Property looks to the Easter raffle

The period directly after Easter often sets the property market's tone for the rest of the year, and right now the forecasts for stock, prices, interest rates and the possibility of recession are looking fragile.

Property Observer

There’s something about any holiday break. It allows people with downtime to pause, reflect, seek feedback and then react.

Traditionally everyone returns from their summer Christmas break, sand no longer between their toes, brimming with new-found optimism.

Hence most years – like 2012 – begin with stronger auction success rates and firmer prices than those that had tailed off in the overburden exhaustion of December.

Easter is another pause, which allows the market – and most particularly potential buyers and sellers – time to reflect.

But that’s where Easter’s similarity to Christmas ends.

It tends to present itself as a rather more unwelcome interruption to marketing campaigns.

And when it comes to property’s forward progression, quite often the real estate market can take a turn for the poorer after Easter.

"It’s what happens after Easter that sets the tone for the year,” Melbourne buyers’ agent Mal James notes.

"When the Easter Bunny spins the roulette wheel where he (or she) stops on price nobody knows,” James opines.

So the big question is: what will happen after Easter?

We’ve seen the typical rush to have properties sold before Easter – on the surface Melbourne seemed to hold up better than Sydney on super Saturday – and now the school holidays mean many buyers will be otherwise preoccupied.

Over recent times estate agents have been regularly complaining of a shortage of stock, but what they really mean is new sellable listings.

The SQM data regularly shows capital cities overburdened with old unsold listings, but the consensus is that given that new listings remain a little light on, and noting the underlying demand, that there’s a good chance of the capital city auction clearance rates therefore remaining solid. But things are very very fragile.

Prices are of course down, especially for stale stock, and this pricing revision has finally seeped through to vendor consciousness.

It's probably fair to say the actual house and unit price falls for mum and dad vendors are far more than the overall subdued figures reflected in capital city median prices put out by the major property data providers such as RP Data Rismark's 4.3 per cent national annual decline.

And so many would-be vendors have understandably decided not to list. Therefore buyers face limited fresh choices and accordingly auctions prices still quite often sell at higher that the pre-auction marketing campaign estimates.

Negative headline overload has dissipated the positive impact of the two recent rate cuts, but any belated May Day rate cut by the RBA might help things along.

Unfortunately then events surrounding the federal budget a week later might harm the prospects of recovery. Already the R word – recession – is creeping into economic chatter.

Bill Evans from Westpac says South Australia is in recession with given poor housing, manufacturing and population growth data.

Let’s hope the rest us of don’t follow.

This article first appeared Property Observer on April 4. Republished with permission.