A lot has been said of the property market in the past six months, with wild speculation and doomsday theories flooding the media, not to mention the building and construction catastrophes happening across Sydney.
I am always hesitant to predict when the market peaks and troughs and when pushed I often liken it to ‘how long is a piece of string’? Understandably, sellers are looking to offload their property at the peak and buyers are looking for a bargain as the property market slumps. In saying this, I do bid caution to bargain hunters – from my experience and observation in this market the quality properties are still fiercely competitive and prices not as reduced as reported by the media, however, deceased estates can still sometimes present an opportunity for discount.
Moving into Q4 2019, I do think it is fairly safe to say there is an increased confidence in the market. From an economic and social standpoint, the return to a stable liberal government is reassuring, a continued reduction in interest rates good for buyers and a relaxation in lending rules from banks promising for investors. With spring just around the corner, this is typically the time sellers will bring their properties to the market and is an opportune time for buyers to assess the following five factors when purchasing a property.
1. Renovations:
Don’t underestimate the cost of renovations. Check the price of renovated places against the unrenovated ones to compare what’s better value in this market.
2. Auctions:
Auctions are favoured by agents and vendors as they have the chance of competition and emotions driving up the price. If you are buying out of auction the chances are there is less competition on the property and in the market in general. Once the agent has two buyers, they enter a dutch auction scenario and try to play each bidder against the other, they rarely accept your offer is last and final unless they really think you will walk away.
In this market you may have the opportunity to hang back and see if there really is demand for a particular property, if there is no demand then you may be able to pay a lower amount. There is no harm in attending and watching auctions, exercise self-control and get a feel for the market. Sometimes the agents say a different price to you than they are quoting online, other times their estimate is lower than what eventuates.
3. Personal Wish list:
Understand what qualities you want from a property. For example: good aspect, car parking, rear lane, stand alone, solid construction, certain streets in an area etc. Keep notes and comments on properties you see or missed out on. You will find on average your search will take six months or more so it’s important to stay on track and not lose sight of what your ideal property is.
4. Building Type and Conditions:
With all the recent media regarding build defects, be sure to review the building type. Is it established or a recent build? There is some concern now that there is risk in new/recently built apartments and the warranty period on new builds is only six or seven years.
To reduce construction costs the engineering and materials are designed to last less than a lifetime. This means major contributions could be needed in the future, special levies in 15-25 years!
There is some comments that the drought has caused some buildings to crack and this happens, and that when the conditions settle back this risk is removed and the repairs are just part of the ownership process.
5. Administration:
Always consider what name to purchase the property in, it is always wise to talk to your adviser.
Whether you are in the early stages of entering the property market, have a property portfolio you’d like a health check on or have found your dream place and need to lock in finance, give us a call and chat with one of our experienced brokers.
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