Some people are claiming that now is the best time to buy in the Australian market. The idea is that your purchase property before an area becomes a hot spot, at which point everyone is wanting a piece of the pie and prices are driven up.
Why is now the best time to buy?
One man who believes now is the best time is Frank Valentic, director of Advantage Property Consulting.
Frank explained: “It is a buyer's market in most parts of Melbourne, and Sydney, and around Australia, so you want to buy when the market is in your favour. Definitely, it's a better buying time at the moment. Most buyers follow the herd mentality and buy when others are buying. In a hot market, we see that, and it's the savvy investors that are buying now when there are more opportunities. The clearance rates are lower, and you've got less competition.
“In areas like Melbourne, for instance, we're now seeing how the clearance rates down. That's around 60%. Last year, that was 76%. I know in Sydney, they're down sort of 50%, and they were up at 70to $80%. I know Hobart is a little bit more consistent than that, but in our areas, it's a better time to buy. We're seeing one to two bidders at auctions, whereas, last year, we were seeing four to five bidders. My savvy buyers are getting in now. They buy when the market's down, not when it's up, and investors retreat. They sort of follow the herd mentality, and when the market's hot, they buy. That was up at about 50% of the market being investors at the peak a few years ago, and now, they're down to 25%. That's really where the opportunities lie. You've got less competition from those investors at the moment.”
How can the number of bidders at auctions indicate market trends?
Looking at things like auction clearance rates, are they a good indicator of what's really happening with the market? A better indicator is, how many bidders are turning up to register at an auction, and how many of them actually bid? That tells us a lot about the sentiment of the market.
Frank agreed: “Oh, it does, and there are fewer buyers out there at the moment. There are more buyers sitting on the fence, and homebuyers buy all the time because they have to buy. They're upsizing, they're downsizing, so owner-occupiers are the real dominant force in the Melbourne market, for instance, and most parts of Australia at the moment. It's really now a good time to get in there, and basically, pick up some good opportunities.
“Property's a long-term game. It's not a short-term one- or two-year game, so your 10-year plan starts when you buy, and if you buy now, your 10-year plan strategy comes into effect in 2028. So, it's really about having a 10-year plan, and sometimes, people get caught up too much with whether it's a great time to buy at the moment, and whether you're going to pick up bargains when it's really about a long-term game plan.”
What is The Block and how do you keep a lid on the excitement of bidding?
There is a huge amount of publicity around The Block at the moment. Obviously, it's a television series, where people turn up to bid on properties. There's a huge amount of competition, anticipation, that someone's going to have to pay a premium price, but how do people keep a lid on the excitement? Frank has been featured bidding on The Block for a number of series…
Frank explained: “Well, you've got to stick to your budgets. That's why our clients get us to bid, so they don't get up with the emotion. We've now bid on 30 of the 40 Block properties over the last nine series, and we'll be hopefully bidding in our tenth series in a row in Melbourne. We've purchased eight of those properties, but we've walked away on another 22, so the main thing is not to get carried away with the cameras, and the emotion, and the Block paraphernalia and it's to really just focus on what is your walk away price.
“Often, you've got two prices, and it depends on your client. A lot of people will see me on the phone, getting instructions, once we've reached our price. Sometimes, the clients will go a few more bids and go that extra level, but it really comes down to getting instructions from the client. Unfortunately, sometimes, on The Block, the clients say to us, ‘Well, bid to this level, and then, call us, and get some further instructions.’”
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