Have you ever heard a real estate agent say now is a great time to buy? Most agents focus on the right time to sell, as that’s where they make their commission!
Yet, in order for it to be a good time to sell, there must always be a buyer for the sale and transaction to occur.
As we have said in recent newsletters it is our view that:
- the residential property market has bottomed;
- the rate of capital growth from the bottom is likely to be modest for some time;
- in the long term the overriding demand growth driven by population growth will continue to drive good capital growth for the right properties
While Melbourne property prices rose by 1.4% in August, this reflects a historically low volume of stock being available on the market in addition to favourable impact of lower interest rates and so forth. We anticipate that as prices recover more stock will become available, keeping a lid on the rate of price recovery. Prices at the end of August remained at 9.5% below the peaks seen at the top of the cycle.
This presents a great buying opportunity for clients who are positioned to take advantage of this point in the cycle.
As always the decisions which will have far and away the most significant impact on the financial results of your property investment are the selection of the property to buy and the price at which it is bought.
Poor decisions not only have a huge impact on the financial results, they are also costly to rectify as the costs of property transactions are a much higher proportion of the value of the asset than is the case for most other asset classes such as shares.
In order to enhance our ability to help you get these decisions right we have recently added Mark Brilliant to our team as Director of Transactions and Advisory. Mark has spent the last 15 years working in the property industry with the last 6of this as principal of a buyers advocacy business. Prior to that, he worked as a sales agent for a leading agency.
Mark says that one of the keys to buying the right property includes Property selection.
Property Selection is the first key to long term growth of your portfolio. The fundamentals have never changed, yet time and time again we see investment properties underperforming because they don’t have the key aspects required for capital growth. Location is critical and our preference is it to look for a quiet residential street close to parks, schools, amenities & transport. The size of the land or internal size of a unit / apartment is the second key, bigger is better as a general rule and while we can upgrade and renovate a property, we can never make the land larger or an apartment bigger. Orientation & natural light, which way is the property & rear yard/balcony facing and how much natural light is there in the living areas? Light and bright sells and rents well, dark and dreary doesn’t appeal and this will have a direct impact on capital growth and the homes rentability.
When assessing a property to ad into a clients portfolio, we grade a further 30 aspects of the property and location to establish it’s long term prospects for growth. The three fundamentals mentioned here are the first three we always check. If the property doesn’t pass these three then it may not be the right calibre of property for your portfolio.
If you are in the position to buy a property, or are interested in establishing a purchasing plan for your portfolio, contact Mark at firstname.lastname@example.org