9 October 2014| Sue Williams| Domain
The property market is steadily turning into an excellent one for buyers, experts say, with the number of homes up for auction yesterday setting an October record and even more homes likely to go under the hammer in the next few weekends.
Auction clearance rates are dropping and prices are increasing at a much slower pace than at any time in the last three years, setting the stage for a buyers’ bonanza.
“The market is now becoming much more balanced away from sellers,” says Domain Group senior economist Dr Andrew Wilson.
“Buyers can now embrace a wider choice of homes, no longer outrageous rates of price growth, and still very low interest rates. It’s still not yet a buyers’ market, but it is turning downwards.”
That’s proved excellent news for HR director Lauren Peacock, 36, and warehouse manager Clarinda Tuzon, 40. The couple have just bought a three-bedroom, three-bathroom house on a 250-square-metre block in the Sydney south-eastern suburb of Botany for $960,000 after making a pre-auction offer after its first open for inspection.
“We were pretty lucky, and we think we got it for a very good price,” says Peacock. “I wanted to get it taken off the market and we didn’t want to go to auction.
“The market is still hot, but you can feel the frenzy isn’t there any more,” she says.
“You’ve still got to be aggressive in this market, though, and I think we got a very good buy as a result.”
Clearance rates are softening everywhere, but are now lowest in the outer suburbs – 56.1 per cent in the south west, 56.7 per cent in the west and 66.7 per cent in the south – where affordability is still the most favourable, too.
But for the best buys of all in this market, Chris Curtis, principal of buyers’ agents Curtis Associates, recommends looking out for the diamonds in the rough: lesser-quality homes with potential for improvement.
That work might put off other buyers and, in the absence of as much competition, enable people who are willing to renovate to drive a hard bargain with vendors.
“At this stage in the slowdown curve, vendors are nervous and feel uncertain what’s going to happen,” says Curtis.
“So you’ve got to play the psychological game. But the market has definitely peaked and it’s a wonderful time for buyers.”
As a general rule of thumb, he says it’s always better for buyers to avoid auctions, and make a pre-auction offer instead, under the theory that it’s easier to ease a horse into a canter when you’re already on its back, rather than jumping on when it’s galloping.
Patrick Nolan, head of home loans for industry super fund-owned bank ME, says that should involve checking out the prices of nearby properties that have recently sold, finding out how many contracts have been issued to judge the level of buyer interest, and then making a strong offer that’s likely to tempt the seller.
“But if your pre-auction offer is rejected, be prepared to walk away,” Nolan says.
“The property could be passed in at auction, and the agent may get in touch to see if you’re still interested.”
Yet, above all, buyers should never lose their focus on what will suit them in the long term, says Spencer & Servi agent David Servi. “No one should panic or buy something they aren’t sure about.
“It’s always about the fundamentals of finding the right property, and one that someone’s going to be happy paying off a mortgage on,” he says.