If you’re planning to bid at a weekend auction for the home or investment property of your dreams, pray it rains. That’s the running joke in the real estate industry, with the belief being that wet weather keeps people away. Does it?
It might not be ironic, as Alanis Morrisette crooned in her ’90s hit, but rain – on your wedding day or otherwise – can be pretty annoying.
Wet weather ruins weekend plans, makes for a painful dash from the shop to your car with an arm-full of groceries and can take a day of house hunting from fab to drab in no time flat.
When you’re in the market for a property and you’ve spent time inspecting it, getting your checks done and imagining how you’ll live in it or how it’ll sit in your investment portfolio, wild horses couldn’t keep you away… right?
Melbourne buyers’ advocates Secret Agent conducted some research on the impact of rainy days that just so happen to also be auction days. Like me, they reasoned that someone who really wants a property will turn up on auction day in gumboots, poncho and with an umbrella. A torrential downpour won’t matter much.
“Our initial thoughts were that it wouldn’t impact results,” the consultancy’s managing director Paul Osborne says. “If a buyer was set to bid on a property, the weather wouldn’t change the way a serious purchaser would pursue it.”
And then he came across some research on the correlation of stock market performance and the weather. It was conducted by the University of Berkeley in California and compared the Dow Jones Industrials and weather patterns between 1948 and 2010.
Surprisingly, it found the market recorded an average reduction of 2.8 per cent on cloudy days. Osborne began to wonder if there could be a similar effect in the world of property. If so, imagine the implications in a city like Melbourne that can famously experience four seasons in a day.
“So, we looked at the winter months when an auction occurred on a wet day, being a day with four millimetres or more of rain. We compiled 2012 sales results that occurred on a Saturday at auction between June and August.”
The average auction result on mostly pleasant weather days, where there was less than four millimetres of rain, was $1,003,300. Conversely, the average auction result on wet weather days was $956,800.
“There was an average price difference of five per cent on a wet day as opposed to auctions that took place on a dry day,” Osborne observes.
Of course, there’s not much you can do to ensure clear blue skies on your auction day, short of praying to the weather and real estate gods. Like some elements of property in general, it’s one of those things you’ve got to take a punt on and hope for the best.
In one piece of good news, Osborne’s research shows that in some cases over the past decade Melbourne prices on a whole were stronger in winter than at other points throughout a year.
Why? There tends to be a scarcity of stock in cooler months, when sellers sit tight for spring or summer. Buyers who are out and about have less to choose from.
With that in mind, it could be worth selling in winter when the competition is thinner. Just cross your fingers for a bright, sunny day.
Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au