What Types of Property Should You Be Buying Now?
The last few months have been unsettling on many fronts. From upheaval in our personal and professional lives through to concerns around family and community.
Many Australians have found themselves emotionally upended by this enduring uncertainty. When we’re on unsteady footing, it feels like a move in any direction could result in irretrievable consequences.
The problems are magnified by speculation about the economy. Sure, there are plenty of smart commentators attempting to predict which direction our nation’s finances will head, but many are throwing around unnerving worst-case scenarios that gain plenty of media attention.
Not surprisingly, the property sector isn’t immune from these touted doomsday possibilities. We have already seen a number of market indicators go negative, from retracting rents to longer sale periods. But if you add to this those depressing calls about sustained future value drops, you can see why property owners feel anxious.
Personally, I think it’s time to inject a little calm and realism into the mix.
For starters, Australia’s property markets are complex and varied. You can’t capture and describe their future directions with a single overriding prediction of value movements. Doomsday predictions usually only apply to the most volatile sections of the country and that does not usually include Inner Sydney real estate.
In short, there is simply no one-size-fits-all performance measure that can tell you exactly how every real estate market in the nation will shift in the wake of this COVID event.
The smart move is to take a step back and think about how to reduce risk in your own market while maximising the opportunity for capital gains over the long term.
I believe that you can soften the blow and boost potential upsides within the current climate. In fact, the best buys now will do very well on the other side of this mayhem.
Run to quality
Whether you are buying a home or an investment, purchasing property with excellent fundamentals is more important than ever.
You’re looking for elements which are desired by a large number of potential buyers, but are also relatively rare.
Put another way, these are the attributes that boost demand and limit supply.
Identifying good fundamentals takes common sense and experience, but they can be covered under three broad fields:
This is the one thing that can’t be changed and has been the basis of good property selection since titled ownership was established.
Choosing a location where there is strong demand relative to the supply of property is essential. This is why I’ve built my business by selecting assets within some of the nation’s best addresses in and around Sydney. There is only so much real estate that can be created within these suburbs.
Even during a downturn, smart buyers know prime locations are the universally understood measure of quality. For example being within proximity to the CBD, or close to desirable lifestyle amenities such as water or parklands. It might also include ready access to reliable retail hubs or transport infrastructure.
Location should be your launch pad in property selection.
Within the bounds of location there is also position.
Selecting a home that avoids negative surrounding uses – such as a frontage to a busy road or placement next to a service station – ensures there’s less reason for buyers to remove it from their purchasing shortlist.
In contrast, desirable positions include quiet cul-de-sacs and coveted streets which offer privacy and exclusivity could be another.
Finally, there are the individual physical attributes that define a good property.
For starters, look at the land. Big blocks with good useable area or well elevated sites with spectacular views will always have universal appeal. There might also be frontage to parkland or water. These are all desirable characteristics that are in limited supply.
Next up – consider the home. Whether it be a high-end contemporary architectural wonder or a classic colonial charmer, the property should have excellent market appeal. Think about functionality and liveability. Are rooms a good size and does the layout flow? Also – how’s condition and presentation? Will it have potential buyers sighing with envy?
Safe as houses
What I’ve learned in my years as a buyers’ agent is that now is not the time to speculate.
What you should be looking for is property with price resilience. An asset with enough foundational appeal to ride out the current storm of uncertainty and stay desirable long after this crisis has passed will prove to be a good buy in the long run.