Right Strategy Needed For Sydney

Posted on 13/10/2016  
Right Strategy Needed For Sydney

Investors can still do well in Sydney if they understand the changes in the market and adapt their strategy, according to award-winning buyers’ agent Rich Harvey.

Harvey, principal of propertybuyer.com.au, says clear goals and strategies are crucial in the current climate, as easy growth is no longer happening across the board.

He says simplistic reporting of high auction clearance rates and strong price outcomes may mislead investors into believing the market is still delivering double-digit price growth rates.

“Clearance rates appear high because the volume of auctions has dropped, while there are still significant numbers of people looking to buy,” he says.

“Those still in the market are competing over fewer listings so clearance rates and prices appear strong. There’s a general shortage of listings across the board compared to the previous situation.

“It’s no longer 50 people deep at the Open Houses but there are still plenty of buyers, relative to the number of properties for sale.

“Generally the market is starting to show a bit more moderation. Typical days to sell a home got down as low as 24 days and now it’s up over 33 days, so it suggests things have changed but it’s still quite a tight market.”

Harvey says listings are low because home-owners aren’t selling as they feel they won’t be able to buy back into the market. “The logic is: I won’t be able to get back into the market at a reasonable price so I’ll stay where I am. It’s become a vicious circle.”

Harvey suggests home-owners wanting to relocate might consider buying first and selling later in the current climate.

“They could complete the hunt for a new home first, and then place their existing home on the market. We wouldn’t usually recommend that because it’s not normally a safe strategy. But in a tight market like we have in Sydney at present it’s a strategy people could adopt because you know you’re going to sell your home when they time comes - as long as you price your property fairly.”

Harvey says the buying market is now dominated by home-buyers, with both upgraders and downsizes active. There are still investors looking, but they are no longer so prevalent.

“There are still linvestors looking for value. They know it will cost them and they’ll have to support the property through its journey but they know they’ll get long-term growth fromit. While there are pockets where unit supply is peaking, this will be absorbed over the next few years as Sydney's massive infrastructure developments and strong employment prospects continue to support population growth.

Harvey suggests buyers seeking value and best prospects for growth should revert to basics, such as buying close to transport infrastructure, seeking centres likely to grow through town planning changes and researching future population hotspots.

“There’s no single answer to the question about where it’s best to buy. There’s no one size fits all. Investors need to understand, first of all, what they are trying to achieve. Work out your goal first - and then look for the strategy and the locations that suit your purpose.

“One strategy might be to follow the North-West Rail Link from Beecroft out to Rouse Hill or look at the eastern suburbs along the light rail corridor.

“Another is to research town planning changes. There are many instances of re-zonings to increase density throughout the Greater Sydney area. Investors should review the Sydney metro plan and look for where the growth centres will be.”

Harvey also suggests areas targeted for major population growth, such as the south-west growth corridor heading towards Campbelltown. Counter-balancing the population factor, however, is the abundance of developable land available, which may suppress price growth potential.

“Another sensible strategy is to buy something where you can add value, such as building a Fonzie flat or duplexes to get two incomes from the one property. A good buyers agent will help you create the right strategy and identify the best areas to fit that strategy." 

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