director
Ray White Group
