The cooling conditions due to the rising rates and dampened demand has already resulted in substantial market discounting, particularly in Sydney and Melbourne.
BuyersBuyers co-founder Pete Wargent said the most significant discounts to date have been seen for detached homes in Sydney, and to a lesser extent Melbourne.
“We have seen examples of properties selling for 10% to 15% less than would have been achieved at the peak of the market,” he said.
“Sentiment is cooler in the lower price brackets too, but stock listing levels are still comparatively low, and discounting in the lower price brackets has generally been more modest to date.”
Figures from CoreLogic for the month of June showed that detached house prices have declined by 2.4% in Sydney and 2.1% in Melbourne year-to-date.
The current median price of detached houses stand at $1.38m in Sydney and $975,850 in Melbourne.
Mr Wargent said open homes were very busy for the summer selling season last year, with most auctions seeing multiple bidders in action.
“Now open homes are considerably quieter, and the majority of Sydney auction campaigns either end in the property being withdrawn from the market or passed in at the auction, to be negotiated upon thereafter,” he said.
How to take advantage of the falling market
Aus Property Professionals founder and managing director Lloyd Edge said it's an opportune time to enter the housing market, given that prices are expected to slow down by 10% to 15% in the next few months.
“Too often I’ll meet people who say they’re not quite ready to buy just yet, they’re waiting for property prices to drop or interest rates to go down; meanwhile, while they’re waiting property prices start to rise again, and they’ve missed out on the opportunity to get better value for their money,” he said.
“My advice to people in this situation would be buy when you can afford to, when your finances are in order, and ultimately, you’ll be better off in the long run.”
Mr Edge shared five tips on how property investors and first-home buyers can take advantage of the slowing of the housing market to get value for their deposits.
1. Look for below market value properties
Paying under the perceived market value of a property will provide buyers with instant equity.
Mr Edge said there are two ways to achieve this: hiring a buyer’s agent and the DIY approach.
“A buyer’s agent can help you buy under market value because of their negotiation skills, contacts with local real estate agents in their areas of expertise, and their ability to uncover off market gems,” he said.
“You can also do it yourself by researching the recent sales of similar properties in the same area and seeing if you can negotiate a better deal with the real estate agent.”
2. Find motivated sellers
During downturns, there are many sellers in the market who are in need of a quick sale and buyers could take advantage of this.
“It could be because they’ve bought another house and need to close the sale on their current property quickly, or they could be a developer looking for a quick sale to pay off outstanding debts,” Mr Edge said.
Buyers should be wary, however, as some sellers might want to sell quickly due to the property having issues.
This makes it a must to conduct a thorough in-person inspection and commission a full property report and pest inspection when dealing with such sellers.
3. Be willing to negotiate
When dealing with motivated sellers, buyers must also be flexible on the settlement terms to put them ahead above other potential buyers.
Mr Edge said flexibility is key here and the more willing the buyer is, the better the deal would be.
“If you are able to settle in as little as 21 days instead of the standard 35 or 42 days or offer an unconditional offer with no cooling off period at all, you could find yourself getting a much better deal on a property, and it will make your offer look far more attractive, even if you’re not necessarily the highest bidder,” he said.
4. Reach out to a mortgage broker
One of the very first things prospective buyers and aspiring investors should do before their property hunt is speak to a mortgage broker.
Mr Edge said mortgage brokers will be able to help buyers determine their borrowing capacity, as well as assist them in securing pre-approval on their loan, ensuring that they do not miss out on properties while submitting paperwork and waiting for the banks’ or lenders’ formal approval.
“If your finance is ready to go, you’ll have the option of making an unconditional offer — you’ll also be aware of any other conditions the seller has included in the contract, so where possible you can accommodate these for a greater chance of success,” he said.
5. Get in touch with local agents
Mr Edge said it is also best for buyers and investors to be known by and have constant communications with local agents.
“Let them know your buying criteria and budget, ask to be contacted with off-market opportunities and when new properties are listed,” he said.
“Ask to be added to their mailing list, so you’re one of the first to know about new listings and to inspect a suitable property when it becomes available.”
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