By Rich Harvey, CEO & Founder, propertybuyer.com.au
When you study property markets there are all sorts of broad metrics that come your way. I’m talking about things like national price movements, capital city Days On Market and median gross yields on various investment locations.
There are almost endless iterations of data, all designed to tell a story about property market performance.
Now, there’s obviously a place for utilising these numbers. They assist in giving a broad perspective of what’s happening across the real estate landscape. But there’s also a failing in pinning your property success to these figures alone – and that’s because there’s something else that’s far more important…
… it’s the three essential nuances.
You see, while broad market data can help describe conditions more generally, it doesn’t tell you exactly what you need to know about the particular property that will meet your needs as a buyer.
Australia’s “property market” is actually a complex tapestry of many smaller markets, each acting in their own direction in response to prevailing conditions. If you only rely on general information without paying attention to the nuances, you’re vat risk of making bad decisions.
So, what are the three essential nuances? Let’s explore each a little further.
Location
I’m sure you’ll have heard the well worn “Location! Location! Location!”, but it’s important to understand what is actually meant by “location” as it relates to your specific property search.
With location, a buyers’ advocate will work from a broad area down to the property’s position itself.
So, we will work to the client’s brief to define which suburbs might fulfil their needs. For example, a homebuyer, the purchaser could be looking for something within proximity of a CBD and certain school zones.
This helps us as professional to identify a suburb, or groups of suburbs, that meet their brief. When we study market condition within that suburb group, we may discover property values there outperforming the broader market. As such, we’ll need to be more bullish in our approach.
But location can be even more nuanced than that. Homes within certain enclaves may be performing better or worse than other homes within that same suburb. A great example is one a property valuer associate of mine from Brisbane shared with me recently.
He described a mid-ring northern suburb where a seam of shifting soils on one side of the street played havoc with house foundations. On the other side of that same street, the soils were as stable as everywhere else.
Now, unless you were aware of the nuance of this location right down to street level, you would be at risk of paying too much for home that could be susceptible to sever structural problems in the future. At the very least, those homebuyers could have trouble reselling their unstable homes in a future buyers’ market where purchasers have plenty of other listings to choose from.
Understanding in detail exactly where you want to buy right down to property position ensures you make the most informed decision possible.
Property type
The type of property a buyer wants will normally be dictated by factor other than market conditions. Homebuyers might want a place to house their family and that could range from a detached house through to an apartment. Investors similarly will be weighing up what particular real estate can fulfil their financial needs based on capital growth and yield expectations.
But as buyers’ advocates, we need to understand what property type our client is seeking so we can gear our approach and offers based on specific market conditions.
For example, recent rising building costs along with blowouts in construction times has meant homes needing renovation are experiencing lacklustre demand. As such, any buyer with deep pockets and patience can pick up a relative bargain. On the flipside, recently completed properties that are beautifully presented and require absolutely no work are attracting a price premium. We will need to be aggressive and creative with our offers on those.
Price point
The third nuance is your budget band as a buyer.
Homes within the same suburbs can be achieving totally different outcomes in the market simply because of their price point.
Across many of the major cities at present, for example, there’s been a run on ultra-prestige homes pushing sale price records. There are plenty of buyers – locals, ex-pats and foreign nationals – who seem to have impressive budgets and are willing to pay handsomely for the right property. Yet, within the same location, cheaper homes of more generic design are dealing with slightly softer demand as rising interest rates cause buyers to recalibrate their top price point.
The level of competition you face in securing a home can be influenced in part by what price point you’re operating in.
Professional property purchasers know that it’s imperative you are aware of overall market conditions, but it’s equally important to reduce the “white noise” and focus in on your specific sector when acquiring a home.
Understanding the nuances is what we do best as buyers’ advocates. To avoid making an expensive mistake by not understanding your particular market of interest, contact one of our team. They can navigate you through the unnecessary stuff and concentrate on exactly what’s important for unearthing your ideal home.
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