Mind the Gap
Wednesday 05 Sep 2018
Whenever I hear the words ‘mind the gap’ I immediately think of holidays travelling on the London Tube where it’s a constant refrain warning passengers to beware the danger of falling between the carriage and the platform as they get on and off the train. But it’s a phrase that has also come to mind over recent weeks in relation to the changing residential property market. I think people need to ‘mind the gap’…and here’s why.
On the Tube in London it’s easy to think ‘the gap’ is obvious for anyone who cares to look for it and therefore the announcement is unnecessary. However the reality is many people simply don’t think to look for it and therein lies the problem. If you aren’t looking you could well fall in.
In terms of the market right now I think there is a gap and it is one that both buyers and vendors should be careful to mind. Although perhaps it isn’t the ‘gap’ that you might expect.
There has been a lot of commentary about easing market conditions and there is no doubt that the demand has eased. At the same time there has been increasing commentary that a wave of listings onto the Spring selling market presents great opportunities to secure a bargain.
I’ve spoken in recent weeks about the fact I believe a significant proportion of vendors have taken into consideration the changing market and appropriately adjusted their price expectations. I’ve warned those expecting to be able to negotiate a price below the estimate presented by an Agent could be disappointed.
But as we enter what is always a busy Spring selling season there is a new gap emerging. More listings and the potential for more realistic prices are together driving more potential buyers into the market. That’s great.
But at the same time, as a result of evidence of more buyers we are now seeing vendors more excited about the potential for increased demand to drive up prices.
That’s where the gap exists. What exists is demand, but not at any cost.
Buyers remain incredibly price sensitive. Even though the RBA left rates on hold again this week the reality is most expect banks to follow Westpac and move their rates higher. Buyers are cognisant of that and they’re not prepared to stretch beyond what they consider is fair, safe and reasonable.
So vendors need to be mindful of gap between growing demand and securing a deal. To avoid falling in vendors need to keep looking to set appropriate expectations.