What a year it has been so far! After months of some properties setting incredible records while others take a lot longer to sell or are withdrawn, the market has finally settled and gone into the natural ‘quiet’ part of its regular cycle.
Having been in the real estate business for over thirty years, I have seen this happen many times before. Prices soar up and up, with no end in sight and buyers are fighting it out to pay top dollar. Then, all of a sudden, property values drop slightly or stagnate for a period.
Some homeowners find this part of the property cycle unsettling. They feel as though they are losing money and panic, however it is important to look at the bigger picture. For those of us on the Peninsula, this is still very rosy!
Take a look at how Avalon compares to other markets and find out why it doesn’t always matter what stage of the market you sell at.
Avalon Property Prices
If you’re concerned about a change in the value of your home in the first half of 2018, consider the following:
- A buyer who purchased the average Avalon home in 2012 had well and truly doubled their money by 2017
- A buyer who purchased the average Avalon home in 2015 was over $300k better off at the end of 2017
- Apartment owners in Avalon have seen the value of their properties grow by an average of over $200k since 2012*
Palm Beach, Newport and Bilgola all have similar rates of growth, with home values jumping from $1.7 million in Palm Beach in 2012 to closer to $3 million by the end of 2017. Newport and Bilgola homes and apartments have also almost doubled in value during that period.
The peak may be behind us for the time being, however if you have owned your home for over five years you are still well and truly ahead financially.
The enduring popularity of Peninsula property
It can be easy to assume all Australian homeowners have experienced similar boosts to the value of their homes in recent years. But when you take a look at other cities, this is not the case.
Take, for example, Docklands in the heart of Melbourne, where an apartment purchased in 2012 for $620k is now worth more like $550k*.
Or in South Brisbane, where a $450k investment from 2012 has only strengthened its value by around $20k per year*.
In these areas, a glut of availability has seriously affected demand. Those who decide to sell may end up doing so at a loss — if they can find a buyer.
Conversely, on the Peninsula, property remains in demand. Right now, the average property being advertised in Avalon has over 1300 ‘hits’ on realestate.com.au, compared to the NSW average of only 859. In poor old Docklands, properties are getting around 180 online visits right now.
Selling in a quiet market
As you can see, if you’re an Avalon homeowner, if you need to sell and you have owned your home for more than five years, you are still a long way ahead of where you started from.
When buying your family home, as long as you buy and sell under similar market conditions, the state of the market is almost irrelevant. In fact, upgrading your home in a slow or falling market can be beneficial.
For example, if we assume a property market has fallen by five percent, your $550,000 home might only fetch $522,500. However, the new home you have your eye on, which was previously worth $700,000, will now sell for $665,000. You have lost $27,500 in selling, but saved $35,000 in buying and are now $7,500 better off.
It is inevitable that the cycle will kick back into gear, particularly in a place like the Peninsula, which never goes out of style and has limited scope for new development.
While buyers are aware it is finally ‘their’ market, local home vendors do not need to drastically reduce their prices to make a sale. With the right agent on their side they will be able to generate competition from buyers and achieve a strong result in the current market.
Get in touch to find out more about investing in Avalon, Newport, Palm Beach and surrounding suburbs.
*Based on Realestate.com.au yearly trend data