Top buyer’s tips for 2020
The unusual conditions of the property market at the start of 2020, offer both a myriad of challenges and opportunities for prospective buyers.
Record low interest rates, low stock levels, strong demand, high clearance rates and growing positive consumer sentiment have combined to create a market that has defied doomsday expectations and rebounded far quicker than expected.
Pent-up demand, government incentives for first home buyers and abundant positive gearing opportunities for investors has also resulted in a crowded market.
Competitive for property is fierce, so how do you find that edge that will get you into your new home?
Here we share our tips and advice for buyers in what has become an increasingly complicated property market.
Strong price growth expected in 2020
The start of 2020, has brought with it plenty of keen buyers.
“Already I’m seeing long inspection queues and packed open houses,” says Cohen Handler founder Simon Cohen.
The new year has also come with predictions that Australia could lead the world in property growth at the start of the new decade. Savills’ World Cities Prime Residential Index, has predicted Sydney prices to grow as much as 7.9% this year, in line with other leading world cities Lisbon and Moscow. Melbourne might not be far behind.
“It’s a very hotly contested market,” Mr Cohen continues.
“The market has changed. People have realised they have to bite the bullet and buy now. Unless something dramatically changes with interest rates, and that is unlikely, it will remain that way through 2020.”
That change includes a significant upswing in the market at the end of 2019.
According to the national home value index of respected property data group Core Logic, dwelling values dwelling values rose by 4% over the December quarter. This is the fastest rate of dwelling growth over a three month period in 10 years.
Sydney led the way with growth of 6.2% in the quarter, followed by Melbourne with 6.1%. Brisbane grew by 2.4%.
“The buyers I have spoken to this year, can see the market has had quite an increase in price,” says Cohen Handler Associate and North Shore specialist Arija McQuillan.
“Everyone was waiting for the market to hit the bottom, that happened last year. Now people want to come in and buy quickly. They don’t want to be buying at the height of the market.
“From speaking to (sales) agents I think there will be more stock coming on the market. But that won’t be enough to put a huge dent in the increase in prices.”
Getting that competitive edge
So, how can you get that competitive edge over your fellow buyers?
“Access to properties, relationships within the industry and the right strategic negotiation are crucial,” Mr Cohen says.
“The market has changed, and the process within the market has changed. So many people want to buy, and sell, off market now. We buy 60% of our properties off market.”
Ms McQuillan adds: “buying off market allows you to eliminate that competition and to buy at a fair price and not an inflated one.”
Access to off market properties is a key differentiator for buyers. As is access to education and information.
The experience and knowledge of buyer’s agents provides that education of the buyer and information of the market.
“If you are looking for expertise, you need to research who has that longevity in the industry.” Mr Cohen says.
“Who has those entrenched relationships?Who has a proven track record? Who has that access to the marketplace? That comes with being part of a team. Not one man bands.”
Valuing property correctly
Most buyers need help when it comes to valuing a property.
“At the end of the day buyers need that valuation. Buyers don’t want to overpay. But they don’t know what that is,” Ms McQuillan says.
“Without specialist knowledge and experience it’s hard to know what a property is worth. We are always clear on what we believe a property is worth, what the ceiling price is, and when you should walk away.
“A lot of buyers need help with that due diligence. They might have an idea what a property is worth but don’t have a lot of trust in what real estate agents are telling them.
“The last thing you want is to buy a property and you can’t get finance because the banks don’t believe it is worth what you paid for it.”
How to buy property in 2020
As buyer’s agents we are your guides on your property journey. In an increasingly competitive market our expertise, relationships, knowledge and experience will ensure you are searching for the right property in the right place for the right price.
To prepare for your first meeting with a buyers agent, there are some steps you can follow to ensure you find the right agent for you, your needs and your family.
- Location – the biggest tip is you have to buy in the right location.
“Research the market,” Mr Cohen said.
“Not just for the last three months but the last 12 months. And look at the suburb’s history. Has it had strong historical growth? Has it outperformed the averages?
- Drivers of property growth
Other drivers of property growth include: close proximity to the CBD or jobs, proximity to transport, schools and amenities, proximity to sought after lifestyle locations such as beaches and a lack of oversupply.
- Budget. What can you buy within your budget in the right area?
“You need to be crystal clear on what a property is worth,” Ms McQuillan says.
“The market literally changed in the last quarter of last year and sales agents might be using sales evidence from earlier in the year to say what a property might be worth. And that won’t be the case.”
- Auctions and open homes
“You need to attend as many auctions and open homes as possible,” Mr Cohen says.
“Only that way can you really understand the market and the values.”
This means putting together a plan of attack, or coordinating one with your buyer’s agent to formulate the best approach for you.
- Picking the market
“Once you are consistently valuing the prices that properties sell for, then you are ready to start buying,” Ms McQuillan says.
“That’s when you know the market.”
Current property market conditions have made this even more of a challenge for the average buyer.
With interest rates expected to remain low in the medium term, low stock levels and high clearance rates also expected to continue and the increased pressure of pent-up demand all creating a market full of uncertainties, an experienced and reputable buyer’s agent can help you to navigate your way through these conditions.
At Cohen Handler, our 10 years as buyers agents has enabled us to understand the market intimately. Let our knowledge, relationships and negotiation expertise help you find your new home.