Eighty per cent of the properties on the market in the western suburbs are currently overpriced.
Why is this so? Owner expectation being “out of sync” with the market is the main reason. Owners base their ideas about the value of their home based on faulty or outdated information.
One of the common misconceptions that I encounter as an agent operating in the area is that for a property to have sold, the asking price must have been attained. This is often not the case – particularly in the present market. There are many examples where properties have sold for hundreds of thousands of dollars less than the asking price but the perception by the local home owners is that they sold for close to asking!
It is also a dangerous practice for a home owner to compare their property with what is currently on the market – particularly if the “comparables” have been on the market for some time.
The final reason that sellers have inflated ideas about current market value of their home is that patterns established 18 months to two years ago when the market was increasing dramatically are still being applied. From 2004 to 2007, prices rose by an average of over 20% annually in the western suburbs. Essentially, this growth meant that the price of people’s homes doubled in that period. Conversely, for the past six months the market has fallen by a figure of 10-15%; to factor in any growth at all for that period is a mistake that can leave a property sitting on the market for months.
The key point for owners is to decide what they are trying to achieve by selling their home. Homes that are perceived by the market to reflect true market value as opposed to an owner’s unrealistic expectation are likely to sell under the market average of approximately 60 days.
The market has shown that overprice properties will sit – and sit – and sit.
David Fear (Director – Director, Altus Real Estate)