As the stock market throws itself on the rocks, hospital capacities tighten and Manly residents concede maybe they shouldn’t slurp their caramel lattes down the beach, Australia’s housing market is undergoing some changes too.
How bad is it going to be? No one knows. What we do know is there will be winners and losers. So: DMARGE spoke to Edward Brown, Director at leading Australian real estate provider Belle Property to find out how you can be the former, not the latter.
Edward told us that, though – from the coveted coves of Vaucluse to the Mascot concrete jungle – these are unchartered waters, there are steps one can take to become a smarter buyer.
He also told us that, unlike the stock market, as soon as the physical effects of the virus are over (and social distancing rules are lifted) everyday people will go back to buying and selling houses, even if it’s no longer a boom market.
“If they need to upgrade because they’re downsizing or upsizing due to growing family needs, they’re going to move regardless.”
First up though was some context – and fairly run of the mill real estate advice – to ease us in: “Push yourself to get the best property your budget can allow – run your numbers, have a good chat with your broker (or bank), understand what your finances will allow you to do and assess all the areas that may or may not work,” Edward told us, if you want to be a smart buyer.
Then look at your preferred suburbs and the suburbs adjoining them to see if you can get more value for money there: “When it comes to making a purchase, push yourself to get a property that will see you through for 5 or more years rather than compromising and not getting everything you’re after.” In other words, having a 10 minute longer commute might be worth it if it saves you 30 years of mortgage stress.
To narrow down what you should kill weekends looking for (once the lockdown is over anyway) Edward says one strategy is to work out a 10 ‘star’ system: “You’re probably only going to get 7 of your top 10 but still… getting 7 out of 10 is still a very good position to be in.”
These stars will include factors that are important to you. Much like you can set a filter on Carsales when looking for a second-hand car, so that it only shows you vehicles within a certain mileage, radius and price, you should do the same with your property search (except taking into account more factors). This means working out the nitty-gritty of what you want regarding proximity to your workplace, social atmosphere, proximity to public transport, price, size, etc.
Your next job, as a savvy buyer, is to offer the right price. Easier said than done, sure. But if you’re looking at a house that’s a 7/10 or higher for you, don’t lowball just because we’re no longer in a booming market.
Yes: “it’s worth what someone is willing to pay,” Edward told us. “But if you’re running around putting lowball offers on everything there’s a reason why your offer will be accepted on something and that’s because no-one else wants it.”
“Good quality homes will sell for a fair and reasonable price – maybe not the same price they could have once achieved in a booming market – but good homes will always have demand in any marketplace.”
Finally, you need to be prepared to negotiate. Being inflexible in this area, Edward says, can bring your chances of owning a property to a premature end: “Sometimes people make offers and they make an offer well below, so they offend the vendor [and] the vendor just doesn’t want to deal with them.”
Of course, this isn’t saying you should feel pressure to go beyond budget – it’s worth what you’re willing to pay – but you must consider that it’s someone else’s much-loved property, in your interactions with them.
Also key for any smart buyer right now is too not get too despondent and stop looking. As Edward told us last week, even though “if people aspirationally would like to move they’re not going to do that [right now]” and “people who don’t need to sell just won’t put their properties up on the market” there are still the same deals (upsizing, downsizing, deceased estates etc.) as there always are to be had (or at least there will be once the lockdown ends and people return to business as usual).
“If you need to move, move. The housing crisis is only going to be caused if everyone sits back and does nothing. The loans are very cheap. You can go and get interest rates for under 3%. That’s cheap money – you can go and get a million-dollar mortgage and they principle an interest for about $4,000.”
Now all that’s left is to earn that deposit…