Top months to buy property revealed
If you're in the market to buy or sell a house, new research reveals the least and most expensive months to purchase property in Australia.
Professor Russell Smyth from the Department of Economics teamed up with Professor Abbas Valadkhani from Swinburne and Professor Andrew Worthington from Griffith University, to investigate seasonality in house and unit prices in each of Australia's capital cities, using monthly data covering December 1995 to July 2015.
This is the first study of its kind. It shows in which months the average housing and unit prices are higher or lower, as well as which capital cities have more significant seasonal price rises or falls.
"Our main finding is that there are substantial seasonal effects in all capital cities and that this seasonality is mostly predictable," said Professor Russell Smyth.
This predictability can help potential buyers save a lot of money.
"If you're looking to buy in Melbourne, for example, May is the cheapest month. We found that home buyers can save an average 2.52 per cent on a house in this month. Based on the median house prices, that translates to an average saving of more than $20,000."
July, on the other hand, is the most expensive month to buy in Melbourne, with average house prices increasing by 3.22 per cent and unit prices going up by 2.79 per cent.
The observed month-of-the-year effects have undergone significant changes in almost all capital cities for both house and unit prices since the 2008 global financial crisis (GFC).
"We see some significant changes in the housing market over the 20-year sample period. In Melbourne and Sydney, the two largest housing markets, we see evidence that the investment boom has influenced the seasonal effect in the period after the GFC," Professor Smyth said.
Before 2008, the most and least expensive months of the year to purchase houses in Melbourne were January (1.08 per cent higher) and November (0.74 per cent lower), compared to May (-2.52 per cent) and July (+3.22 per cent) now.
The researchers indicate that this means there is a noticeable increase in volatility in the market compared to the period before the GFC, when house and unit prices were much more stable.
"In other words, it may be possible for sellers and buyers to use this knowledge of seasonal effects to their benefit, but there is by no means a guarantee that there won't be further changes in the future," concludes Professor Smyth.