Simple ways to strike a deal in a buyer's market

With auction clearance rates further falling away and stock levels rising, it is likely that we are going to enter a buyer’s market, where there are more sellers than buyers so the buyers have more influence on the final agreed price to a property.

But just because a market favours buyers doesn’t mean that whoever buys will automatically make money. That’s because prices could fall even further or you have bought an overpriced property.

So how can you buy well in a buyer’s market?

Advertisement: Story continues below Conduct research into an area: that is, find out where schools, hospitals, cafes and public transport systems are. Compare this to surrounding suburbs, then check the prices of properties in the surrounding suburbs.

Sometimes there can be mispricing of properties between suburbs. Two years ago, I bought a property in a suburb in Sydney’s upper north shore. At the time, house prices in this suburb were about $50,000 to $80,000 less than surrounding suburbs.

On further investigation, it seemed that since this suburb had some light industrial zoning, the suburb was discounted. This did not make much sense and so I bought in that area. Now there is no discount for that suburb.

Conduct many site inspections – and I mean many. I would suggest at least 50 property inspections. Indeed, one of Sydney’s best buyer’s agents, Patrick Bright from EPS Property Search, suggests 100 site inspections.

The reason for seeing so many is that one becomes very familiar with the local areas and what properties are selling for given their respective quality and location.

Conduct an independent valuation. I am surprised how few people do this. Many are quite happy to buy a general building inspection report, which can often be useless, yet they are not willing to spend about $300 to find out whether the home is fair value.

Get an independent valuation before making an offer. Or at least get a comparable sales report for the street and suburb. These reports are supplied by organisations such as Australian
Property Monitors and cost about $50.

Get friendly with the agent.
By being friendly with an agent you can find out all sorts of things that might be valuable in negotiating, such as why the seller ismoving on, how long the property has been up for sale, what new properties there are, and so on.

Get a home discounts report, which tells you how long properties have been on the market for and how much they have been discounted. This allows you to better negotiate when making an offer.

Overall, buying well even in today’s market requires diligence and time. If you persevere, it is quite possible your investment will perform well.

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Surge in interest in Australian property

Safe secondary property markets are becoming increasingly desirable to disciplined international property investors, according to Property Wire.

Overall, property searches have dropped by 2.3 per cent in October, said international property agent Rightmove Overseas.

Safe market searches saw Germany property increase by 7.45 per cent, while popularity for Ireland property was boosted by 8.11 per cent.

Other countries seeing a surge in interest was the United States (US), Australia, Canada, Switzerland and Australia, said Rightmove Overseas head Robin Wilson.

The surge in interest for US property is most likely a factor of the Scottish Sterling strengthening against the US dollar in October.

The emerging trend is long-term gains over fast profit in exotic holiday locations or traditional European hotspots, said Wilson.

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Strategy will be pivotal in next 30 years

Strategy will be pivotal in next 30 years
As the property market ticks over into a phase of low growth now is the prime time to become a more targeted investor, according to Gavin Hegney of Hegney Property Group.

In a boom market everyone moves at the same speed, said Hegney, but now we’re in a three to five-year stage of low to steady growth where some will move ahead but others won’t.

This is the stage where strategy is pivotal, said Hegney.

Understanding where people are moving to over the next 30 years is the single greatest knowledge investors can arm themselves with, he said.

“If you can answer the question ‘where are people going to live?’ then you’re set.”

The Australian Bureau of Statistics (ABS) Mobility Survey is one of many reports investors should become friendly with, said Hegney.

In houses, moving for a better location will become the more prominent feature than the bigger house, he said. “Many will choose to stay in a good location and renovate the home without having to move.”

Hegney said if looking at apartment buyer movements, the trend is nothing new with 60 per cent of apartment dwellers moving from apartments within two years and 30 per cent moving in 12 months, according to the ABS Mobility Survey. “This suggests that two-thirds of buyers are getting it wrong.”

Learning from these mistakes, trying to work out what people want to live in and changing a property to suit that is the best way to ensure a long-term asset and capital growth, he said.

Hegney said it’s also about jumping ahead of the migration trends and assessing which areas will best suit the inevitable trend of densification across the cities.

“Which areas will make greatest use out of existing infrastructure? If the past 30 years was about suburbanisation then the next 30 years is about the consolidation of cities,” he said.

“So investigate those areas that can do it well and will become more desirable as a result. It’s about picking the Paddingtons of the next 30 years.”
MY KNOWLEDGE GIVEAWAY

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Rental demand stronger than ever as first time buyers find buying a property challenging

More than 50 per cent of first time buyers currently in rented accommodation are now finding the shift to homebuying an even greater challenge, up from 38 per cent in March 2010, according to the latest Bankwest/Mortgage and Finance Association (MFAA) Home Finance Index.

Simultaneously, the index revealed there’s been a significant decline in upgraders interested in purchasing property due to the level of debt required, with only 34 per cent of respondents actually feeling it’s a good time to buy a new home, compared to 44 per cent previously.

“Many homeowners are opting to live in their houses for longer, renovating along the way to improve comfort but avoid high debt levels,” said MFAA chief executive officer Phil Naylor.

The Home Finance Index also revealed an increased number of tenants believed rent is too expensive, up 67 per cent from 63 per cent in March.

The number of renters content to continue renting to maintain their lifestyle, dropped down to 19 per cent from 23 per cent in March.

These results indicate a strong desire to shift back towards the property ladder, said Bankwest retail chief executive Vittoria Shortt.

Looking further away from the city centre or for a smaller property are the trade offs these first time buyers are prepared to make, said Shortt.

In contrast to first time buyers, the index has revealed that more homeowners shifting properties are keen to move closer to the city, 38 per cent, up from 24 per cent in March.

Now that the First Home Owners Grant is lower, families are increasingly bearing the weighty request to fund the initial house deposit.

According to the index, compromises first time buyers are prepared to make to break into the real estate market include:

- Nearly 25 per cent are continuing to live at home to save money for a deposit;

- Approximately 55 per cent believe the current economic climate has led them to look for cheaper property;

- More than 42 per cent said they are looking for a smaller property;

- Nearly 20 per cent are prepared to move from the city to the suburbs.

More than 53 per cent of first time buyers are stashing away some savings in the event of economic instability, while homeowners said they would like to put more money aside, a figure up to 55 per cent compared to 35 per cent in March.

Other money saving strategies being considered by homeowners considering a move include:

- Looking for an established property (38 per cent);

- Lowering the mortgage (35 per cent);

- Looking for cheaper and smaller properties (35 per cent and 29 per cent respectively).

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City house prices unchanged, growth flat

AAP

29Oct10



CITY home prices were virtually unchanged in September, with national dwelling values up just 0.1 per cent in the month, the latest RP Data survey shows read more about Cairns Real Estate & 24/7 Property news here

Australia’s most affordable suburb records top value in property sales

The total value of property sales across the nation is up by 30 per cent compared with five years ago, according to RP Data.

For the year to July 2010, total property sales amounted to $213 billion, a healthy climb from the same period five years before when total property sales reached $165.5 billion.

While a selection of Australia's most premium suburbs with a median house price well over the $1 million mark have topped the list of 40 suburbs, including Australia's most expensive suburb – Bellevue Hills in New South Wales – surprisingly Australia's more affordable suburbs have also hit the list.

At 27th place is the nation's number one cheapest place to buy, Devonport, Tasmania, with a median price of $250,000 and $62,947,353 in total value of property sales.

These statistics demonstrate increasing demand for dwellings and the growth in the values of property over the past five years, said RP Data senior research analyst Cameron Kusher.

"For vendors, these conditions equate to additional profit to be made from the sale and for property professionals it translates into additional commission," he said.

Of the top 40 suburbs with greatest total value across the nation, 36 suburbs are within capital city regions, while three of the remaining four are regional spots located on either the Gold Coast or Sunshine Coasts in southeast Queensland, said Kusher.
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