Why? Because it is the lower entry price point and it is affordable. This price point competes with first home buyers, downsizers, professional couples and many new immigrants trying to enter the market AND we are NOT producing enough house land supply to meet the demand.
If your budget is mid-range $2 Million and above in many areas, there are some great value propositions out there. Buyers today at this level are acquiring property that sold 12 months prior for considerably more.
Here is the thing. A good property will always attract solid competition and buyers. I have been to recent auctions where over 20+ contracts are issued, bidding is fierce, auction numbers are over 75 attendees, and the price achieves several hundred thousand over the initial guides… just like in the prime of the market a year ago. This is because these properties are still prime and highly sort after.
I have seen many buyers become exceptionally discerning with their budget and what they expect, only to miss several properties. These people still have a ‘Champagne taste on a beer budget’ – aligning expectations and value is still very critical if you are going to transact effectively. This said there are some great buys in the market particularly where the property may require some renovation, insight and effort.
These properties with a need for renovation or facelift are where the real value and opportunities lie. Sydney buyers are showing a high preference for properties that are finished and ready to move into… with little work to be done. As a result, these properties are achieving premium prices in return.
The opportunity gap is buying those properties that are not as desired, the ones that need some new insight and love. It is amazing to see the number of buyers who turn away from a property that requires some renovation.
Many say the risk is with getting tradesmen and that material costs are high. This has been true and still remains to some extent; however, this will correct as the market comes back to equilibrium and the trades seek more work. The supply chain issues with materials are also working themselves out.
The cost of a renovation is typically far less than a knockdown and rebuild. Money spent on the key areas of the kitchen and bathrooms can achieve a direct return and profit on the money spent. When completed there is a tangible uplift in the home equity as well.
I have seen several potential buyers be so discerning that they have had to revisit their financiers for renewed approvals on more than one occasion. The trap here is that they have been downgraded in their purchasing power with the new applications.
As interest rates have risen so they are matched by the lender’s margin on top of the base rate. This means the serviceability of the loan has changed and you need to have more income or capability to service the same level of loan you were previously approved for. This is a hard lesson for some.
If you want some sound market guidance and a strategic edge in acquiring a property give me a call to discuss your situation.
