Winter 2017 market wrap

Winter 2017 market wrap:

As we head into Spring this week and farewell the cold & wet Winter period (which turned out to be mostly warm & dry) it is interesting to take a quick look back over our shoulder:

Sydney:

Auction clearance rates hovered around 70% and that gave us some opportunities to buy prior to auction (working on the agents’ & vendors’ fears that their property had a 1 in 3 chance of not selling on auction day).

Listings are still tight. Hopefully we will see more stock coming onto the market now for the Spring selling season (although feedback from selling agents does not support that hope and we expect stock shortages to remain for the rest of 2017).

Prices are still increasing but the rate of increase has slowed.

Central Coast:

Listing numbers for good property are down. Recently it took us 4 months to wait for the right property to buy for an interstate client. There were only 5 possibly suitable properties that came up in the entire 4 months!

First Home Buyers are now noticeably present since the NSW state government reduced stamp duty to $0 for properties priced $650K and under (saving approx. $25K). Unfortunately for those of them not using a buyer’s agent, we see many anxious FHB’s overpaying or buying inferior property (or both).

Newcastle:

Prices continue to boom. Many of the properties we see going to auction are achieving prices in excess of 10% over what we as buyer’s agents think is good value. For properties needing a renovation we see many buyers overpaying to the extent that once the purchase price, stamp duty and renovation costs are taken into consideration, it would be cheaper to buy something already renovated. We are seeing the same thing with development sites – with the prices being paid, the numbers just do not stack up to make a decent profit on the project for the risks involved.

This is a time to be very sure to fully conduct due diligence with the properties you are buying. We are here for the long term and so we resist the temptation to make a quick purchase for the sake of buying something. Typically, in the aftermath of a boom like that we have seen over the last 4-5 years, we see prices take a breather while rents play catch up and come back to 5+% or more before the market takes off again. It’s all part of the normal real estate cycle we see over and over (and not a cause for concern about a bubble bursting or a crash for those waiting for such an event before buying).

To find good properties post-boom, please contact us for an obligation free chat about how we can add value to your property search.

State of the market Autumn 2017

State of the market Autumn 2017

SYDNEY, NEWCASTLE & NSW CENTRAL COAST:
The Sydney boom continues as auction clearance rates exceed 80% on most weekends. The major factor we see playing out is the Supply V Demand equation. Last year in 2016, sales volumes were down by around 50% in most of the suburbs we buy in. This was not due to lack of buyers but by a lack of stock on the market to buy. The situation has not changed much this year in 2017. The main problem seems to be two-fold:

  1. Owner Occupiers are not prepared to sell before they buy for fear of being locked out of the market because of extremely low stock levels and ever increasing prices.
  2. Investors are over-represented at almost 60% of the market (a factor of almost double their normal 30%) and when an investor buys, unlike an Owner Occupier, they have no property to sell – so there is no additional property being put back on the market for sale.

The one good thing about these stock levels being so low, is that it is forcing up the prices for sellers, and holders of real estate are sitting on large equity gains.

This is affecting all of the Northern Beaches, Upper and Lower North Shore, and Inner West. The Eastern Suburbs has seen more listings come through but not enough to satisfy demand. Price growth in Western Sydney appears to have stalled recording growth of only 1-2% in 2016. Stock in the $400-600K price range on the NSW Central Coast is being snapped up by buyers (in some cases sight-unseen) as the “ripple effect” moves out from Sydney (perceived by some to be ‘unaffordable’).

Do we see any change to this situation in the short term? Unfortunately, no.

The people that represent the bulk of the properties coming onto the market are known in the industry as the “4D clients” i.e. those affected negatively by debt, the downsizers, the divorced and the deceased.

The only things we foresee that are going to make a shift in this market is a sharp rise in the cost of money (interest rates), a sharp rise in unemployment, or a huge global unsettlement and we all hope & pray that does not happen.  All things being equal, with limited supply and huge demand, we will be looking at more price increases in 2017 as we saw in 2016.

The good news is that currently up to 50% of the properties we are buying for clients at present are what we call off-market or pre-market properties, silent sale properties not advertised to the general public but instead marketed to the agent’s private database of investors and Buyers Agents.  The great advantage to this is that in most cases you have no competition if you can act fast.

If you’d like to get an unfair advantage or are finding it difficult with your own efforts to buy property, then hit us up for a chat to discuss what we at Propertunity can do for you.