Buyers Agent Nick Viner says the re-pricing of blue-chip real estate in Sydney has reached a level where trade-up buyers end up saving thousands on purchase price and stamp duty costs. He tells us where the best opportunities exist.
Kevin: Well, no matter what the market does, there are always opportunities. That’s highlighted in a release that I’ve just received from a buyer’s agent by the name of Nick Viner. Nick is from Buyer’s Domain and joins me. G’day, Nick. How are you doing?
Nick: Hi, Kevin. How are you?
Kevin: Good. Yeah, always. We’re very positive in this industry, I find. There’s always a silver lining behind every cloud. Let’s talk about-
Nick: That’s it.
Kevin: The opportunities for trade-up buyers. Tell us what’s happening because you’re operating in the Sydney market. What are you seeing there, Nick?
Nick: Yeah, absolutely. Well, look, overall in the city market this year in the last 12 months we’ve seen a drop of about 7%, just over 7%, although in reality, when you get out and about there, I’m seeing bigger decreases of probably 10 to 15%. Bought an upgrader unit for someone in Mossman recently for 3.13, and the same units were trading for 3.5 in the middle of the year.
Nick: So that’s a decrease of $370-odd grand, rather, which is more than 10%. So there are particularly strong opportunities for people looking to upgrade, and the reason being because although you might be a little bit depressed that you’re selling your current properties for less than you would have 12 months ago, when you go and upgrade to the larger property, the bigger property at the higher end of the market, the savings are going to be greater on the larger property. So that’s what we’re seeing right now. In some ways, the smarter buyers are really taking advantage of that opportunity.
Kevin: It is sort of a warning, though, for anyone who is looking to get into property that you’re gonna have to be prepared to take the punt that the market will recover and not continue to decline, Nick?
Nick: Well, that’s right. And, look, Kevin, it’s very difficult to time the bottom of the market. In fact, no one is going to be able to time the bottom of the market, and what I’d say to people, I speak to a lot of buyers day in and day out, and there’s a feeling among some of them that they’re best waiting for the market to hit the bottom, but when do you know when that is?
Nick: And the problem with waiting for the bottom of the market is, you really only know when it’s the bottom of the market when it stops going up again. And as soon as it starts going up, as soon as you are starting to find and buy in a rising market, you’ll find that the competition, the buyers come out of the woodwork, and it’s very difficult to secure property in a rising market, and you start making some of those compromise decisions. Busy roads and all that kind of stuff because you feel under pressure.
Nick: The great thing about the market now is you’ve got more time to consider the options and really focus on getting a really good quality blue-chip property at an outstanding price.
Kevin: Yeah, because the problem when you try and time the market is that, as you just mentioned there, invariably miss the market because I’ve seen people wait for what they think is the bottom of the market, and then when they see an upswing, they’ll wait to see if it lasts and miss it totally. So I don’t think there’s any value in chasing the market up or down. I think you’ve got to buy when you think it’s right and make sure that you buy well.
Kevin: Tell me about investors. What are you seeing with investors compared to general home buyers?
Nick: Very interesting, Kevin, actually. Investors have been really, really quiet for the last 18 months or so, and in fact, I’ve always worked for investors and home buyers in sort of equal numbers up and down over the years. But as I say to investors, they’ve been extremely quiet for the last 18 months. I think they’ve been, I mean they probably started seeing higher prices and falling rental yields, and then they’ve been largely shut out of the market when approaching the banks for loans. Although I’m starting to see a little bit of a turnaround amongst the banks in that regard.
Nick: So I think one of the smaller lenders the other day was coming out with much better rates for investors than for home buyers, and that’s a little bit of a mini-reversal, and possibly off the back of that, for the first time in a long time, I’ve had a couple of new inquiries from investors in the past couple of weeks.
Nick: So that’s an interesting development. I think the other thing going forward is that rents have been low, and they’ve probably even fallen as much as 10% in the last year. We actually manage my business, my business manager has a handful of properties for our investor clients as well. So, yeah, I can speak to you freely about this.
Nick: And rents have been so low, and investors have retreated from the market, and I think they possibly will retreat further, particularly if Bill Shorten gets in and removes negative gearing.
Nick: But there will come a time, and no one knows when that will be. Will it be 12 months? Will it be 24 months? Where the amount of investor stock becomes too low because the investors haven’t been there for the last, whatever it is by then, two, three, four, five years. And rents will start going up.
Nick: And you’ll wait and see. The investors will start coming back into the market off the back of rising rents.
Kevin: What are the best opportunities to buy in Sydney right now, Nick?
Nick: Good question. Look, I’d stick with the inner-ring suburbs, particularly for an investment property, I’d stick within $10K of CBD, possibly even five to seven, because those are the areas that, those are the blue-chip areas where you’ll get consistently solid demand going forward, irrespective of the strength of the market, and good areas where you’ll never find a shortage of tenants.
Kevin: Nick, thanks very much for your time. Nick Viner has been my guest. Nick is from Buyer’s Domain. Thanks for your time, Nick.
Nick: Pleasure. Thanks, Kevin. Thanks for having me on.
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