What’s going on guys It's Jordan de Jong here and today I want to talk about how the yearly property cycles play out on a month to month basis, and then I’ll follow up with some market conditions that may impact these cycles in 2020, hopefully, this will help you when planning out your next property purchase. Obviously, as we saw between 2017-2019 other market conditions can have a serious impact on consumer confidence, specifically federal elections with proposed policy changes that would impact property investors, regulators such as APRA playing with the financial leavers, and other economic drivers such as the cash rate. So every year can be very different depending on these other factors and how heavily the media reports on them, the media has a phenomenal reach and depending on how they relay the message it could be perceived the wrong way or at a very extreme level such as this 60 Minutes segment that suggested the property market was going to crash by 40%. So the following yearly cycle will be based on a typical year growing at the average rate without any significant external intervention, and it’s mostly driven by our seasons, holiday periods and how our human emotions try to predict when we think it’s the best time to either buy or sell property. Although these cycles are generally replicated in all markets and states, this walkthrough will have a bias towards to Melbourne market as that’s what I know best, also auction campaigns are more apparent in the Melbourne property market than some other states, and you’ll see why they have a significant impact. Starting off in January it’s a pretty slow month, because a lot of people take extended holidays between Christmas and Australia day, so it’s not an ideal time to think about buying or selling because even if you’re not away on holidays, a lot of potential buyers or homeowners might be on holiday themselves. For those who do decide to list their property in January, normally the earliest we come back to work is after the first week after New Years, and if you think about an Auction campaign, it usually takes 4-5 weeks to roll out before the actual Auction day, this means the earliest we really start to see auctions and clearance rates being reported is the first week of February. This is when the property cycle really kicks off for the year, as we start to see some new listings come through onto the market and auctions ramping up in mid-February, most people taking extended holidays are usually back to work and into retinue by now and we start to see a lot more action taking place. With almost 2 months of stagnation between December and January, anyone who missed out buying or selling late in the previous year is coming in guns blazing to make a deal happen, they’ve just had two months off with free time to think about how the missed out last year and not going to make the mistake again this year. On top of that, we have all the New Year’s revolutionist who wants to make a change to their lifestyle, the holiday goers who want to buy a holiday house in the location they only spent 5 days in, and the family gatherings that caused families to either move closer together again or….. further apart. In combination this usually creates the highest clearance rate season of the year between mid-February into late March, and then people start to plan and go on their Easter holidays, and as before, sellers are either going away or on a break and don’t want to necessarily sell their homes over the holiday season, talking of festive seasons, could you give me something to celebrate by smashing the like button? The same is true for buyers, but that doesn’t have as bigger of a consequence as sellers, because when homeowners aren’t selling, there is less stock available on the market, and we see a supply shortage over this period, and due to the sale process being quite clunky, finding the right agent, getting contracts done, figuring out where to live next, this generally slows down the market. When a buyer is hot, it doesn’t really matter about their holiday, they can come back and the next weekend be bidding at Auctions or making offers, it’s not as big of a process to get going again if they were already looking to buy and have everything in order before the break, this intermediate pent up demand then creates a surcharge in the market late April and into May. Early may we start to see those sellers back from their holidays list their properties and a whole bunch of new stock comes back onto the market and it sits pretty neutral on the supply and demand ratio in mid-may until it starts getting a little bit colder, especially down here in Melbourne. Just like it’s harder to get out of bed on a colder morning, we become more lethargic in the property market too, all the buyers that have been trying to find the perfect property since the start of the year start to get over the whole process, they’ve been out bided too many times at auctions or missed out on their dream home and are now disheartened, quickly getting over real estate agent phone calls and emails. The same happens for sellers, there’s no bounce in their step to selling either, the plants and grass aren’t flourishing like they were in the summer weather, it's gloomy or raining most days so there’s not a lot of natural light coming through and market always seems to slow down over the winter period. Then, of course, we have the end of the financial year through June and July, so a lot of people are ensuring they have their tax returns are in order, getting depreciation schedules written up, maybe fitting in a last-minute renos and are generally focused on their current setting rather than finding a new one. Again, to throw in a holiday season here, June, July, August is the warm season for Europe, and all of those who try to escape the cold weather, especially down in Melbourne, generally organize their longer holiday’s over this period. So due to this low amount of stock on the market through winter, there’s been a demand snowball effect taking place in the background since early May, buyers desperate to find the perfect property will snatch up a good listing quite quickly after it comes onto the market. Just like the sunshine coming through after a gloomy winter, when we come into spring we start to see a lot more listings flow through onto the market, that fresh spring air and flourishing backyard bring life in many forms, especially into the property sector. Spring is the last real push for the year, with a big increase in stock on market, the good ones usually go first, followed by B & C grade properties as buyers are beginning to feel burnt out, and start saying “This will do” or “I’m not going to miss out on another one”. A-grade properties will still come on the market through this period, but we generally start to see the market fizzle off through October and November, Auction clearance rates start to slow down and when we see Christmas decorations hit the stores, which seems to get earlier and earlier every year, that Christmas season break mentality kicks in. Christmas parties now get booked as early as mid-November and between then and the 25th of December it feels like the days just drag on, the workforce is focused on getting everything wrapped up for the year and then planning their summer breaks in the spare time, which doesn’t leave much time for property in between. I’ve found this period between mid-November and late-December a great time to buy property, as everyone else seems to be distracted and demand simmers down to a manageable level, supply is still steady and there’s no reason for great properties not to come onto the market and be snapped up just before the festive season. Until of course, the year wraps up a weekend or two before Christmas, people start going away, organizing their Christmas hams and the last thing on their mind is property inspections and checking contracts of sales, and from here the cycle repeats itself. So in summary February, May and October are months of higher than normal demand, in early March and late September we start to see more stock come onto the market, January, April, June, and July are disrupted by holidays seasons and EOFY and in my opinion, November and December are the best times to buy. As a follow on from this, the best time to buy is when you can afford to do so, market conditions and individual circumstances are always changing so don’t try and hold out on buying a property to try and “time the market”, because something could seriously change in the meantime and may cause you to miss out altogether. Up until this point, the video has been pretty generic around the yearly seasons, but let's go into some situations that would cause external factors to impact the property market in 2020, If your keen for more content, subscribe and hit the notification button so you don’t miss a video. If we continue to see the cash rate come down to 0.5% or even 0.25% this will through to interest rates and we will be paying less again for our mortgage repayments, essentially this is where the term “Money is cheap” comes from because its costs much less to borrow more money. If the cash rate gets to 0.25% and the economy is still week, Phillip Lowe said this would trigger the start of quantitive easing, which essentially means they print money out of thin air through buying bonds and it gets injected into the Australian economy, which means people have more money to spend and we generally see goods such as fruits and vegetable prices skyrocket as they soak up this additional cash injection. You may think this would be good for property prices because we have more cash to spend, but at in a time of a weak economy, big financial transactions are the last thing on peoples mind, especially if unemployment and underemployment are increasing and the populations main focus is to keep food on the table, this is why we see those food prices increase. This is all a very doom and gloom scenario, by the way, so instead if the economy is recovering but we still see interest rates lowering, this would fuel the property market and we would possibly see investors flood back into the market after a 2-year hiatus. If this happened, we would most likely see APRA step in again and put some restraints on investor lending so that the housing market doesn’t surcharge too far out of control. Lastly, we commonly hear people talking about the first home loan deposit scheme throwing in a whole lot first home buyers in the market, I disagree with this though as there are only 10,000 spots available now, and another 10,000 in the start of the new financial year, so 20,000 in total for the year compared to the usual 110,000 first home buyers that purchase a home every single year, it will have an impact but it’s not really a significant chunk of that market. I want to know what you guys think about the yearly cycles and what you have seen in different seasons, leave a comment below. As always, seek your own professional financial, legal, taxation & property investment advice for your current situation, these videos are just my opinion and general in nature and should never be considered personal advice. Until next time, happy house hunting.

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