Sydney property values fell into negative annual growth territory for the first time since 2012 last month. According to the latest report from CoreLogic, Sydney home values softened by -0.5% over the year to February 28.
All this means is it’s getting a bit easier for buyers. There’s more stock on the market, buyers have a bit more choice and some new negotiating power. Auction clearance rates have softened a bit as volumes for sale increase and buyers become more discerning.
I expect this to continue for a while. Usually when Sydney comes out of a boom, it returns to normal market conditions pretty quickly and it’s a new ball game for both buyers and sellers.
So this week, I’m going to talk about how to buy at this point in the cycle.
While buyers might feel buoyed by the market slow down, reality is we’re still only just past the peak of a boom in which property values grew by about 75%. It’s therefore understandable that some buyers would be worrying about paying too much in today’s market.
So, what do you do? Wait a while to see if prices go down, or just get on with buying?
The most important lesson from other booms in Sydney is that prices don’t go down much afterwards. The city has very strong fundamentals holding prices up (eg strong economy, undersupply, population growth, migration), so buyers shouldn’t expect a big change.
In addition, real estate should always be a long-term play, so even if you do pay a bit of a premium (within reason) today, it’s not going to matter much in 10 years’ time when property values will have probably doubled.
In many pockets of Sydney, we are still seeing properties sell well above reserve. This isn’t happening as much as it was but we are certainly still seeing it with the better-quality homes in the best locations. So, if you want to buy a great new home, you might still have to pay a premium price.
However, with interest rates remaining as low as they are, this remains manageable. Owner-occupiers can still lock in fixed rates around or even below 4%, so that should help a lot.
Here are some specific tips on how to get ahead of other buyers, make offers and bid at auction.
How to get ahead of other buyers
Every buyer is online these days, so when a new property listing is uploaded the chances are you and every other suitable buyer will receive an alert to it. At this stage, you’re all on an even playing field.
It’s different when you’re a ‘database buyer’.
Database buyers have registered their buying criteria directly with individual agents and they are often notified of new listings prior to them going on the big portals. This gives you an advantage.
Agents often conduct pre-campaign inspections with database buyers too, so you can get a look at the property and perhaps even make an offer before public advertising begins.
You can also get ahead of other buyers by doing thorough research on the local market – so you’ll be able to recognise and act on an opportunity sooner; as well as getting your finance approved, as this is a powerful demonstration of your commitment to buy.
Tips for bidding at auction
Tips for buying pre-auction or via private treaty
The Sydney market is currently taking a breather with the Easter long weekend approaching and school holidays commencing in mid-April. We typically see a surge of new stock on the market immediately after the holidays, so buyers should ready themselves for a potentially busy May!
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