Will the real market please stand up?

Spring market to gauge housing market.

The housing market experienced two events over winter – low stock levels and strong price growth. When interest rates are low in combination with tight stock levels, price growth is never far behind. But it can set up a misread of the market too. Many buyers competing for few listings in winter can carry a different outcome than when many buyers are picking over many listings in spring.

Historically, the most transactions occur in the last third of the year, from September to December. If prices hold or even rise from current levels between now and Christmas, the price gains in winter will be justified. If the extra stock on market causes a softening in prices, it will suggest the strong prices achieved in winter were aided by a lack of seller competition.

Buyers can expect stock on market to rise by 30-40% in spring. The good news is that whilst spring will bring extra sellers into the market, the buyer pool does not expand to the same degree. Prices have risen by around 10% this calendar year, so further growth would be a surprise, but not an impossibility.

However, one thing buyers wont find this spring is good property at a bargain price. Regardless of what happens in spring, 2014 will go down as a sellers market, the second year in a row that sellers have held the upper hand.

To ensure an accurate read of the spring market, buyers and sellers are well advised to gauge the market on the basis of real time results. A sale in the same street three or four months ago is largely irrelevant. Buyers can only make offers on properties that are currently listed for sale, and sellers can only sell to buyers active in the market. Whether the market rises, falls or stagnates in spring will depend on the factors driving today’s market. Previous sales are now history.

Come what may, the real market conditions will become evident during spring.

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