Average time on market hits record low levels, while vendor discounting is on the decline.

Average time on market hits record low levels, while vendor discounting is on the decline.

Average time on market and vendor discounting are two extremely important property market indicators. They give investors a yard stick to measure supply and demand across markets and often point towards a flat, declining or climbing market.

I came across the following an article from RP Data and thought I would share its key findings.

RP Data has been tracking the average number of days properties take to sell and the average vendor discount since the beginning of 2005′.  “Both measures have recorded a significant improvement throughout 2013 and the average number of days on the market is currently at a historically low level”.

Average vendor discount measures the difference between the first advertised price and the end sale price of a home.

‘As of December 2013, the average discount for a house in a capital city in Australia was -5.7% and -5.3% for a unit. To give a comparison, at the same time in 2012 discounting levels were -6.9% for houses and -6.3% for units.

‘RP Data’s analysis of sales across the Australia’s capital cities found that over the final quarter of 2013, 29.5 per cent of all houses and 37.5 per cent of all units sold, transacted at a price which was at or higher than the original list price’.

Why is this average vendor discounting important?

  • A reduction in average vendor discounting is generally the result of an increase in competition.
  • An increase in competition or demand is one indicator of property price rises.

Average days on market measures the difference between the first advertised date of the property and the data the property was officially sold. 

‘Based on RP Data’s findings (since the beginning of 2005), the average number of days on market for a property in Australia’s capital cities are at historic lows of 38 days for houses and 35 days for units’.

Why is average days on market important?

  • The improvement in days on market figures can be reflective of an improvement in market conditions.
  • An increase in competition or demand is one indicator of property price rises.

“The improvement in both discounting and time on market is reflective of the broader housing market conditions”.  “Property transactions have increased measurably over the past year and home values have also risen”.

Why is this important to you as a buyer in a capital city?

  • These numbers are strong indicators that a market is heating up.
  • Therefore you can decide if you want to jump in and try and make the most of current market conditions or realise you have missed the current opportunity and look or wait for the next one.

Why is this important to you as a seller in a capital city?

  • By setting a realistic asking price you will generally be able to move your property quickly.
  • When market conditions and competition are heating up there is the potential to sell your home at a premium or above current market values.

The information provided in this blog is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances. 

The information in this article is based on RP Data’s findings and is RP Data’s intellectual property. We thank RP Data for their findings and appreciate the information they provide to investors.

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.