FOMO is driving big price gains in Brisbane’s property market.
We look at what it means for buyers and sellers.
Brisbane’s surging property prices are the result of many factors and one of the most important ones is the fear of missing out (FOMO). Here in the Brisbane Prestige Property market, we’re seeing FOMO at play every day among buyers with people prepared to pay above the odds to secure a home before prices rise again.
We look at why FOMO is so strong and what it means for buyers and sellers.
The perfect storm for property prices
Property prices are ultimately always driven by the laws of supply and demand and right now there are strong drivers on both sides of the equation.
On the demand side, buyers have access to record low-interest rates and the banks are often prepared to let them borrow more than they were six months ago. There is growing confidence in Australia’s economic recovery and relief that COVID-19 never took hold here like in many parts of the world.
Added to this, a lot of people are also determined to move after the pandemic clarified long-held dreams or created new ones.
On the supply side of the equation, there simply isn’t enough stock to meet the demand. While there may be more property on the market than there was a year ago (stock levels were at their lowest point ever in May 2020), there still aren’t a lot of listings at the moment compared to normal times.
In fact, the total number of properties available in the Brisbane market in February 2021 was 29% lower than in February 2019.
Creating competitive tension
With demand outstripping supply by some measure, there is a sense of competition among buyers that we’ve rarely seen. To say the property market is running hot at the moment would be a wild understatement.
For evidence of this, look no further than the auction clearance rate which is currently hovering around 84% in Brisbane according to Corelogic.
We’re often seeing 5-8 parties place competitive bids at an auction – even for premium properties, such as 24 Glen Rd Toowong, which sold under the hammer for a record $7.3 million, almost $1 million over reserve price.
24 Glen Rd – Toowong SOLD Under the hammer for $7.3 Million
This strong competition means that right now we’re almost always encouraging sellers to let their property go to auction rather than accept a pre-auction offer. It’s not uncommon for properties to achieve 10%-to-20% more on auction day than we’d have expected at the start of a campaign.
A continuing factor
Unless conditions change drastically, we don’t see FOMO leaving the market anytime soon. That could be a great thing if you’re selling to downsize (because the gap between prices will work to your advantage) or if you’re exiting the Brisbane property market. But buyers need a plan.
With the market heading upwards, our advice is to buy first and sell second. If you can negotiate a longer settlement period on the home you’re buying, you may still be able to settle both properties simultaneously.
It also pays to act decisively when you’re buying. In this kind of market, buyers who hold out waiting for the perfect home or who try to negotiate a hard deal just because they’re worried about overpaying end up being the ones who really do miss out.
That’s because, if prices continue to rise, they usually end up having to pay far more.
Want more?
If you’d like advice on buying or selling in today’s market, get in touch.
Jason Adcock 0418727788