Developers Introduce ‘Preposit’ To Combat Tougher Lending Conditions

What do you do when you need to sell a massive backlog of apartments still on the market due to tightening lending conditions from the banks? You introduce a post pay method for home seekers who are struggling to save for a deposit.

First there was Afterpay now there is Preposit!

For those of you who aren’t familiar with the concept, Afterpay is a digital service that makes it possible to buy something now and pay it off in fortnightly instalments over a set period of time. Unlike a layby, you’ll get the product right away, whether you’re shopping online or in-store. And in the best circumstances, you’ll pay nothing more ie. provided you can afford the repayments.

Now however, Apartments WA are offering ‘preposit’, a service that enables struggling home buyers to rent while saving for a deposit as reported in the Australian Financial Review, ie. the Afterpay of the real estate industry.

Buyers can literally move in today and pay tomorrow, the only catch being that you need to be able to afford your loan repayments and prequalify for a loan.

It is estimated that over the next two years, there will be approximately 200,000 new apartments coming onto the market, of which most are in high-rise developments. A worrying thought to many seeing it has been well documented of recent especially in Brisbane that there is currently an over-supply of apartments with developers resorting to extreme incentives to sell them.

For example, at present developers are offering $50,000 cash incentives plus GST on top of regular sales and advisory commissions to sell luxury apartments around Melbourne.

Some are also offering thousands of dollars worth of designer furniture to be included in the sales, just to get it closed early.

Proposit – the company offering this service, states that it stores the payments in weekly instalments until the deposit amount has been reached, then give back to the buyer toward purchasing the apartment.

Although this may seem like an appealing option to those who can’t seem to save enough for that first deposit, it is very important to take into account the risk factors and additional costs that could be associated with using the service such as interest rates.

The other thing to take into account is oversupply often means that should you wish to sell your home down the line, it may be more difficult to or you may not get a price you are happy with. This particularly applies to first home buyers who often get caught up in the excitement without thinking that they may want to buy a house later on down the track yet wont have any capital growth for a decade due to the massive oversupply.

That being said, as with any large purchase, the best time to get into the property market is when you feel confident and financially ready.

 

 

 

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.

 

 

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