How is buying a prestige property different?
Property buying is among the most expensive outlays you will ever experience – especially when the real estate you're purchasing is in the prestigious $5 million-plus category.
Spending so much on one patch of land is one thing, but making sure it's going to be exactly what you're after is a completely different ball game. There's hardly anyone looking for a home and willing to spend more than seven figures that doesn't know precisely what they want. It might be a particular lifestyle or ease of access to certain amenities. It might even be including particular amenities in the home itself. Tennis courts, a pool or two, incredible city or beach views and a plethora of rooms in which to entertain, lounge, cook and exercise; these are just some of the requirements that prestigious property buyers could have.
Does this sound like anything you'd be interested in? Cohen Handler employs specialist buyer's agents with extensive market knowledge and relationships with real estate agents that set them aside from the crowd. Having the guiding hand of a buyer's agent researching and finding the perfect prestige property for you to buy will give you a real edge in this competitive market, and it might even open up some off-market homes as well. That's something much less accessible without a professional, and accessibility is the key to buying a property, after all.
Getting into the market and finding the right place to live can be an arduous task.
Getting into the market and finding the right place to live, be it a bachelor pad, a family home or a retirement nest egg, can be an arduous task. Paying the right price for that can also be something of a struggle, and knowing what to pay for a certain kind of property in a particular suburb is golden information. You definitely don't want to be buying a patch of land to build on, only to find out that you've completely overcapitalised and blown your budget out of the water! Capital gains also come into the equation, and if you're looking for a great way to see returns on your property purchases, then you'll want to be buying in suburbs that are guaranteed to be doing well down the track.
We can help to take the challenge out of the process, and put more fun into it. It's important that you know what you want from a house, and we will take all of your requirements into account. First and foremost, you are a client and we are not only legally required to work in your best interests, we are passionate about finding the right place for you.
Sydney and Melbourne – the home of prestige properties in Australia
Particularly in these capital cities, property prices have been skyrocketing at the higher end of the spectrum.
Sydney suburbs, such as Vaucluse and Watsons Bay, offer incredible living and the most amazing views around the Sydney harbour and out to sea, but properties in the most prestigious areas do cost money.
The median house price in Vaucluse is $4,111,000 as stated by Residex – which almost sets it into the prestigious price range already! However, getting into the higher end of the price list, a house on Vaucluse Road or Carrara Road will cost you around $13 million, and Wharf Road puts you closer to $11 million.
Slightly north of Vaucluse, Watsons Bay has a median house price of $3,337,000 – potentially because it is a little further from the CBD. The most expensive street here is Pacific Street, with a median house price of $12,276,226. but the next highest is Victoria Street, which sits just above the $5 million mark. Interestingly, the overall median house value in Sydney is $1,010,360, according to CoreLogic RP Data, and a property over $5 million will be a huge five times more than that average. In Melbourne, the median house value is down significantly to $821,340, so a six-fold increase is required to break the prestigious $5 million threshold.
In Melbourne, finding a prestige property will require a little more work and expertise. Suburbs such as St Kilda East, Albert Park and South Yarra all carry with them a very strong and recognisable name, but the median house prices in these regions is down a serious amount on Sydney. St Kilda East comes in at $1,341,000, Albert Park $1,740,000 and South Yarra close behind with $1,693,000. While these are a far cry from Vaucluse and Watsons Bay, it must be remembered that they're still medians, and half of the properties in the suburbs will lie above these figures.
Toorak is really the only suburb in the cultural capital of Australia that really sticks out as being home to so many prestigious properties. Residex states that the median house price there is $3,746,000, while a house on Struan Street will set you back more than $12 million.
The same goes for the most expensive streets in the previous three suburbs – St Kilda East is home to Sidwell Avenue, which has a median house price of $3,679,566. This is lower than most prestigious properties in Sydney, but there will still be many available that meet the needs of even the most discerning buyer. St Vincent Place South in Albert Park edges closer to the $5 million mark with a median house price of $4,347,071, while Fairlie Court in South Yarra comes in strongly at $5,022,500. For buyers after a piece of the most luxurious property in Australia, all it takes to find is a little research. If you don't have the time to do this, it'll pay to have a buyer's agent on hand to take the reins for you and really get down to work to find you the most impressive piece of real estate they can.
Price isn't the only thing that holds people back from buying prestige properties – being scared off by the potential maintenance that such extravagant properties pose is something that might frighten you, but a buyer's agent will take into account your wants and desires for personal time as well. Nobody should be afraid of buying their dream house, after all!
How does buying a prestige property differ?
Buying a home in this sort of price bracket does require a few different approaches for some. You'll need to keep in mind that if you're paying a deposit on a property, it will be significantly higher than, say, a home that sells for well under the median value in Queensland, which happens to be $548,540. A 10 per cent deposit on a home over $5 million might be exactly the same as the total you could expect to pay in Queensland – the difference being that a $500,000 home in the Sunshine State isn't quite what you're looking for.
Getting to a 20 per cent deposit for a prestige property will most likely mean hitting seven figures in your bank account.
Both Westpac and The Commonwealth Bank of Australia don't require you to have any particular amount for a deposit. Requiring Lenders Mortgage Insurance (LMI) is one way they can protect themselves against potential shortfalls from clients unable to pay, and that's another cost you may have to factor into your buying budget. Unless you have saved 20 per cent of the sale price for a home, many mortgage brokers will require LMI. Getting to 20 per cent for a prestige property will most likely mean hitting seven figures in your bank account, and that's a serious amount of saving.
Most prestige property sales occur off-market – that means you won't be able to scroll through websites or turn pages in a newsletter to find which luxury homes will be available to you. In reality, every home has a price, it's just up to you (and your buyer's agent) to find it. Many people who own amazing homes don't just want to up and leave when you offer them money for it, so you might find that your offers are rejected, but don't be disheartened by this. Keep in mind that your dream property – that same one you might have been saving for over the last 15 years – could be just around the corner.
What are you looking for in a prestige property?
People don't look at buying a prestige property just because they enjoy architecture a little more than most, nor because you need to pay $5 million to get your kids into a 'decent' school zone. Buying a prestigious piece of land is about settling into a certain lifestyle that involves maybe having a private tennis court, being in a modern village situation, having access to beaches and waterfront views.
In a lucky few locations around the east coast particularly, you might even have room for a dry dock on which you can moor and launch a boat or jet skis. That's absolutely the most attractive thing about some properties for many people, while others prefer a focus on family living, entertainment and modern style and decor. Prestige property isn't limited to price – it includes all manner of desires that many people can only ever dream about. Once these dreams have come true, however, they'll find themselves with access to some very amazing perks that come with living out their days in a prestige property.
Buying one can be a little more difficult without the help of a buyer's agent, however. Most high-value property sales happen off-market, which means they aren't listed for sale. That can allow for a serious reduction in competition for a property, but you'll still need to bid to match the current owner's valuation without ending up paying too much. You might well be lucky enough to have access to a very hefty amount of money, but if you pay too much for a residence, that's just money you might not see again.
Getting the right valuation for a property is one step you could take to reduce the risk of doing this, although having the expert advice of a buyer's agent on hand is also going to help. The median value of a home on that particular street will be taken into account, as well as the current value of the calibre of a home together with what the seller believes the property to be worth are the main components to coming up with an offer. That requires an experienced hand, because if you offer too little, the seller might close up completely. Go the other way, and you'll be paying through the nose for a property that you can't be sure is completely worth it.
That's why it's so important to know exactly what you want from your property. If you have in mind a price ceiling, exact specifications for the number of rooms or beds, media spaces, kitchen design, bathroom modernity, quirkiness, number of stories, size of the garage, special touches you'd like to see, views or even something as simple as the size of the block of land, it'll be much easier for us to find the perfect home for you.
The above requirements are all very accessible in a prestige property, especially in places such as Sydney where expensive homes pop up everywhere – but, not all of them would be right for you. If you see a home advertised, for example, for $6 million, and decide to view it based purely on pictures and price, you might well be wasting your valuable time.
The suburb, regional growth, similar property sales and nearby amenities or transport routes are some of the factors that some people never take into account, but they are almost as important as the living space itself. You'll even have to consider the potential for resale down the line, because it's quite likely that something will appear in your life that changes where you want to live, or even the sort of lifestyle you'd enjoy the most.
If you spend so much on a house that was worth much less than you paid for it, and then sell if for a loss, you'll fall into what CoreLogic RP Data calls the 'pain' category. The latest Pain and Gain Report from December 2015 stated that only 2 per cent of Sydney home sales were in this pained section, which means 98 per cent made capital gains – even with any other overheads. That should be even more of an incentive to not let yourself slip into this bracket, and only pay what the property is worth – that's (one part of) the true value of a buyer's agent.
And what about for investment building?
People find it so easy to absolutely fall head over heels in love with a piece of property that all rational thought goes out the window when it comes to putting in a bid and buying the home. That's why it can be so important to have an objective perspective on your side.
You want to avoid overcapitalisation at all costs – it's a serious waste of money.
Taking a look out over a lovely, peaceful bay with an amazing view from the private balcony of your potential master bedroom in a house you're viewing for the first time can lead to rash decisions. In reality, the home might be something you aren't too keen on, and what you actually intend to do is knock it down and build something personal and modern. However, you want to avoid overcapitalisation at all costs – it's a serious waste of money, and something you don't want to have to look back on when you make a loss selling your virtually brand-new home just three years later.
An industry professional would know exactly what you want from a piece of land for building, and your budget for the whole project. From this information, we'll find only the very best and most suitable properties for your needs. Sometimes moving into an existing home is not enough and you actually need to start from scratch and design one yourself. If you want views, build up and buy land that provides you with a special outlook. More specifically, you may want sea views or city views, or both.
There are pieces of land that account for any of these. A long-held desire may be to have a croquet green, a tennis court or a boat shed, and we'll be able to provide you with a number of solutions to any of these requests. Even looking for a place with dry-dock access so all you have to do to get out on your boat is leave through the back door.
The budget you have allocated for your dream home building project may be in the vicinity of $10 million, for example. If you then go and spend $7 million on the land alone, and there happens to also be a house needing demolition, you'll need to pay even more to remove it – severely cutting into your architecture, building and landscaping budget. Certain types of homes need more work than others to build, and your specialist buyer's agent will be able to collate that information to keep you within budget but still seeing your dreams come true.
There's also the little issue of potential overcapitalisation with your building specifically. If you plan on building a home in an area that won't match the style, that's fantastic for sticking out from the crowd and maybe even garnering some attention. However, if it doesn't match the style of the street to the extent that it takes away from the appeal, then you'll be overcapitalising. The same goes for building various amenities into your property that have public alternatives just a short stroll down the road.
You'll be upping your expenditure for a dry dock, for example, but if there's a marina down the road where you can dock a boat and access it at all times securely and safely, you're unlikely to see returns on that addition. Savvy buyers in the future might not be so inclined to spending extra to meet your expectations if you've overcapitalised on such amenities. That's not to say you should restrict your enjoyment of the design and building process, however. All you should do is take into account the advice of your professional buyer's agent before making any final decisions, because they have the knowledge and expertise to send you down the successful path towards capital gains in your dream house.
The crux of prestige property buying
There are a large number of factors to consider when looking at spending so much money on a piece of real estate, but that shouldn't be putting anyone off. In fact, it allows for more specific searches and requests to be made for your buyer's agent to look for.
You just have to know where to look and what to look for.
When all is said and done, the two things that will ensure you buy successfully are research and professional help. The latter is available through the specialists at Cohen Handler, but the former is completely up to you. It's of the utmost importance that you know precisely what you want to see in your prestige property purchase so that when you go searching, there's a number of specifications that you can look out for.
Tennis courts, pools, media rooms and enormous ensuites or walk-in robes are all possible – you just have to know where to look and what to look for.
Prestige properties can truly take your breath away. It'll probably do the same for your friends and family as well (that's not something to be sniffed at). If you have the desire to get into a home like one described above, then don't let anything scare you away. Saving hard and looking at the best mortgage broking options can give you access to some of the most desirable properties in the entire country. If you don't have the money, then many of the principles of buying prestige properties still apply.
Buying a house above the $5 million mark might be a frightening prospect, especially with the lack of available options on the market. Something that must be remembered in this process, however, is the fact that so much high-value home buying occurs off-market. Without a buyer's agent holding your hand down the garden path, your accessibility to these homes will be significantly decreased.
Give yourself the absolute best chance of success when buying prestige property and employ a buyer's agent from Cohen Handler to help you through every phase. We want to help you achieve your property-buying dreams.