So the Domain stats hit my inbox this morning and clearance rates in Sydney this week were 58%, down from 65% on the previous week’s numbers. Whilst we’ve definitely seen the market decline over the last 6 months, some credit has to be given to seasonality. Breadwinners are spending their excess cash on presents to go under the tree and most are either on holiday or kicking back on the couch with their mind on the cricket, not on the weekend’s coming auctions. Low turnouts equal low clearance rates and this time of the year is Sydney’s lowest!
As they say though, the seller’s chagrin is always the buyer’s delight! Depending on your view of the 2018 market, there could be some Christmas bargains to be had!
So, if you’re hanging around town and not at the SCG here’s how to take advantage:
stock building in certain areas will certainly have an impact on auction clearance rates. My personal view is that an oversupply of stock may or may not be a seasonal buying opportunity. There will certainly be seasonality in the overstocked area but the hard part is picking where you are in the development pipeline. Areas like Alexandria and Waterloo for instance have tonnes of property either in development or coming online soon. Literally thousands of apartments are being pumped into these inner city suburb presenting potential infrastructure issues and general demand side problems. Do some homework to make sure you haven’t caught a falling knife.
don’t assume that an auction is cheap just because no one is bidding. Ambitious Sydney agents often get the price guide wrong and overset the reserve. Investor or owner occupier, you should always do your homework and benchmark your required rate of return (yield) against comparable properties in the area to ensure that you can lease the property on settlement or as an owner occupier not overpay for an asset you will eventually sell.
As a property professional, my insider’s tip is to not just look at the CoreLogic benchmark either. Those metrics may serve as a useful starting point, but you should collect a handful of similar properties too to make sure you’re comparing like with like. This means, the same or similar; location, configuration, space (square meters), age of property, and level of modern conveniences (internal laundry, dishwasher, air conditioning etc).
keep your eye on services such as Domain or Realestate.com.au, or if you’re lazy like me, subscribe to their database and you’ll get an email every week. Have a look at the suburbs where pass-in rates are high and make note for auction visits the following week. My professional tip here is to really gauge the room, sometimes holding back and not placing a bid even in an uncontested auction can be the better strategy. Waiting for the auction to be passed in and exchanging details with the managing agent can often produce a lower purchase price than stirring up dormant underbidders at the auction. The fact that you turned up to the auction and any open houses prior will show the agent you’re a serious buyer and any defects you observe in person will serve as validation points when putting your offer forward too.
Merry Christmas from the team at Managed!