Which Australian cities have higher house prices in winter?
Conventional wisdom says that the best times of year to sell property in most Australian cities is spring, late summer or early autumn. CoreLogic data shows that sellers are taking that idea to heart: sales in the capital cities consistently peak in the months leading up to December, then peak again in late February through March.
What if the conventional wisdom is wrong? Are spring and late summer really the best times of year to sell, or are sellers and real estate agents incorrect in their assumptions?
Melbourne and Sydney are outliers, with properties in those cities selling for more in July.
Seasonality of house prices
In 2016, a small team of researcher from Griffith, Monash and Swinburne universities set out to answer the question of housing seasonality definitively. They used complex models to analyse comparable house sale prices in each capital city from 2010 to 2015, and what they found supports the idea that there are ‘hot periods’ for the country’s property markets.
They discovered that during certain months of the year, homes sold for a small percentage more than the average, depending on their location. The study’s findings were as follows:
- Brisbane in January: 0.78 per cent more
- Hobart in January: 2.91 per cent more
- Canberra in March: 1.56 per cent more
- Darwin in March: 4.06 per cent more
- Adelaide in April: 2.14 per cent more
- Perth in December: 2.01 per cent more
- Sydney in July: 2.33 per cent more
- Melbourne in July: 3.22 per cent more
These results show that if you’re in a capital city other than Sydney or Melbourne, selling in summer or autumn may net you a higher sale price. Interestingly, Melbourne and Sydney are outliers, with properties in those cities selling for more in July.
The drivers behind house price highs
Investors don’t buy and sell according to their summer plans, they do so to maximise their tax efficiency.
Properties in six out of eight capital cities sell for more during early summer and autumn. There could be several complex reasons behind this; however, it’s more likely that the drivers behind housing seasonality are relatively simple.
During late spring and summer the weather is fine, work is generally winding down, kids may already be on school holidays – the perfect circumstances for house hunting.
Next to no one buys over the Christmas break, so most will either house hunt in November and settle in early December or late January, or house hunt in February and settle in March. Since these are the ideal periods in which to buy, demand is higher than usual; this in turn pushes up prices.
Simple enough – but what’s going on with Sydney and Melbourne? Australia’s two biggest cities have been the epicentres of the property boom, and the majority of investment properties in the country are located in either area.
Investors don’t buy and sell according to their summer plans, they do so to maximise their tax efficiency. That explains why prices peak in July – the first day of the financial year. If an investor sells at this date they’ll have 12 months to pay capital gains tax if they’ve made a profit when selling their property. During this time, they can enjoy full use of that money.
Investors are generally more aggressive, and more experienced in achieving a higher sale price. That explains why sales for comparable properties are higher during these periods in Sydney and Melbourne when more investors are selling.
When’s the best time to sell for you?
Deciding on the right time to sell your home or investment property is a complex and personal decision. While seasonality should be considered there are dozens of other factors you need to contemplate. These include:
- Time: selling your property, moving and buying can be time consuming, stretching over months. Do you have time to balance other commitments including work, childcare and study while selling, buying and moving? If you’ve just started a new job or welcomed a new family member – now mightn’t be the right time.
- Money: is selling the right financial choice for you? If you want to upgrade, consider if you’ll be able to handle the increased mortgage repayments – even if something goes wrong.
- Circumstance: is now the right time of your life to sell and move on to something new?
Above all you should consider whether selling is right for you right now. After you’ve decided to sell you can always delay until the ‘hot season’ in hope of achieving a higher sale price.
Get in touch with a local real estate agent today, to ensure you sell for the best price possible, regardless of the weather outside.