Certainty in an Uncertain Time
The last three years in the Sydney housing market have provided vendors with perfect storm like conditions.
Money has been cheap and banks have been providing record breaking competitive lending. This coupled with stock shortages and a rapidly increasing population in major cities has lead to a property BOOM in Sydney. There has been a great deal of certainty in the Sydney property market that, IF you could purchase a property, you were near-guaranteed strong capital and rental growth. We have observed over the past few years buyers being frustrated by a lack of stock and exhausting home searches in Sydney paying premiums to secure homes before they reach auction. In 2017 the tide has turned and buying the right property has never been more important.
Fundamental to any successful property search, is the development of relevant search criteria, along with a realistic budget. Not only will this help you to focus your search and reduce the time/stress involved in securing a property, but it will also increase the likelihood of finding the right property for your needs.
Dedicating some additional time up-front to consider the primary purpose and key goals of your property purchase, will assist you with developing and refining relevant search criteria. Further, taking some time to undertake some research into the target areas that you would like to buy into, will help ensure that your budget is realistic or whether further revision/refinement of your search criteria, budget or target areas is required.
While we witnessed Sydney auction clearance rates average 80% from 2014-2016, auction clearance rates have reverted to a modest 61% for the weekend of 11 November 2017 as reported by Domain in a spring market. Of course this was to be expected with the likes of foreign investment more than halving this year bringing transactions from an expected 40,000 to a projected 15,000 according to Treasury analysis. This move implemented by the Australian Government, along with capital outflow restrictions in China has already proved to have an impact in Sydney’s luxury residential market as well as the inner city off the plan high rise market.
Buyer’s agents have been predominantly used over the past three years for being able to aid buyers in acquiring off market opportunities and securing property for buyers who kept missing out. This is still very much the case, however, as the market continues to show evidence of slowing and lending becomes tighter than it already is, providing certainty around buying the right property has never been stronger value. As agents acting on behalf of buyers rather than sellers, our day-to-day commercial offering requires a profound understanding of local market demographics, yields, returns and long-term capital growth trends in order to help our clients make informed purchasing decisions. Simply just buying “off market” won’t cut it anymore.
Carrying out required research will ultimately save you time in the long- run, by avoiding wasting time searching for properties that you will not have the budget to secure. It should also improve your chances of not paying too much for a property.
So, what’s the point you’re asking? The point is that the last three years, most buyers have been buying in a rising market and experiencing enhanced capital growth. But the cycle is now over, and the market has softened and so now asset selection and value is more important than ever. Now buyer’s agents are being forced to rely on experience from past boom and softening markets to guide and provide their buyers with comfort that they are securing the right property at the right price. Rose & Jones, in operation for over 19 years, can attest their strength in the house market from their exposure and resilience to past changing market conditions. The Boom of 2003, softening 2005, boom 2007, 2008, softening 2009 – 2012. And the boom of 2014-2017, which now appears to be over. Navigating your way through the next property cycle is something only experience can provide certainty on.