The art of buying a property when there’s none around
With so few properties on the market and listings dropping across the nation, buyers need to apply a range of skills and strategies to secure a dwelling in such a tight market.
Current stock levels in most capital cities are far below the five-year historical average. Vendors are reluctant to sell for a handful reasons.
With rising interest rates and a lot of talk in the media about the potential for a market downturn, prospective vendors are sitting tight as they wait for conditions to improve before contemplating selling.
There’s also challenges associated with finding their next home. It is a chicken and egg scenario as prospective vendors halt their decision to sell until they have found a suitable subsequent property to purchase.
Many vendors made a significant move when Covid lockdowns initiated the need for change. These vendors may have been on the quest for more land, or additional rooms (such as studies), or could have escaped their lockdown city.
For most buyers who make a significant move, they often find themselves bunkering down following the move. Unless the move is no longer working for them, they aren’t likely to trigger a sell decision for a while.
Many of these vendors who moved in 2021 and 2022 aren’t looking to move in 2023.
Finally, stamp duty is expensive. The average tenure of home ownership has increased and stamp duty is a large driver of this change.
Real estate buyers energised
Buyer sentiment didn’t feel particularly strong at the coalface in late 2022, but a shift occurred somewhere between Christmas 2022 and the beginning of the autumn market in 2023.
Buyers are now back with a renewed sense of deliberation.
Some are spurred on by the continual threat to a reduction of borrowing capacity with every month’s rate rise but others are fatigued by constant claims the market is about to topple.
This more energised buyer group is challenging the limited supply and our demand-supply ratio is currently a lot higher than it was in 2022.
Prices are exhibiting steady growth across the board, (with Sydney leading the pack) and we’re now seeing multiple buyer scenarios unfolding on many properties.
With the exception of renovators and knock-down properties, it’s fair to say all segments of the residential property market are performing reasonably well.
From apartments to townhouses, units to family homes, and particularly the upper quartile segment of the market, prices are trending upwards thanks to the imbalance between high demand and low supply ratio.
Previously it was the A-grade, crowd-pleasing properties that were attracting high numbers of bidders and buyers, but in this current market we’re also seeing B-grade properties attracting strong buyer interest.
This is surely a sign of a less-discerning market.
Avoiding inferior properties
So, how do buyers avoid falling prey to a B-grade property and confidently manage the buying process in a property drought?
The first tip I’ll offer is to be prepared to sign a contract. Too many buyers hit the home opens without adequate finance pre-approval.
Throwing out ‘subject to finance offers’ in a sea of competing buyers is a recipe for being pipped.
Vendors have greater numbers of buyers to negotiate with and the vast majority will opt for the unconditional offer.
Moving at pace is my second tip. Taking weeks (as opposed to days) to conduct the due diligence on a property is the difference between securing it for a fair price versus missing out to another party.
From contract legal review to arranging building inspectors, buyers need to be prepared to move quickly once they are keen on a property.
Being upfront with the agent is sometimes counter to what buyers believe they should do. Telling the agent emphatically that you have interest in a property isn’t showing your cards. Telling the agent your upper budget limit is very different to advising them that you would like to be kept in the loop about a particular property.
The buyers who play down their interest are often the ones who return for a second inspection, only to find a sold sticker covering the sale board.
The agent can’t keep a buyer in the loop if they don’t know they were keen on the property in the first place.
Manners maketh the property buyer
And the last tip, but possibly the most valuable, is to be remembered by the agent for all of the right reasons.
If an agent is aware of a buyer’s brief and has found the buyer to be friendly and engaging, they are more likely to make some suggestions about alternative properties.
Sometimes these alternative properties are off-market or pre-market.
At this time of year, the chance of pre-market opportunities strengthens as we inch closer to the traditional spring market.
A friendly, helpful agent’s willingness to share a future listing with a buyer can make a significant difference. We lean on our professional relationships daily to have access to quality listings that the broader buyer community won’t know about.
This property drought isn’t showing signs of easing, and until vendors return in numbers, buyers need to be on their A-game to avoid disappointment, costly mistakes and bad purchases.