Seasonality on property markets: when is the right time to buy?
There's a season for everything – not only vegetables – and property is no exception. The season, month and even day of the week can affect the prices and a buyer's chance of success, particularly if they are buying overseas property.
- Spring: property goes on the market
- Summer: higher competition between buyers leads to price growth
- Autumn: finalising transactions, still some property left
- Winter: less buyers, less property, more likely to get a «bargain»
Markets react differently
Residential property markets naturally adjust to seasons. As biological beings, humans are simply less inclined to slog through unending property visits in cold weather. This may be due to some geographical bias: most of the earth's land is located in the northern hemisphere, an area famous for SAD, or Seasonal Affective Disorder, which is basically the lack of sunlight, that depresses the local inhabitants as soon as winter moves in. With less optimism in the coffers, there's less chance we'll purchase.
Tourist destinations are particularly vulnerable to these changes: as the summer season wanes so do the tourists and therefore the potential buyers. Director of Domazur, Wenanty
«At the end of autumn, buyers are getting ready for the winter and all the celebrations that go with that. Some are already thinking about their ski holidays while others are planning trips to far away places like Asia. Activity really starts to increase in May, continue through the summer time and taper off around the end of September. Actually, it's harder to arrange visits during the summer as many sellers rent out their property to holidaymakers. It's quite common for the sale arrangements to be engaged in autumn as a result of summer time viewings. And spring is when autumn transactions are finalised.»
Demand in leading property markets is stable due to insufficient supply, strong population density and/or major tourism. National markets unchanged by climatic variations are Austria, the UK, Hungary and Germany – others are more localised like the New York City property market. In the case of the latter, the demand outweighs supply so much in the luxury sector that investors are heading out of Manhattan and into the suburbs in search of property. This will no doubt force prices (and demand) to grow. In the world's leading cities, business affects demand according to Tranio's managing partner, George Kachmazov:
«Big cities like London, Frankfurt, Paris and New York actually have heightened activity in autumn when the business season starts back up again after the summer holidays. People return from holidays, companies start hiring again and property prices start to grow. In Moscow before the current crisis, owners would hold on to their property until autumn because they knew there would be more pressure on the market and they would sell their property for more.»
Commercial property is immune to climatic seasonality. Instead it reacts to the fiscal calendar, budgets and deadlines, stocks and currency exchange rates as well as global changes in financial markets.
Buying cycles for holiday property
Tourism benefits property markets in popular summer destinations. Countries like Spain, Portugal, Croatia and Montenegro have strong tourist markets and great summers. Visitors come for a holiday, maybe even a few, and are conquered by the great weather and cheap prices.
The buying cycle starts in autumn when they return to actively start looking for a home. Buyers start visiting in autumn and return in spring to make their final decision and start the transaction process so they can close the deal and have the house in time for summer. Sellers typically put property on the market in spring, increasing supply and competition.
Avoid summer shopping for holiday property as demand and property prices reach their annual peak making it harder to negotiate a discount and signalling to sellers that they should raise the price. Spain’s property market, one of the world’s top holiday destinations, is a great example. Of the millions that visit the country each summer, many are tempted to buy property encouraged by low interest rates on mortgages and preferential exchange rates.
August is the worst month in Spain because most of the banks, local authorities and other companies actually work on summer time (morning and evening) but close
Beat the seasonal property traps
Winter is the worst time to sell because there is little demand. However, there are buyers who are not bothered by the time of year. In fact, the festive spirit actually means these buyers are more optimistic and less concerned by the price. On the other hand if the property has been on the market since spring and still hasn’t been sold, there is definitely something amiss. It could be a structural issue, location, land disputes or the price. In any case, it's better to investigate.
The house should be well equipped for the local seasons: homes in a location with temperature extremes (hot summers and/or freezing winters) should be well insulated and have a good air conditioning and/or heating system as these are expensive to replace. If you're not a local, the only way to know is to visit it during those seasons.
Internet has transformed buyer habits in all sectors and this trend is not going to end. Instant access to thousands of listings defies seasonality and allows people to pick and choose their viewings. A new trend is also emerging of people buying without actually visiting the property (common for
Yulia Kozhevnikova, Tranio