Is it the right time to sell my house? It is a question you need to ask yourself before deciding to sell your house. Many factors impact the success of your sale. Looking into quantifiable real estate data can help you avoid making bad decisions and plan out a concrete strategy before listing your house.
Take a look at these KPIs so you can better understand what’s ahead of you before putting up a for-sale sign and engaging with a real estate agent.
5 KPIs You Need to Know Before Listing Your House
Knowing the real estate condition in your local area and your specific suburb is crucial. Each area has unique characteristics that could influence your market. Doing research is an advantage when making vital decisions while selling your property.
Moreover, it can give you more negotiation power with the real estate agent. Having substantial insights into the current real estate market trend prevents agents from presenting false data just to get the deal.
Transparency is essential in building a trusting relationship with your real estate agent. At Empire Real Estate Melbourne, we value honesty and make an outright effort to provide you with all the essential information about your local suburb, be it good or bad, to ensure satisfaction and ease of transaction with our clients
Here Are The 5 Market Trends You Need Before Listing Your House
- Demographics – What is changing?
- Available Stock
- Average Price
- Market Cycle
- Real Estate Statistics
- Days on Market (DOM)
- Auction Clearance Rate
Property market research takes time and effort. Having to do the market research yourself can be strenuous, and there will be a possibility that the data may not be accurate. On a brighter note, having a real estate agent who already knows the current property trend in your suburb can significantly make the sale of your property a lot easier.
How To Research the Property Market?
Knowing your local real estate market is important because you will know who will be the potential buyers. Knowing your buyers’ demographics can help you create appropriate marketing strategies. Additionally, it will help you decide what certain property features you need to highlight and other benefits of the location of your house to attract your target market.
So, what do you need to know?
- You need to know the predominant age range. Are they young people? Young couples? Or families with kids?
- How many Parks are located within the suburb? Are there shopping centres? Are there many restaurants in the area? Parks? Etc.
- What is the predominant profession in your suburbs? Are they professionals working from home, or do they work in an industrial area?
- What is the quality of the school in the area? Are there any private schools?
It is important to know what your suburb offers to your possible buyers. The residents’ needs, lifestyle, age, and income can help you assess the best properties that can sell well in a specific area. Having data on what age range dwells in your area can give you a clear insight into the property sizes in demand and accessible buildings fitting to the current market.
Moreover, if you find couples in their 20s and 30s moving into your suburb, properties with bedrooms, a backyard space, and a nearby good school will pique their interest. Lastly, household income can impact spending capacity. Hence, an decrease or increase in household incomes can influence property prices and sales.
The Supply and Demand
Looking closely at the housing supply in contrast to the current demand is crucial in planning investment opportunities. In suburbs where the demand exceeds the supply will project an increase in property prices. However, the figure is just one thing.
Population growth, industry progress, building projects, and demographics can also impact property sales and future demand. There are instances that a vacancy of 10% in a particular area at a specific month drops to 5% the following month.
Perhaps the suburb is experiencing a decrease in population, or people are moving to other suburbs. Assessing and looking at every corner of this instance or sudden change can give you a better perspective of its significance in the current supply and demand.
You need to know how many current listings are in your area and how many listings were in the previous months, this will indicate if your suburb is on a seller market or buyer market.
The Average Property Prices
The current average property prices can provide insights into whether or not you are selling your property at a reasonable and appropriate price. Looking into the average property prices trend will require looking at properties on the market and the features they highlight so they can go beyond their average price.
To garner a better perspective on other listed properties on the market that goes above the average property price, going to viewings in person and roaming the vicinity can help you get a real feel for it.
Furthermore, the median sales price is another vital data you need to examine. The median sales price helps buyers know when and where to buy a house. It also indicates whether the area is currently in the seller’s or buyer’s market.
A rising median sales price indicates a seller’s market, while a falling median sales price is buyer’s market. The median sales prices project potential selling and buying opportunities. It gives you the perspective on what to accentuate in your marketing strategies to tap the right buyers. Typically, properties sold under median prices are bargains, while those sold above the margin have unique features that attract more buyers. Factors that affect property prices are size, location, lifestyle, and other desirable property qualities.
The Market Cycle
The market cycle of your suburb is another aspect you can consider to know how much you can price your property. Gentrification in the suburb can significantly boost property prices. So, if you live in a poor suburb but are gradually displacing old dwellers into new inhabitants, housing will be improved, more businesses will be attracted, and property prices will be bound to increase.
- Market Boom – a period when the economy in a certain area substantially increased.
- Market Downturn – when the market has become less favourable than the previous season.
- Market Stabilisation – is when the economy is firm and stable for long periods.
- Market Upturn – this is the period when the economy is rising, and employment is also growing.
The Real Estate Market Data
Real estate data, statistics, and market trends are crucial factors in achieving your investment or sales goals. While some are more concerned about positive capital growth, others may find days on the market as a dominant factor. Thus, looking at all corners is ideal for better market insights.
The most important KPIs are :
- Days on Market (DOM) – the age of the property listing was active on the market before an agreement with a broker and seller was made, or an offer was accepted. Looking at DOM can help determine whether you are on a seller’s or buyer’s market.
- A seller’s market- occurs when the demand exceeds supply which is advantageous to sellers.
- A buyer’s market- occurs when the supply exceeds the demand, which is advantageous to investors and buyers.
- Auction Clearance Rates (ACR) – the distribution of properties offered at an auction on the week it was sold successfully. The rate is concluded by accounting for sold properties versus the total number of properties offered. So, suppose 100 properties were listed, and 70 were sold, the ACR is 70%.
- Above 70% is the seller’s market
- Below 70% is the buyer’s market
Other KPIs like these ones are also important:
- Demand to Supply Ratio (DSR) – is the number of active listings available for every buyer on the market. A high supply-demand ratio equals higher inventory, low sales, and low property demand, such an instance is called the Buyers Market.
- Ripple Effect Potential – is the possibility of the neighbouring areas’ price changes propagating to nearby surrounding areas.
- Vacancy Rate – the percentage of vacant rental properties such as apartments complex and hotels at a given period.
Rental Yield – the amount of rental income a property produces per year in contrast to its overall value.
How To Know When There is a Strong Demand in a Market?
- Low DOM means that the properties are listed and sold for a shorter time in contrast to other suburbs. It can indicate that there is a high property demand in the area.
- If the buyers ask for zero to minimal change in the asking price, it could mean they have a high spending capacity.
- If most of the properties go to auction sales, the area has a positive buyer sentiment.
- If properties are advertised with “open inspection,” it indicates a high number of interested buyers.
- If the area has limited available property, it projects that properties are selling quickly and that the demand exceeds the supply.
Selling a property can be a daunting task. Many factors need consideration to ensure a successful sale. Property market research takes experience and a strong grasp to analyse fully. There are complicated concepts that only an experienced real estate agent can comprehend and assess.
Property market research is crucial, however, time-consuming. If your time is precious for your family and work, hiring a real estate agent is a reasonable action. Experienced real estate agents are already updated with market trends and changes. They know how the real estate industry works in your local area and can explain and present to you the best strategy in selling your property.
For extra knowledge, it is also essential to look at:
The Economic Factors
Future trends can be analysed by considering the employment growth in your area, the stability of average property prices, and the residents’ disposable income. Employment growth and disposable income directly impact each other.
The higher the employment growth in an area, the higher the spending capacity of the residents. Hence, they have more means to spend money on a beautiful home. The Australian Census updates each postcode’s demographic data on employment growth, wage increase, and other contributing factors.
Finding all this information alone could be difficult and sometimes impossible. Here at Empire Real Estate Melbourne, we have access to more data than the general public, and we can share it with you for FREE.
Just give us a call at: 0404003010 or send us an email to: zbig@empirerealestatemelbourne.com.au