Tensions Rise As Sydney’s Auction Clearance Rate Drops Below 60%

Sydney’s property market saw tensions rise this weekend past with auction clearance rates dropping to 58.1 per cent as reported by Domain, as auctioneers who were confronted by a significant amount of “pass-in’s”, mediated standoffs between prospective buyers and vendors across the city.

The clearance rate for Saturday, one of the lowest of the year, was based on 378 reported auctions. However in addition to this, 76 properties were withdrawn, and a further 216 scheduled auction results were not reported by agents – a growing trend which was observed last week when the auction clearance rate was heavily revised for the same reason.

With the 216 outstanding results, the final clearance rate for the weekend could be downgraded to below 50%, making the performance rating from the same weekend last year (74.6%) a distant memory.

This coincides with CoreLogic’s newly-released combined index for eight capital cities, that annual property growth has dropped below zero for the first time since late 2012.

The three-month annualised rate is now at 2.4 per cent, suggesting an acceleration in the negative trend in 2018.  The turnaround has been sharp. Around this time last year, house price inflation across the eight cities was running at more than 11 per cent.

Sydney house prices are dragging the aggregate number lower, where property values are down 3.4 per cent over the past 12 months, the weakest result in 11 years. Melbourne is still recording annual house price growth of 3.7 per cent, although they fell in April, and Hobart is recording double-digit rates of growth.

The recent decline however needs to be put in to context as reported by the Australian Financial Review seeing that Sydney prices climbed about 75 per cent between early 2012 and mid-2018.

That being said, its still unsavoury news for the property market and adds to plenty of anecdotal chatter about shrinking crowds at inspections and stock struggling to sell. Auction clearance rates are circling 60 per cent, putting them around five-year lows, so it’s more important than ever for agents to proactively drive engagement in properties from the moment they’re listed through to auction day.

 

 

What Exactly Does An Agent Do And Do I Need One?

In today’s world of technology, there are many options for selling a home – some including the use of a real estate agent and some eliminating the agent entirely for example by using Purple Bricks. However few actually know exactly what goes into the process of selling a home, or what the benefits of having an agent is. We thought we might shed some light on this and take you through the entire process so you can decide whether an agent is right for you.

Why Use A Real Estate Agent

 Renowned for their shiny new suits and unwavering gift of the gab, agents are often the subject of humorous scrutiny amongst the community. However there are many great agents out there who offer a lot of benefits with the top three being client knowledge, market knowledge and finely tuned negotiation skills.

Sydney buyers’ agent Tracey Chandler says that a good agent knows how to turn a negative into a positive. If a potential buyer complains: ‘I don’t like the way [the property] faces,’ the agent would say, ‘but if it was the other way around you’d be looking at a wall’,” she explains. “It’s up to the agent to bring them back into the picture, and they do this with absolutely no emotional attachment, which is what you want.”

The agent also acts an arbitrator that filters information between the buyer and seller, a major asset they often don’t get credit for according to Tony Williamson, Principle RE/MAX Australia.

Knowing The Market

 As for market knowledge, an agents’ access to a database of interested buyers is crucial. With the property market being as competitive as it is currently, local agents will be able to target individuals who may have recently missed out on a similar property in your area. The element of client knowledge requires a bespoke approach from agents.

Choosing the right sales method

According to Domain, an Agents’ marketing plan runs the gamut from an off-market strategy, where promotion is minimal and agents proactively target their extensive personal database of buyers, to a fully loaded campaign of online real estate portals, print advertising, flyers, signboards and open homes, the latter deemed one of the most powerful ways to attract interest.

However, regardless of selected method, agents encourage vendors to invest in the presentation of their property. A small investment of a few thousand dollars could potentially at an extra $20k to sale price.

Photography is also a major component, with great photographs resulting in higher numbers of groups through at the first and subsequent open-for-inspections.

Method of sale can also be customised, with vendors often preferring to sell via private treaty rather than auction, and is particularly suitable for homes where there might be lower levels of buyer demand.

On the other hand, if the vendor wants a quick sale for market price and they live in a seller’s market, an auction is highly recommended.

Properties can often sell before the auction date if a buyer is keen enough.

The benefit of auctions is the process allows vendors to control the terms under which the property is offered and ensure the creation of an unconditional sale, with the added benefit of a deadline for the buyers to act – increasing the competition.

How Do I Pick One?

Word of mouth and referrals are common, and people do talk about property results both positive and negative. However it is also a good idea to do a bit of research and go to some other local auctions for similar properties in your area as well to see what is achieved, note the active bidders present, and meet the agents.

 

 

Is Kings Cross Set To Be The New Soho?

The bustling streets of Sydney’s Kings Cross late at night may well be a thing of the past, and we’ve bid farewell to many of the old haunts that saw us consume a bevvie or 3, but although you are rarely now confronted with a vast array of late night types and party goers after midnight, the streets are still brimming with people, culture and great restaurants and bars, and property prices in the area are seeing a major boost. It’s still has great nightlife, just not post midnight night life.

Well-seasoned property specialist of the area Jason Boon, of Richardson and Wrench Elizabeth Bay likens the new look and feel of the Cross to Soho in NYC, and says that the controversial lockout laws haven’t deterred prestige buyers to the area at all.

“There’s still restaurants and quiet bars and there’s still a buzz around the neighbourhood that gives it a Soho lifestyle” he said.

In fact, well heeled locals can rest assure that their real estate is scoring top sales among Sydney’s corporate elite as reported by Domain Prestige two weekends ago, illustrated by the recent sale of Steve Askew’s penthouse in the Elan which sold for over $10 million, more than double the $4,045,000 Askew paid for it in 2003.

In addition, Yachtie Matt Allen bought the Dorchester sub-penthouse for $8.9 million, topping the $8.75 million paid by billionaire Gretel Packer for the nearby Macleay Regis penthouse late last year.

Elizabeth Bay is also becoming the new favourite for downsizers, with heavyweight corporate adviser Jamie Garis (paying $8.5 million for their penthouse in 2016), investment banker Scott Malcolm (paying $8.55 million in 2016) and pub mogul John Lewis ($20 million last year).

Perhaps Kings Cross really is a bit of a mini Soho in the making!

 

 

Hobart Takes The Lead In Property Demand Booms As Sydney Enters Slump Status

According to Real Estate Australia’s first Property Outlook Report, Sydney has been named Australia’s “most challenged city” following a 25 per cent plunge in property demand, whilst Hobart on the other hand is higher than anywhere in Australia.

The disheartening news for Sydneysiders is based on the number of realestate.com.au views last quarter compared with the same period last year. Whereas Hobart’s residential property market showed demand in the southernmost capital is double that of Melbourne, the second-most in demand city.

Hobart listings experienced 4500 average page views — significantly higher than Melbourne’s average of 2267.

The report also shows Hobart’s demand level has grown by 48 per cent over the past 12 months, the highest in the nation as reported by The Mercury.

Realestate.com.au chief economist Nerida Conisbee said the combination of a changing economy as well as low levels of development in Hobart had meant buyer and renter demand remained “incredibly high”.

Although this is a great outcome for homeowners, it proves to be slightly more challenging for first home-buyers and renters.

“Hobart is still the most affordable capital city, however it is starting to get expensive and this is likely to remain the case in 2018,” Ms Conisbee said.

Hobart’s biggest issue at the present time however is rental supply and new development that the city needs and is ready for, whereas previously the Tasmanian economy wasn’t in a position to support significant levels of new development.

View Chief Executive and Real Estate Institute of Australia board member Adrian Kelly said there was no doubt that Hobart was well and truly at the “top of the cycle at present” with many people trying to secure a property and turnover levels being very low.

He said this had caused a perfect storm, particularly while interest rates were so low.

“Our high rental returns are also very attractive to local and mainland purchasers alike looking to secure a rental property,” Mr Kelly said.

“The rental market is becoming difficult for families and individuals with extremely high competition.

“Some tenants have been forced into becoming a buyer out of sheer desperation to secure accommodation.”

Meanwhile, demand for properties in Devonport and Launceston has grown 42 per cent and 37 per cent respectively over the past 12 months.

However, he said buyers were well educated in terms of value.

“They don’t mind paying a premium to secure a property but if the price is obviously way too high then they won’t bother,” he said.

Notwithstanding banks, who are exercising caution in terms of valuations and lending percentages.

 

 

 

 

There’s Something About Radelaide – Interstate Demand Fuelling Adelaide’s Property Market

 

Last month, Property Journalist Andrew Street revealed in a devastatingly candid tale, why his love affair with Sydney had come to an unfortunate end, and how his love of the glistening harbour city had officially turned to “unrelenting disgust”. A bit harsh you might think?

Citing many reasons from transport and construction to public safety, Mr Street revealed the final straw was undoubtedly the most predictable – HOUSING PRICES. Specifically, the spiralling rent increases since buying had long ago ceased to be an option for his two professional income household.

“The final straw was realising that renting a large enough property within our budget for our growing family would sentence my wife, who works in the CBD, to a commute that would begin before our son was up in the morning and end after he’d gone to sleep”.

It was at this point that Mr Street decided he had to ‘Break Up With Sydney’ and move his family to Adelaide.

Although many Sydneysiders would not have necessarily agreed with Mr Street’s vicious tirade on our golden harbour city, it is no secret that Sydney housing prices are becoming a little to intense for even double income professional households, so buyers are looking elsewhere and according to an article published this week in The Advertiser, they are looking in Adelaide.

Interstate demand for Adelaide properties has reached an all-time high and up nine per cent from this time last year, with cashed-up investors from Sydney and Melbourne circling Adelaide’s residential property market, with local agents reporting a boom in inquiries from interstate buyers unable to afford properties in their own cities.

Spurred on by affordability and higher yields than those on offer in the eastern states, realestate.com.au data shows more than 4.6 million property seekers from Sydney and Melbourne eyed off Adelaide properties in 2017, nine per cent more than the previous year.

While Sydney buyers were predominantly drawn to seaside suburbs such as Glenelg and Henley Beach, Melbourne-based buyers agents had their eyes firmly set on character homes on the city fringe, driving both price growth and demand.

Auctioneer and sales agent Hamish Mill, of Harcourts Williams, said buyers’ advocates were continuously scouting properties close to the CBD with the majority of his agency’s sales now going to interstate clients.

The result also comes as no surprise to beachside sales specialist Penny Riggs of Klemich Real Estate who said demand had outstripped supply for some time.

“I’ve definitely had more interest from interstate, especially from Sydney. A lot of them come here for the weekend to watch the footy and look at real estate at the same time. There are definitely a lot of investors moving out of Sydney and looking to spend their money elsewhere. Most congregate around the $750,000 price point, and there’s plenty to buy here in Adelaide” she said.

So we must pose the question, are Sydneysiders breaking up with Sydney or is Sydney kicking us out?

 

 

 

 

 

 

 

Dump Or Delight? What You Should Know Before Purchasing A Derelict Property

Sydney’s obsession with buying a dump is becoming an epidemic. A wave of dilapidated houses have hit the market in recent times, with house-hunters dreaming of picking up a bargain property in a sought after location.

Last month alone saw Domain journalist Kate Burke’s auction research trip turn into a half submerged leg in the floorboard of a derelict Newtown terrace. The house sold for $1,051,000, after a fierce bidding war between two buyers who were not the least bit concerned by all the caution tape, the cracked walls or the broken floor boards.

Just to inspect the terrace you had to be over the age of 16, wear enclosed shoes and sign a waiver, excluding the real estate agent of any liability for any personal injury that occurred, she reported.

If you think that in and of itself might be a deterrent, think again. More than 100 groups inspected the Newtown property, a very strong number in the current market.

However, transforming an uninhabitable property into a beautiful home can be incredibly expensive, as structural problems hidden deep beneath the peeling paint, crumbling ceilings and rotten floorboards can’t be left alone once discovered. For properties protected by heritage constraints, a knock-down-rebuild is out of the question.

Yet rundown houses continue to appeal to savvy renovators and could offer the chance to create a dream home for those prepared to pay the price.

Paul Cree from Refresh Renovations said fixer-uppers often attracted buyers seeking entry into a suburb they otherwise couldn’t afford, while other buyers were drawn to a home’s period features.

Taking all risks into account though, is purchasing a dump a smart idea, and what do you need to know?

Mr Cree says that it’s important to really gauge the scope of work that needs to be done from the start.

Structural vs. Cosmetic

Sometimes a property can look very rundown but a lot of it is actually relatively cosmetic,” he said. “Other times the stumps or footings of the property need replacing and there are a lot of structural problems.”

Mr Cree said these hidden problems end up costing more than buyers realise, citing issues with plumbing and electrical systems and damp as the major culprits.

“There are often a lot of unknowns and it’s wise to have a bit of a contingency to tackle those unknown costs.”

Speak To The Local Council

Before buying a property, familiarise yourself with the development control plan of the local council and make an appointment to discuss your ideas with a duty planner.

Older homes are more likely to have heritage constraints, but Mr Cree said this usually involved a home’s facade.

“A lot of the time it’s more focused on the road-facing aspects of the property. There’s more flexibility with what they can do at the rear of the house.”

Don’t Forget The Building Inspection

A building inspection is essential, but it’s also worth hiring a builder to estimate the cost of renovations, as comparable renovated properties may prove better value. There is no point purchasing a property in this state that you simply cant do anything with.

Renovation Finance

Mortgage Choice spokesperson Graciela Gomez said it can be harder to secure a loan on a dilapidated property as the risk to lenders is higher.

“If the borrower defaults on their loan, the lender will need to repossess and resell the property,” she said. “This could be more difficult to do if the property is rundown.”

If the property is uninhabitable, most lenders require buyers to take out a construction loan to fund the project, with payments made in stages.

“Lenders will ask to see the borrower’s building contract along with payment schedule from a licensed builder. They will also request evidence of council approval.”

Securing A Mortgage

Buyers whose homes are valued less than the purchase price may struggle to get finance approved or may need to pay lender’s mortgage insurance which can add thousands of dollars to the loan amount.

Furthermore, renovating an uninhabitable home would be too challenging and expensive for first-home buyers without hands-on building experience, and not lucrative enough for developers.

Selling

Flipping a property can be trickier in a flat market, but when prices are going up, the risks of taking on a major reno are minimised, as even unimproved properties can benefit from rising land values.

 

 

 

 

 

Why Let A Stranger Inspect A Property For You When You Can Use Home Live?

It’s an ongoing frustration amongst renters who are looking for a new home yet either can’t make the inspection time, or have multiple properties that they would like to inspect fall during the same time period.

But would you let a stranger go to an inspection for you?

A company in Melbourne called Propzee conducts inspections of properties for rent for people who can’t be there in person, claiming to provide its clients with a condition report on the fixtures in each room along with photos. Other property seekers have opted to use job sharing site Airtasker, again sending a totally random individual into the property to take photos. But at the risk of sounding trite, if home is where the heart is, why on earth would you rely on a person who has never met you or your family, doesn’t know your personality, your likes, dislikes and beyond, to provide you with enough information to be confident that this is the right home for you?

Domain reported in a recent article on this matter that Tenants Union Victoria chief executive Mark O’Brien said renters should be cautious when asking a third party to inspect a property on their behalf.

“Residential tenancies agreements are contracts just like any other and you should probably take them seriously – and part of taking them seriously is don’t rent something that you haven’t seen,” Mr O’Brien said.

In addition, Propzee advises its clients that the report they provide should not be used as the sole basis for making an application and they should inspect themselves. Huh? So why would you pay for an inspection service when you are advised to inspect it yourself anyway?

Home Live eliminates the need for this and the unnecessary fees via its live broadcast inspection platform, which not only allows an agent to take you through the entire property in split second time, but allows you to both interact with the agent during the broadcast – where you can ask them to zoom in on specific areas or fixtures and ask questions; in addition to activating the interactive 3D mode, which allows users to be able to virtually walk around the property, complete with furnishings, much like you would in a computer game.

Most importantly however, you can be anywhere in the world whilst tuning in to the inspection. No fees, no frustration, no strangers.

So although it is probably a good idea to inspect a property in person eventually, Home Live allows you to at least make your own decision about whether this property is right for you to inspect to begin with. And it won’t cost you a cent!

Find Your Tribe

Somewhere Over The Rainbow… Apparently – There Is A Property For You!

It’s official, the property season is back in full swing, and in case you missed it, a recent article published by Stephen Nicholls, Property Editor at The Daily Telegraph, saw Sydney home buyers who will be hitting the streets of Sydney as they hunt down that golden ticket, classified into tribes – labelled creatively by Buyers Agent, Lauren Goudy.

So which tribe do you belong to and how will you fare according to Ms Goudy?

RAINBOW TRIBE – CAUTION TO DAYDREAMERS 

These people “believe in the pot of gold at the end of the rainbow” — buying a house is their ticket to riches. Ms Goudy fears this tribe will be the most vulnerable this year, in a quieter market.

OLD SCHOOLERS – GETTING A FOOT IN THE DOOR EARLY IS A GOOD IDEA

They save hard for a deposit and, perhaps with the help of mum and dad, buy a small property to start them off.

“For example in the eastern suburbs of Sydney,” she said.

“They’ll buy perhaps a one-bedroom apartment and use it as a stepping stone.”

RENTVESTERS – A COMMON EMERGING THEME OVER THE LAST FEW YEARS

They buy something cheap elsewhere as an investment and then rent a home in their preferred area.

ROLLING STONERS – SLOW AND STEADY WINS THE RACE

Use the “stepping stone” approach to move up the property market, buying bigger and better each time.

FLIPPERS – YOUR IN THE DANGER ZONE

Buy older properties then quickly renovate and sell them, hopefully for a profit — often inspired by television shows. This tribe is in big trouble for 2018.

“Over the past six months of 2017 they have been badly burnt,” she said.

Many bought something before the market started to turn in August — and then had to sell in quickly in November when the buyers disappeared.

QUANTITY LORDS – WATCH OUT FOR THE BANKS!

Those who own three or more properties, at least some of them often outside Sydney as they look to build a property portfolio. Again, Ms Goudy fears for this tribe in 2018 because the banks are tightening the rules for investors.

HOT SPOTTERS – IT’S RISKY BUSINESS

Believe they have a “crystal ball” ability to find the next property hotspot. Ms Goudy warns this tribe will need to be more cautious as this form of investment will be more high risk than in the past.

SIT-A-LATERS – HARD WORK PAYS OFF IN THE END

This tribe are the lucky ones, they are now paying down the last of their mortgages and will only be active in 2018 if they want to downsize to free up some equity to enjoy their retirement.

FREE LOANERS – DON’T RUB IT IN YOU LUCKY THINGS

The tribe everyone wants to belong to — they have paid their home off and are mortgage-free. With the rises in property, they can relax this year and spend their money whatever their heart desires.

BUBBLEGUMS – BURSTING AT THE SEAMS

Have been holding out from buying anything because they believe the property bubble will burst.

“This tribe lost a lot of members in the past six months as prices have become more palatable to them,” Ms Goudy said.

Ms. Goudy explains that it’s much safer to be risk-averse in this type of climate, where significant changes to market conditions can be observed.

First Home Buyers in particular should avoid buying something in areas that have a high concentration of new developments where return on investment might not turn out to be what they had imagined.

So how did you fare?

Is The Quintessential Dream Of Owning A Home Soon To Be A Distant Memory?

Australian Housing Market Rated As ‘Severely Unaffordable’

For generations and generations, most of us were taught from a very young age that you must start saving to buy your own home. Owning your own home by the time you were thirty was the dream.

My parents in particular got me on the saving spree in the very early days and would be most disappointed if I hadn’t saved 30% of my pocket money weekly. I still remember coming home one day at fourteen years of age after a teenage shopping spree- a result of indulging in far to many episodes of Beverly Hills 90210, where they chastised me for being so frivolous and made me return half of the items.

But never did I think that despite accumulating substantial savings over the years and making considerable adjustments to lifestyle, that the dream of owning a home would become elusive by the time I reached my late 20’s but certainly now in my early 30’s. Sure we all need to make certain sacrifices and adhere to certain budgets in line goals and family responsibilities, but not to the degree you need to now, and it doesn’t appear that in doing so guarantees you a property at all.

The recently released Demographia International Housing Affordability Survey named Australia as the third least affordable housing market, behind only New Zealand and Hong Kong.

The New Daily reported that Sydney was by far the least affordable city in Australia, and the second least affordable of all the 92 cities and regions covered; Melbourne, Adelaide, Brisbane and Perth were the fifth, sixteenth, eighteenth and twenty first respectively.

Australia’s overall median multiple was 6.6 – which means the average Australian house costs the equivalent of 6.6 years’ annual income.

To be classed as affordable you need a score of 3 or less. Anything over 5.1 counts as severely unaffordable.

Melbourne’s median multiple was way over that at 9.9, while Sydney’s was a shocking 12.9.

So how on earth are generations from Baby Boomers and beyond who aren’t already existing property owners going to get a bite?

My parents purchased their first home at age 25 in 1976, a four-bedroom townhouse in Willoughby on Sydney’s North shore for $52,000. With their combined salaries, they paid the whole house off in 2.5 years. The median price for the same style of house in that area today is just over $2,500,000 according to Domain data.

With the ongoing uprise in living expenses, combined with the time it takes you to finish a university degree, get a job, earn a good salary, and pay rent and so on, how on earth do you get a foot in the door now?

I’m concerned that one day I will have to say to my children, make sure you save all your money so you can pay your RENT!

Yes that’s right, RENT. There are so many new budgeting tools that the banks are making available now to assist with saving for home deposits or savings in general, following 70, 20, 10 rules, or 80, 10, 10 and so on, however taking into account the above, in addition to the longing to reside in a suburb that’s close to the city center or work; has great schools and facilities; and a good transport system; well is almost becoming near impossible.

Unfortunately home ownership is becoming elusive and although one might need to sacrifice the $10 avocado smash in the morning to save a bit of extra money, it appears as though doing so will have little or no impact whatsoever on the ability to own a home in an inner suburban area, and will probably most likely just make you miserable. Buy the toast I say!

SJW

Could This Be The Real Reason Brisbane Is Saying No To Apartments?

It’s a trend that has been present for some years now, but large Brisbane Construction companies are starting to feel the pain from new apartment build jobs which are drying up quickly, and now down 40% as reported this week in Domain

 

Instead Brisbane residents are opting for detached houses with detached house and land packages seeing an upswing of four percent, year-on-year to the end of the September quarter.

Although excellent news for the smaller building companies who specialize in the detached housing sector, the larger firms are concerned.

Oversupply and increased consumer demand for detached homes seems to be a culprit here, however one must look at whether the introduction of the new 3% transfer surcharge placed on foreign investors in Queensland, might be the major problem.

The Property Council of Australia Queensland Executive Director Chris Mountford reported to the AFR back in late 2016 just prior to the new foreign investor laws being introduced, that some of Australia’s top property companies, including Stockland, Lendlease and Mirvac, could be caught out by definitions in the new laws because they may have a majority foreign shareholding.

Fifty-fifty joint ventures between Australian and international investors, where control is jointly shared, would be caught by the Queensland surcharge.

“By imposing the Additional Foreign Enquirer Duty (AFAD) on these entities, there is a high likelihood that the additional costs will be passed onto the end purchaser who is likely to be a Queenslander,” he said.

Leading private Queensland developer Mark Stockwell furthered the sentiment, saying that international investors make up between 10 and 30 per cent of Stockwell projects. Without these investors the projects don’t get up and the construction jobs don’t get delivered.

“It’s going to stop development like there’s no tomorrow and that’s the thing I’m really worried about,” he said.

So if foreign investors are either passing on the transfer fee to potential buyers or are backing out altogether, could this be the hidden reason why Brisbane’s residential apartment market is in such despair, and what affect will it have on local jobs?

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