How can you tell when the market is turning?

There are several signs that change is in the air but keep an eye on the whole picture.

A lot more people would be millionaires if the knack for picking the bottom of the property market was a widespread talent. It’s not.

Even experts can be certain the market has hit rock bottom only in hindsight, after clear-cut evidence the real estate cycle has lifted a notch or two and prices have begun to head north.

But there are many indicators of a market upswing to keep an eye out for. And weekly monitoring of the leading signs will help you make informed decisions about whether the market has plateaued or is poised to fall further.

Larger crowds at auctions are one of the strongest barometers of an improving market.

The managing director of Wakelin Property Advisory, Monique Sasson Wakelin, says higher attendances at open inspections and auctions in the sub-$600,000 bracket are a key indicator because this market segment is especially vulnerable to shocks.

She says there are six other signs that help identify whether a market is set for a bounce.

These include: an increase in the number of buyer inquiries to agents and buyer advocates; auction clearance rates that at first stabilise and then creep up; and the return of first-home buyers and investors to the market.

Another reliable gauge is the first cut in official interest rates after a long period of rate stability or rate rises.

The Reserve Bank’s 25-basis-point cut to the cash rate on November 1 might confirm this theory. According to Ms Wakelin, another sign of imminent market change is when fixed three-year interest rates are lower than the variable rate, something that’s happening in the current lending market.

Last but not least in Ms Wakelin’s edited list of market-health indicators is that much-decried sign: talking real estate around the dining table.

When people talk property at dinner parties and can be overheard in restaurants discussing up-and-coming areas and the nuances of interest-only loans, she says, it’s a sure sign things are looking up.

Investors and home buyers need to view real estate as a series of markets, not a single, immutable entity. Different dwellings and different areas of the same city can be chalk and cheese, as many people have discovered.

Elite Buyer Advocates senior advocate Catherine Cashmore says low-end high-rise apartments are already experiencing difficult market conditions. Many of these units, in her opinion, don’t meet first-home buyers’ needs.

It’s a mistake to think real estate in high-demand areas will keep dropping in price, she says.

”We’re already seeing a higher number of properties being withdrawn from the market each weekend as vendors choose to tough it out in the hope of better times ahead,” she notes.

‘Good stock is diminishing [and] in my opinion, we hit the bottom of the market a few weeks ago.”

If you are wanting to find out what your property is worth in the current market, click here for a free market appraisal, or click here to download a report with the lates property data for your area.

Source – Chris Tolhurst – domain.com.au