If you’ve read a paper or real estate news website lately, you’ll have heard that Sydney’s property market is crashing. Property buyers have vanished. Prices have ‘collapsed’ up to 20 per cent or more. It’s a catastrophe!
But what’s really going on?
If you look at the full picture, you’ll see that the current state of play is really just a blip on the radar – a short-term anomaly.
And on the flipside of all the bad news, now is the perfect time to buy real estate that has good fundamentals and exceptional value prospects.
Here’s why.
This isn’t a crash
Prices are down, there’s no denying it. But where is the reduction? It’s not on the intrinsic value of quality Sydney property.
Prices skyrocketed across 2016 and 2017, with buyers in a frenzy thanks to intense competition and a scarcity of stock.
They were paying 15, 20 or 25 per cent above the guide in order to beat everyone else and get their hands on the property they wanted.
This insane activity blew up medians in almost every part of Sydney.
But if you take 2016 and 2017 out of the equation and join the dots between 2015 to 2018, to last year’s apparently horrible market, prices have actually gone up.
Yes – up. So much for that market crash.
In total, prices might’ve come off around 10 per cent across inner markets but they’ve really risen around 60 per cent if you look at the past five to seven years of activity.
For an asset like property, that’s an incredible result.
It’s something shares wouldn’t be able to deliver without wild volatility.
This isn’t a crash. It’s an adjustment. It’s a return back to realistic levels and the true intrinsic value of property.
And it’s a place where property buyers ready to move now can snap up some good deals to hold for the long-term and cash in on the renewed growth that won’t be that far away.
Where to look for value
There is a significant lack of competition in the Sydney market right now.
Selling agents have to work hard to get an offer – any offer in some cases.
But the perception that they’ll do anything and everything just to move stock is flawed.
Vendors are under pressure, for sure. Those on the market do want to get off it. But they won’t shoot themselves in the foot.
My view is the majority don’t need to sell, we’re not in a distressed market scenario.
When property does eventually sell, it’s selling at a fair value that reflects the current state of things.
And similarly, property buyers who come to the table with a stack of conditions, such as needing to sell their current place before settling, or ones without finance, aren’t attractive.
Banks are being tough, as you’ll know.
Those buyers in a position to move now – pre-approved and with no conditions – are in the most exceptional place to make a deal with a vendor who wants to move on.
So, where can you find that value?
We’re looking in the Lower North Shore locales such as Waverton, Cammeray, Cremorne and Mosman.
We’re surfing around the Northern Beaches in suburbs such as Manly, Frenchs Forest, Balgowlah and Fairlight.
And we’re always interested in blue-chip eastern suburbs with character Victorian terraces such as Paddington, Surry Hills and Bondi Junction.
How property buyers should determine value
Value is different to price. The value of a property reflects its investment fundamentals, the current state of play, future demand, and an area’s profile now and later, to name a few.
The intrinsic value of Sydney property right now means prices are about where they should be for current conditions.
For solid property investment opportunities in good areas, values are holding.
Prices are where they were in 2016 before the crazy premiums were splashed around.
As an independent buyer’s agent and property advisor, my job is to determine a property’s true current value so that my clients don’t overpay.
I find the best potential opportunities and look at what they’re really worth.
I then determine the ones that offer the best fundamentals for future growth.
Then look at comparable sales from recent months – not ones from two years ago, when the peak was at its dizzying high and overblown.
I also assess localised demand and stock on market and plot out the likely path of that property in the mid to long-term.
That’s how you find out what a property’s value is now, so you can pay the appropriate reflective price.
There are good deals to be found, for sure, but even in the current market, uninformed property buyers risk making some huge mistakes.
You need all of the information available – and the best expertise and professional advice – to avoid paying too much or investing in something that’s got little or no future potential.
Look at the bigger picture
Would-be property buyers are understandably hesitant at the moment.
They’re umming and ahhing about whether to move now or sit tight.
But really, there has never been a better opportunity to pay a fair price – in some cases to snap up a bargain – before the market bottoms out and begins its recovery.
Plus, of course, buying property should always be about the long-term, not the here and now.
Those who sit on their hands will pretty soon wish, with the glorious benefit of hindsight, that they had picked now as the time to move.
Don’t find yourself with those same regrets.
If you would like to get into the market this year and find out how you can take advantage of the current conditions, please get in touch with STRAND today and ask about our FREE Property Roadmap Meeting to help identify your next move towards buying a property.
