By Rich Harvey, CEO and Founder www.propertybuyer.com.au
The sub $1 million segment of the Sydney property market is presently sizzling.
Buyers are frantically chasing properties with little regard of comparative values. Stock levels are extremely tight and auction clearance rates are the highest level in the last three years. Some properties are going to tender and are selling over full listed price. The typically subdued winter market in combination with a gross lack of stock and increase in buyer confidence is contributing to the rising property prices that we are now seeing.
The market dynamics are changing. In a rising market buyers have to move quickly to agree on price and secure a property. Buyers are increasingly utilising the services of a buyers' advocate to get ahead of the pack. We’ve had a 20% increase in buyers’ agent work in the last 6 months as a result of increased confidence in the property market.
The message for buyers in a rising market is simple - it is more crucial than ever to conduct a thorough analysis of property value to avoid the mistake of overpaying. Many buyers are catching the “FOMO” disease - the fear of missing out (FOMO) is clearly driving some buyers to become emotional with the transaction and therefore paying in excess of comparative market value.
Recent examples include the following:
- 2 bed, 2 bath, 1 car apartment in Stanmore - propertybuyer appraisal the property at $725,000, the vendor expectation was $750,000, the property sold for $795,000
- 2 bed, 1 bath, 1 car apartment in Mosman - six contracts and four offers after the first open, two of them were above asking price, the property sold on the Monday after the first open
- 2 bed, 1 bath, 1 car apartment in Wollstonecraft - price guide over $650,000, nine registered bidders, the property sold for $784,000 at auction
- 2 bed, 1 bath, 1 car apartment in Crows Nest - auction bidding guide from $620,000 - agent expecting $680,000, the property sold for $740,000
- 2 bed, 1 bath, 1 car apartment in Queenscliff -$650,000 + price guide - agent indicated $700,000 should secure the property then changed this figure to $750,000 after the first open where 52 groups inspected the property and 14 contracts were issued
Last year we typically saw around 3 to 4 bidders at auctions in the key Sydney markets. This year we are seeing around 7 to 10 bidders on high quality properties. The tight supply situation is likely to continue for some time and put gradual pressure on property prices. The positive news should encourage more vendors to list their property for sale. Despite the slight increase in building approvals last month, it will not be enough to alleviate the price pressures on buyers for the Sydney market.
Low interest rates, increased consumer confidence and the reduction of the negativity in the media towards the property market is contributing to current demand out-stripping the supply. We are getting multiple requests from frustrated buyers seeking a leg up with the research and negotiation tactics. They want to find properties before they hit the general market and pay fair market value.
This article was written by Rich Harvey, founder and Managing Director of propertybuyer, Sydney & Australia’s most awarded Buyers’ Agents. Propertybuyer helps property investors and home buyers search and negotiate the right property at the right price, everytime.
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