Some areas and property types are still seeing strong demand. But vendors and their agents need to be very careful about how they price the property. With increased access to market data, buyers are very price sensitive and will avoid properties that are even slightly over priced.
Key market indicators are still telling us that we are in the upswing phase of the cycle for residential houses but peaking for residential units. The price differential between Sydney prices and Brisbane prices has pushed out to over 80% according to RPData CoreLogic, the highest level since the 1990s. A recent Herron Todd White industry briefing concurs with our assessment of the market cycle:
Day on market (DOM) is decreasing with well-priced properties selling within days of listing. Agents have been telling us that some buyers are purchasing ‘sight unseen’ in an attempt to beat other buyers. Many of these contracts subsequently fall over as buyers experience remorse or find out they have paid too much in their haste.
Buying without having someone inspect the property for you presents significant risk and we do not recommend this approach.
In a recent article I recommended that you need to follow 3 rules in this market:
- 1. Be First
- 2. Be Fast
- 3. Be Fearless
Click to read the full article or view the realestate.com.au excerpt published in June 2015 http://www.realestate.com.au/blog/buy-red-hot-market/
The Underground Property Market
In this fiercely competitive market, buyers need every advantage they can get. Off market opportunities and rebound sales (we cheekily call this the ‘Seagull Strategy’) are a good source of potential properties that not every buyer has access to.
You can read more about the Underground Property Market on our Blog https://propertypursuit.com.au/the-underground-property-market/
Off market purchases: Silent listings, pre-listing opportunities and private sellers come about through our network of agent contacts and market presence. They are properties that are listed with agents but are not actively marketed to the general public, or result from private sellers contacting us for a quick quiet sale. Not every property is suitable or a match to our client’s requirements but we have purchased a couple of these off market properties in recent months.
Kedron: Pre-listing opportunity to buy a freehold town home with 3 bedrooms, 2 1/2 bathrooms, lock up garage on a small lot. Walk to bus terminal, shops and new retail development. Purchased for $590,000 and now leased for $500 per week (approx 4.5% gross yield).
Wilston: Direct approach by a private seller, 3 bedroom, one bathroom cottage on 405m2 land. Walk to the cafes, train and surrounded by prestige homes. In this instance the seller will not pay any agent’s commission.
The ‘Seagull Strategy’: There are occasions where we have assessed a property, put in an offer and someone else pays far more to secure it. If that contract falls over we are the first point of call for the agent – particularly if the seller is looking for surety from the buyer. In the past few months the ‘Seagull strategy’ has been quite effective for our clients.
Kedron: 3 bedroom post war house in original condition on 405m2 in a great street, surrounded by character homes, plenty of renovation activity in the street, walk to the schools, shops and new retail development.
Out of town buyer paid $565,000. They withdrew and we picked it up for $535,000 because the seller needed a fast outcome. We arranged and managed a $12,000 renovation, the current market appraisal is $580,000 and the property is renting for $430 per week (approx 4% gross yield).
Wavell Heights: 4 bedroom, 2 bathroom, renovated home on 607m2 land. We inspected, assessed and offered $720,000 for our home buyer client. There were several offers made and the highest offer of $750,000 was accepted by the seller. When the contract looked shaky because finance could not be secured, the seller was running short of time and wanted to be sure that the next buyer would be able to complete the purchase. The agent recommended they go with our buyer so we were able to secure it at the original offer price of $720,000.
Wilston: 2 bedroom renovated unit in walking distance to the cafes, train, schools and parks. We inspected, assessed and offered $465,000 on the first day. A local home buyer offered $485,000 even though all recent sales were around $460,000-$470,000. The contract fell over and the agent came back to us. We were able to purchase the property for our original price of $465,000.
We have purchased some beautiful homes for our clients this year, here are just a few:
As we head into December buyer activity tends to slow down as buyers become distracted by Christmas activities.
You may start to see some negative media commentary about a ‘slow down’ in the market but take it all with a grain of salt. This is part of the regular yearly cycle, sellers tend to hold off putting their properties on the market until mid-January and we usually see a pickup in sales activity in late January.
Time for the crystal ball………..2016 will most likely continue to see a similar level of buyer activity as 2015 but we believe that recent changes in investment lending criteria (see Finance article for more details) will change the composition of buyers. Already we have experienced an increase in home buyers looking to upgrade from their existing homes. We believe this is likely to continue throughout 2016. Generally the more buyers that are in the ‘upgrader’ market tends to result in an increase in median house prices.
We continue to be cautious about units as an investment category in Brisbane. Our analysis of the Brisbane City Council local government area shows that there are approximately 27,500 units currently approved for and/or under construction.
- Not all properties are advertised on the internet. Use our networks to get access to the full range of properties
- Do not buy a property without inspecting it yourself or having a professional inspect it for you.
Everything is not always as it seems in the photos and it is often what is not photographed that is just as important as what is.