State of the market end of spring 2017

The buying frenzy party in Sydney is over. All good things must come to an end. If you owned some property in Sydney before this last boom, chances are that due to the capital growth in the past 5 years, you became a property millionaire (if you weren’t one already). Figures we saw this week say that there are now 1.1 million millionaires in Australia. This would be due no doubt, at least in part, to the property market.

We believe that whilst there is still growth left in the market, it may be single digit growth only, as the market takes a breather. So where are the buying opportunities? In many respects the answer to that question does not change. Here’s what we see:

  1. Selling agents are calling us, where they did not need to before, to see if:
    1. We have any buyers (presumably because they don’t have)
    2. Trying to extract pre-auction offers from us (because they don’t have enough buyer interest to run an auction to the price they told their vendors they could get)

We are buying very well at auction where other bidders are more cautious, and in most cases for less money than we would have had to pay with a pre-auction offer.

  1. People still have to sell due to the 4 D’s
    1. Death
    2. Divorce
    3. Debt
    4. Downsizing

Distressed sellers always present an opportunity to buy property for under market value.

  1. Out of area agents that mis-price property

We recently purchased a property for at least $15-20K under what we believe the true value of the property was worth, simply due to the inexperience of an out-of-area selling agent.

  1. The time of the year. Most years we are running around exchanging contracts on Christmas Eve!

There are some good deals to be had by taking advantage of the fact that some sellers want a sale locked in before the Christmas holiday period so they have some certainty about their plans to move in the New Year. Watch out for properties advertised as “Upcoming Auction”. These sellers have missed the auction campaign for this year and won’t be going to auction before February next year. The selling agent has signed them up and is ‘babysitting’ them through this period but they may be open to selling now!

  1. Off market (or pre-market) properties can be purchased with little to no competition from other buyers due to our long term relationships with selling agents.

If you’d like to leverage off our contacts and experience to source good property, feel free to contact us.

State of the market Autumn 2017

State of the market Autumn 2017

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.

“Off Market” listings

It seems to be the trending call of the typical Selling Agent or Buyers Agent. “I have access to an ‘off market’ listing”.

What is an “off market” listing?

This is agent jargon for a property that is exclusively listed with the selling agent but is being sold to their database without marketing. (usually for a quick turn-around)

What does this mean for the buyer?

It can mean a few things:
• Limited competition
• Quick turn around
• Less stress
• No uncertainty like auctions etc.

The term “off market” for a distressed seller can be great for a buyer who is ready and willing to purchase immediately. Sometimes, somebody’s misfortune can be your gain. But be very careful that you have completed your due diligence up front before the emotions take over and the emphasis becomes solely on securing this “off market” opportunity.
Remember, Real Estate Agents are paid to get their vendor the MOST amount of money for their property. They can be very clever and call their desperate database (including novice inexperienced buyers agents) with the promise of an “off market” property with no competition BUT for an exorbitant price. It’s easy to lose focus on what’s value when you think you have already won the negotiation by securing something with no competition. This surely gets the transaction done, but at what cost?
Contact a reputable Buyers Agent (preferably a REBBA member) who doesn’t promise only “off market” opportunities. The majority of the time, in our experience, the “off market” opportunities are only an unrealistic seller wanting an inflated price from a desperate buyer.