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Weather is a big factor when it comes to determining one’s mood. But did you know that the weather could also affect house prices at an auction?

Yes, new research by University of Technology Sydney points out that sunny days are great for sellers, with houses commanding higher prices at auctions. On the other hand, buyers could save more on rainy days as the gloomy weather also manages to depress the property prices at auctions.

 
Sunny days increased the house price by 0.974 percent
 

Dr Adrian Lee, senior lecturer in finance at the University, confirmed the link between mood and weather prices, having examined data from auctions and private sales in Sydney between 2000 and 2004 against corresponding weather data from the Bureau of Meteorology.


The rain and the blues

The research by Dr Lee pointed out some interesting co-relations between mood and house prices – establishing that houses are not priced rationally. Conversely, the prices, especially at auctions, are swayed by weather influences, as auctions are held in the open.

“The price is partly driven by people’s feelings, particularly at auctions. So, if you are buying or selling a house, it is good to be aware of these influences,” commented Dr Lee, who found that sunny days increased the price by 0.974 percent or nearly $9,740 on a house priced at $1,000,000 in Sydney. Besides, warmer days also led to higher prices – with a ten-degree higher maximum temperature resulting in a 0.635 percent increase in price.
Rains, as expected, proved to be a dampener, bringing down the house prices by 0.174 percent as compared to a clear day. Interestingly, a public holiday weekend resulted in a 1.3 percent discount for the buyer.


The overall mood of the property market in Australia

The above mentioned research comes at an interesting time with an overall sluggish real estate market in Sydney. In fact, experts predict the property prices in Sydney to rise minimally by 2-4 percent in 2018, as compared to the double-digit spurt in prices earlier this year. But could this cooling market be affected by the rising temperatures in Australia, as the effects of global warming become more pronounced?

As APRA battles to ease the pressure on the housing industry by tightening the noose around investment lending, and the Federal and State Governments introduce measures to boost first home buyer activity, it seems climate change could be another factor for the RBA and industry watchdogs to consider, not only to monitor the housing prices but to also ensure sustainable living conditions for future generations.


Planning your purchase

With the rising household debt and a large number of mum and dad investors increasing the risk of a property crash, the cooling prices in Sydney and Melbourne have added fuel to the fire. However, amidst the negative predictions spoiling the mood of the market, buying property in Australia remains a coveted dream and a beneficial investment if planned well.

If you intend to buy a property, especially at an auction, apart from utilising the rainy days, click here for some tips to bid like a pro at your first auction. In addition, choose to partner with a team of experts who will help you make informed decisions in line with your financial situation.

At HashChing, we bring you hundreds of verified brokers on a single platform who will gladly answer your home loan queries online, free of cost. You could also compare hundreds of competitive home loan deals from over 60 lenders across Australia, here.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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