The impact of seasonality on property investing

When considering purchasing an investment property, seasonality is often forgotten as one of the important aspects to consider.Seasonal changes will have an impact on buyer and seller sentiment, which in turn influences property prices and the movement of the market.Understanding the seasonal patterns will help property investors to time their purchases and sales, capitalise on seasonal trends, and maximise their returns.

How does seasonality impact property markets?

Spring/Summer

While the overall effect of seasonality will vary by region and state, general trends and patterns can be observed when comparing the cooler months to the warmer months.During the spring and summer months, the Australian real estate markets tend to be more vibrant.

Warmer weather encourages more open house inspections, auctions, and overall property activities (like gardening and renovating).

The warmer weather and sunshine often influences buyers to be more positive and optimistic and generally willing to get out and explore open homes in a positive light, which can influence the overall sales price for the seller.

The longer daylight hours and favourable weather conditions means there might be more stock available for sale on the market, more open homes, and more sales via auction campaigns.

Investors should take note of this, because when there is more activity and positive buyer sentiment, this is likely to increase real estate prices, particularly as it gets closer to Christmas and some buyers start to feel a little desperate to get into a home before Christmas, which might push up prices.

Sellers will usually take advantage of this increased activity and market their properties more aggressively, hoping to attract higher bids across the spring and summer months.

Characteristics of spring/summer markets:

• increased buyer activity and competition
• sellers are more willing to list properties
• more open house inspections and auctions.

Autumn/Winter

Conversely, the cooler months across autumn and winter typically see a decline in market activity.

Colder temperatures and shorter days may deter potential buyers from attending open houses and auctions, especially if it is unusually rainy or cold.

Seller sentiment may also wane, leading to fewer property listings.

This slowdown can be more pronounced in regions with harsher winter climates, such as Victoria, while warmer areas like Queensland we expect to see less of an impact.

Now consider Victoria, with its colder and more variable winter climate, experiences a more noticeable seasonal effect.

Buyers might be less inclined to venture out, and sellers may prefer to wait until spring or summer to list their properties.

It is likely some of the colder towns may experience reduced market activity and some supply issues when it’s cold.
There is an exception though.

Areas known for their cold climates might go through a period of heightened activity.

Think about the areas close to snowfields and snowy mountains that are buzzing with activity over the winter months and ski seasons.

We are likely to see more properties come onto the market, and more buyer activity because the properties will be shown off in their best light – with views over the snowcapped mountains or holiday homes listed for sale to show off how they are busy and booked over the winter months.

Sometimes visiting tourists love the location so much they start to investigate options to purchase a holiday home or even relocate if they love the area during their visit. There is more about this below.

Characteristics of autumn/winter markets:

• decreased buyer activity and fewer open houses in most areas.
• less motivation for sellers to list properties, unless in areas close to the snow.
• potential for fewer auctions and slower market pace.

Other Considerations

There are always going to be exceptions to these rules. This is just the overall impact that seasonality can have on property markets, so it is really important to understand the market you will be buying in as well as how the seasons will impact that area.

Think about the below considerations:

Queensland

Queensland is known for its generally warm climate. Because it experiences milder winters compared to southern states, the colder climates won’t have as large an impact on the property markets here.

Because of its warmer weather, winter does not significantly deter market dynamics and many people who live in the southern states might consider relocating to Queensland into coastal cities like Brisbane and the Gold Coast that experience more consistency in the property markets, even during winter.

Property prices don’t drop as much during the winter months in Queensland, as the weather remains conducive to outdoor inspections and tourism.

Strategic Considerations For Property Investors

If you are investing in property it is important to understand these seasonal trends so you can make informed decisions.

Timing the market:

Investors looking for better deals might consider purchasing during the winter months when demand is lower, potentially securing properties at reduced prices. Selling during the summer months can attract more buyers and potentially yield higher sale prices.

Region Focus:

In warmer regions like Queensland, investing can be more consistent year-round, reducing the need to heavily time the market.

In colder regions like Victoria, investors might find better opportunities by targeting winter purchases and summer sales.

Specialty Investments:

In ski resort areas, focusing on winter investments can be highly profitable due to the seasonal tourism boom.

Vacation homes and short-term rentals in these regions can provide substantial returns during the winter season.

Market Adaptability:

Staying informed about local market trends and climatic conditions can enhance investment outcomes. Whether investing in steady coastal markets or booming winter resort areas, a nuanced approach to seasonality can significantly enhance investment success.