How to buy a property amid lockdown supply issues

COVID-19 lockdowns have severely hampered market activity across much of the nation this year, seeing many vendors postpone sales campaigns until buyers can attend auctions and open for inspections in person.

This has seen a significant reduction in the supply available to eager buyers, who have been forced to compete for the reduced purchasing opportunities, via online auctions or private sales.

Across the nation, the total stock advertised was down 27.1 percent on the five-year average in the four weeks leading up to August 8, according to CoreLogic. 

Sydney, suffering under its protracted lockdown, has seen new listings fall more than 17 percent over the four weeks leading up to mid-August.

Once lockdowns eventually ease, however, we can expect a surge in market activity, as vendors take the opportunity to hold in-person auctions and open for inspections again.

This pattern was seen following Melbourne’s protracted lockdown in 2020 and subsequent lockdowns this year, which flowed on to drive uncharacteristically high auction numbers across Summer, and the busiest Autumn auction sales period on record.

However, despite the increased levels in supply, it’s likely to remain a sellers’ market across much of Australia.

So how should buyers navigate the purchasing process, amid surging demand and limited supply?

First off, they shouldn’t be disheartened. A buying campaign is usually a marathon, and prospective buyers accrue valuable knowledge of the market and their requirements along the way. 

Patience is a vital quality. The temptation in this market is to compromise and buy something that isn’t quite right. 

That only leads to buyer’s remorse down the track. Buyers need to trust that more supply will arrive in the future and remain discerning in the interim.

Saying that, if the right property presents itself today, a buyer should still know how to pounce. 

That’s especially important amid the sporadic and uncertain nature of lockdowns. 

Buyers who have carried out sufficient reconnaissance and due diligence between lockdowns will be well poised to jump on unexpected opportunities that arise due to the disruption.

The challenge then becomes about paying a fair price. Typically, finding recent comparable sales are the key to establishing fair value. 

Some investors are initially determined only to buy in a specific suburb or two, which makes them vulnerable when the choice is low. Becoming enlightened about new ‘comparable’ suburbs reduces the risk of overpaying.

There are a couple of other factors to bear in mind, given the likely elongation of the buying process. 

First, buyers should be mindful of the expiry date on their mortgage pre-approval. A three-month limit is not unusual, which is easily exceeded in today’s conditions. 

Second, those who are looking to move home and trade properties in the usual order – sell first and buy second – may want to avoid short settlement periods to reduce the heightened risk of failing to find a replacement property and being forced to take up a short-term rental lease.

In these unstable times, it’s vital property investors are informed, prepared, and agile – to ensure they lock in stable, long-term returns.

Jarrod Mccabe

Sydney developers gear up for future apartments growth

Developers are seeing big opportunities in Sydney apartments, with new projects flowing through the planning system likely to be attractive to investors as well as owner-occupiers priced out of Sydney’s soaring established housing market. 

Capital growth in Sydney’s housing market has doubled that of units in the year to date, with the Harbour City recording a nation-leading 20.9 percent uplift in house values so far in 2021, according to CoreLogic. 

But recent research by the Housing Industry Association unearthed some surprising strength in Sydney’s multi-residential market, even as the median value of units rose by a more pedestrian 10 percent in the first seven months of the year.

HIA economist Tom Mott said multi-unit commencements in Sydney had returned to pre-pandemic levels, with recent approvals supporting an upwards trend.

Medium density units gaining approval have also reached a 25-year high, Mr. Mott said.

“This suggests the underlying shortage of apartments in Sydney was far greater than previously thought,” he said.

“Record low interest rates are helping to unleash this pent-up demand. 

“Investor activity has also emerged. These buyers are looking through the haze of the pandemic in anticipation of a return of overseas migration.”

On the Lower North Shore, a recent penthouse sale neatly illustrated the depth of buyer demand, setting a new per-square meter record for the prestigious area.

Luxury developer JQZ said the first penthouse at its 88 by JQZ development, currently under construction in St Leonards, sold for $10.5 million, equating to $52,239 per sqm.

Apex Investment Alliance managing director Denis Wan, who is handling marketing on behalf of JQZ, said he and his team were surprised at how quickly the buyer moved after being presented with the opportunity.

“The sales contract was exchanged in just seven days from when the penthouse was unveiled to a select group of potential buyers at an event on Friday, June 11, so this buyer certainly didn’t waste any time,” Mr. Wan said.

“Penthouses are a big trend at the moment but there’s a limited supply, particularly on the Lower North Shore. That’s why they are achieving such impressive figures.

“I won’t be surprised if we continue to see record prices, as we have more buyers than penthouses available.”

One of the biggest projects added to Sydney’s development pipeline is Avenor’s latest luxury apartments tower East Walker Street, which recently got the green light from planning authorities.

East Walker Street will comprise a 30-story tower containing 280 apartments, to be built in the heart of North Sydney.

Avenor managing director James Paver said he believed the timing was right to advance the project, which has been in the planning phase since 2017 when the developer started amalgamating several separate plots to facilitate its development.

– Dan wilkie

5 questions to ask to make sure your property is ready to rent

Investing in property is an exciting endeavor, but it can also be daunting. And, if you’re planning to lease that investment property, you will run into several other challenges.

As with all major decisions, you should ask yourself important questions. 

After nearly two decades of experience in property investment and management, I’ve found these five questions are crucial to guide investors towards the result best for you and your investment goals.

Is the property up to standard?

Up to standard can mean several things, such as safety regulations or your own specifications for what makes a property a home. Take a look around your property and take note of what you have and what is missing.

Does it have a car park and ample storage? Do you need to install air conditioning? Are smoke alarms working? Do carpets need replacement? Is there any leaky plumbing that needs fixing?

Has your house or unit been checked professionally for any defects? This is also a good time to schedule pest inspections.

What is happening in the local area?

The lifestyle of the suburb where your potential rental property is located can either impact the property negatively or positively.

Observe the features in the area that are key to attracting quality tenants. These include access to transport options, parks, schools, and proximity to the CBD.

Speak to a property manager who can catch you up on the latest local demographics and statistics in the area.

With a better understanding of your rental property’s neighborhood, you will know what’s in demand and set yourself up for higher rental returns.

Do I have insurance?

It will seem like an extra cost, but landlord insurance can cover all sorts of issues.

Landlord insurance policies take into consideration the risks you face as a property owner and investor and not necessarily as a resident.

Landlord insurance also covers the property owner for tenant-related risks that are not covered by home insurance or body corporate/strata fees.

Typically, a landlord insurance policy will cover:

  • Theft or burglary by tenants, their guests or other burglars
  • Malicious damage or vandalism by tenants or their guests
  • Loss of rent due to tenant default or breaking of the lease
  • Legal expenses required to evict a tenant
  • Damage caused by disasters (i.e., floods, storms, fires)

Who is my target market?

It’s essential you identify your potential tenants and know what they would be looking for in a rental property.

Once you identify your target market, you can focus on what their wants needs, and expectations are as tenants.

If you’re looking at a property close to a university, consider multiple occupancy homes near transport and amenities.

Meanwhile, if you’re going for the family market, look for a large home with a garden and spacious communal area.

What are my responsibilities?

Some of a landlord’s responsibilities include rent increases, safety and security, repairs and access to the property.

It’s also important to stay updated on state rules and regulations.

You want to keep your investment property safe and profitable while ensuring your tenants are happy. Hiring a property manager to oversee the responsibilities can save you plenty of time and stress.

– Lauren Robinson