How are investors in Australia behaving?
For both buyers and sellers, the activity of investors in the market makes a big difference to how they respond themselves. Owner-occupiers don't want to be buying when the market is heightened because of increased investor activity, and sellers don't want to list their homes when there is very low demand.
At the moment, investor activity could be pushed sky-high in Australia as a result of the Brexit referendum. London was one of the primary markets for overseas investors, and now that the economy has fallen so dramatically as a result of the decision to leave the EU, the capital city might be a poor option for future property buying. For that reason, investors will be turning toward Sydney, Melbourne and Brisbane as a way to ensure their capital gains are still on the up even through this financial turmoil in the northern hemisphere.
How is the market pushing people into using a buyer's agent and getting a competitive advantage?
But with the predicted upward trend in investor activity, what will it do to the existing landscape, and how is that going to be pushing more people into using a buyer's agent and giving themselves a competitive advantage?
A volatile market being opened even further
According to the CoreLogic RP Data monthly indices to the end of June, the median dwelling price in Sydney almost breached the $1 million mark, coming in at $996,140. Looking at houses in particular, that median was up to $1,079,060, while apartments were as high as $734,060 – an increase of 12.8 per cent over the past 12 months.
As Australia's business hub and the largest city at present, Sydney is a real target for overseas buyers who are wanting to take advantage of the high demand currently being seen around the country. The Housing Industry Association's (HIA) Population and Residential Building Hotspots report for 2016 states that the population in Australia was just below 24 million halfway through last year, which had increased 1.4 per cent over the previous year.
That's going to mean increasing demand, as more and more people look to get into their own place, and supply won't be able to keep up. In fact, there were 221,000 new residential homes built last year, 48.4 per cent of which were semi-detached homes, or multi-unit dwellings, according to the HIA. That marks a shift toward people using land in a more versatile way, and opening up the possibility for cheaper housing while not cutting into the quality of an individual dwelling.
That's great news for people who aren't in the market for a house with a large backyard, but it doesn't mean that it's a pipe dream.
The median house price for Brisbane and the Gold Coast, some of the most incredible places to live in the entire world, is sitting at $561,130. That's significantly lower than the cost of an apartment in Sydney, and you've got much more of a chance to have a substantial amount of land as well. Of course, the attraction to Sydney is the amazing opportunity for jobs and the up-market lifestyle on offer in virtually every corner of the city, but the call of a bigger home at a lower price might be far stronger for some families.
If you don't know what the best option for your needs is moving forward, a buyer's agent will be able to decipher all of your information.
What are investors doing with Australian properties?
The CoreLogic RP Data Investor Report from June 2016 shows that investors are more focused on the lower end of the scale when it comes to the properties they're buying.
There are 2.6 million investor-owned properties in the nation, which accounts for 26.9 per cent of the market, but only makes up 23.8 per cent of the total value of stock. This highlights how active investors are, but also that they're not usually concerned with homes at the higher end of the cost scale.
To put that even further into perspective, 46.9 per cent of current owner-occupied dwellings have a value of less than $500,000, while 53.4 per cent of investor-owned properties are in the same price bracket. What that's doing to the market, then, is clear. As people adding pages to their portfolio continue to look at the more affordable homes, it's forcing owner-occupiers to spend more as they're being priced out of this sector.
Owner-occupiers are being forced to spend more as they're being priced out of the affordable sector.
The competition is too high for many owner-occupiers to deal with, as they're inexperienced with the buying process and don't know where to look or who to turn to for help getting into the right home. Enlisting the services of a buyer's agent is going to help to either decrease the competition surrounding a particular home, or at least make it less stressful when trying to place a bid.
This is because a buyer's agent has access to off-market properties through great relationships in the industry, so your pool for buying is far larger. They will also be able to make bids and handle negotiations on your behalf, so you won't have to worry about a thing. With your price ceiling in mind, they'll attempt to strike you the best deal while staying within your budget.
If investors continue to look at the lower end of the market, it'll become more and more expensive to get into a home that's right for you and your family. As this becomes closer to reality, you'll want to do everything in your power to ensure you have the edge over the competition.
Who's buying what?
Nearly half (48 per cent) of all investment properties are units or apartments, according to CoreLogic. These tend to be closer to the CBD, which makes them perfect for higher rental yields and far lower vacancy rates, which are both going to be earning the buyer money.
Further, only 15.7 per cent of taxpayers have an investment property, which shows a fair amount of Australian buying is coming from overseas. Of this group of people, they average 1.28 homes each.
As apartments are some of the most sought-after properties for investors, it's important to note how the rental yields are performing. Over the past year, CoreLogic reports that weekly rents have actually declined over the past year by 0.2 per cent. This would have had a lasting effect on investor activity, if it weren't for the low cash rate keeping debt costs to a minimum and thus not requiring major repayments from rental owners. Where investors get most of their money is in capital gains.
The dwelling values around the major centres over the past five years have increased by a whopping 29.4 per cent. While rent might not have been paying all of the bills, there would still have been the knowledge that upon selling, that particular investor was going to see a large return, offsetting any losses.
Investors are currently very active, making the market competitive and keeping a lot of hopeful buyers in the hunt for longer.
If you don't want to be a part of that long and drawn-out search for the right property, but want a professional in the property industry to do the legwork for you, a buyer's agent from Cohen Handler could be the perfect solution. Get in touch today!