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News & Updates

Where are property prices headed? Finding the best time to sell

Sellers all ask one question, where are property prices headed? Based off this, they try to figure out the best time to sell.

If you want to know how to time your sale whether the market is up or down, then this is the article for you.

A little secret about timing…

You would be forgiven for thinking that there is one piece of advice when the market is hot, and another for the cold.

In my opinion, that is not the case. The question you always need to ask first is “when is the best time to sell for me?

For example; is it worth delaying retirement and moving up the coast 2 years just to see if the market goes up? Is it worth waiting years for the market to recover to downsize from a grand home that has become too large to maintain?

The market going up or down is not normally quite as important, especially when you consider how property cycles work in our video below:

Understanding Property Cycles

Property Cycles

When you ask ‘where are property prices headed?’, you have to understand cycles. Importantly, where you are in the cycle.

We know that a cycle will move through peaks and troughs. What is hard to predict are exact timings of these movements. Trying to pick the peak of the market is basically a game of luck.

Luck is not a good strategy. Let’s unpack why a bit further.

Waiting for ‘the peak of the market’

Yes the peak of the market is a great time to sell. Buyer confidence and activity is high. The market is going up and people don’t want to miss out or get left behind.

Picture of a hot hand

The problem is that when the market climbs, the marketplace assume it will continue to rise indefinitely. This is similar to the hot hand fallacy where say, a team who wins the first ten games of the season is expected to win all remaining games.

So because of this bias, no one can predict when the market will start to slow down. By the time this happens, you have already missed the peak. This is why it doesn’t make sense to wait for the peak.

A lesson from 2019

Sitting at a cafe some months after the recovery had started in Sydney, I overheard a conversation from two gentlemen next to me.

Even though it was only several months after the recovery, they were worried about prices moving and getting ahead of them again. It’s interesting.

Man at a coffee shop discussing where property prices are headed

Sentiment amongst buyers shifts so quickly. So there is no need to wait for the market to climb further to find desperate buyers.

Selling in a ‘bad market’

No it is not ideal to sell in a slow, low, bad or cold market. But there are 3 things people don’t understand about low markets.

  • There is less stock available, so certain types of properties can be in demand if they present a shortage in their area
  • In many cases, a good result is possible but it may just take longer
  • If you are selling or buying in the same market you might be protected, or even come out better from a drop in prices. More on this below.

If you are in circumstances where you need to sell there’s no point delaying just because of a ‘bad market’. It makes little sense to put yourself through financial difficulty or interrupt your lifestyle because of market conditions.

PIcture of the market and money being timed

In a down market, it becomes even more important to have a comprehensive strategy around marketing your property. This is to ensure more eyeballs hit your campaign when buyer activity is lower.

Selling and Buying in the same market

It makes little sense to worry about where property prices are moving if selling and buying in the same market. In truth, no two markets are exactly the same and you might even get out ahead.

For example, if you were selling a house in Eastwood during Sydney’s 2017-2019 trough, then buying an apartment in nearby Meadowbank or Parramatta… well you would have done extremely well.

Activity for houses in Eastwood was still strong, whereas there was an oversupply of apartments in Meadowbank and Parramatta. This meant that prices were a lot softer.

So when selling and buying in the same market you don’t need to worry as much about where property prices are headed.

By Joe Wehbe

Click me for more insights like the below!

Marketing and Selling Properties · News & Updates · Property Management

Can you use video to advertise properties for rent?

One question few agents ask is whether you can use videos to advertise properties for rent?

So much attention goes into selling property. But there are improvements we can make to the way we advertise properties for rent.

Why is video advertising for rental properties rare?

1) Cost

Property marketing videos are traditionally not cheap and hurt your pocket. Normally they will cost in excess of $2,000… so this is rarely worthwhile for a rental property.

Video Symbol
Video Symbol

The difference we make in our agency is that we have in-house videography solutions. This makes video cheaper and easier for landlords to access as an option, making their property stand out against the competition.

2) Agents who are not bothered

One of the most common jokes in real estate: “Property Managers are agents who can’t make it in sales”. The stereotype for agents working in rentals is that they are less ambitious and talented.

There is less incentive for innovation and creativity. Property Managers normally have less property marketing skills than sales counterparts, and they will not think to make videos for rental properties.

3) There is a shortage of true marketers in the industry

In our business for example, we consider ourselves marketers who happen to be working in property.

A marketer is someone who understands their customer, and then designs advertising that is most likely to attract and convert the target customer.

Most real estate agents make their living by simply uploading properties on the internet. They are not strategic and don’t adapt over time to changes in customer behaviour.

You can absolutely use a property video to advertise your property for rent

Check out our example below which shows an in-house ad for Asquith. Filmed and edited to highlight unique features and short enough to capture attention.

A video advertising apartments for Lease in the Asquith Area of Sydney

The benefits of video advertising in real estate are…

Want to understand the benefits of using a video to advertise your property? You should check out our article is a property video worth the money?

In it we discuss how video consumption is on the rise. Customers prefer video and it plays a major role in their decisions. So, we recommend taking advantage of video when selling OR renting your property.

News & Updates

Whether to have one or multiple agents?

Should you have one or multiple agents? Should you sign an exclusive agency agreement or should you opt for a conjunction agreement with multiple agents?

There is only one answer to this question. You should always engage agents on exclusive agency agreement, the reason being that your exclusive agent will work wholeheartedly towards achieving your goals.

Single or multiple?

What happens with multiple agents?

If you engage multiple agents in a conjunction agreement, your sale will only be a race to the finish line. That is, a race to beat the other agent without the result in mind. This does not make for a genuine and authentic approach to realising your goals, and the risk is that a focus on commission will be at the forefront of the agent’s mind. 

Discouraging

Or, the opposite effect is that it discourages agents. If they have a series of listings and buyers looking at properties, why are they going to refer them onto a conjunction rather than a property they have an exclusive selling right over? 

silhouette of two agents fighting

Don’t get caught in the crossfire between too many sellers! Tread carefully!

Most owners think that it can be worthwhile having several professionals competing in the sale. We can understand why it makes sense on paper. But in reality, this is not always the solution.

In some cases having multiple representatives is normal in real estate, but often on larger projects or in commercial real estate transactions. Here more contacts or inquiry volumes might demand this. But for the sale of a single home or small collection of properties, choose the agent who best suits your campaign.

If you need any help, you can start the sales process today or simply request a no obligation SMS Appraisal.

Good luck making the right choice!

Markets · News & Updates

Economic and Property Outlook August 2019 with Bill Evans

Bill Evans is Westpac’s Chief Economist, and has been so since 1991. As identified in our video, he is known for being clear and fearless in his predictions.

I was fortunate enough to hear Bill speak at this morning’s Westpac Property Breakfast. This article is intended to pass on the insights gained in order to help our community make better decisions in the short to medium future.

Rate Cuts

Evans pointed out that the RBA Governor is willing to cut rates down to 0% eventually. This will depend on the reaction from other central banks around the world, such as the Fed. We are already seeing negative interest rates in Europe!

In Australia, further rate cuts are expected in October 2019 and February 2020 by Evans.

In the USA, Evans believes we will see cuts in September, October and November!

Photo of the Best Rates

Recession

“I don’t see a recession happening in the USA” was the opinion. Obviously this has been discussed a lot lately with so much happening across the world and in the US. “Those people who say there is a 40% chance of recession… if a recession happens they say they predicted it. If it doesn’t, they say ‘well that wasn’t even my major position”.

Thank you Bill Evans, for your directness.

“Those people are useless”.

Many look at the US’s inverse yield curves as a sign of trouble, but Mr. Evans interpreted this as the attractiveness of US bonds to international investors. As he puts it, these look a lot more promising than other alternatives internationally.

Currency and the Dollar

The Australian Dollar is predicted to continue to lower in relation to the US Dollar, down to around 0.66 in 2020. This is making attractive commercial property investment in Sydney and Melbourne. As valuations are favorable on these markets, a weaker Aussie Dollar will create incentives for foreigners here.

The Euro is also expected to fall in relation to the US Dollar. Sounds like a good time to stock up on some USD!

Australian Economy

Two big areas of concentration are poor wages growth and unemployment numbers.

Wages growth is required for consumer spending to rise. Consumer spending increases business confidence. This in turn drives the economy.

The savings from interest and tax rate cuts will bolster household incomes, but this is likely to be allocated towards debt. Consumer spending will not be bolstered Evans believes – in fact consumer spending will continue to be weak.

Housing

The sharp increase in auction clearance rates post election in Sydney and Melbourne is very predictive according to Mr. Evans. It indicates the recovery is likely stable and here to stay.

Sydney and Melbourne prices have steadied since May, and increased by 1%. Some outlets are predicting 10% increases in prices in Sydney over the next 12 months. Evans strongly disagreed with this idea, and few could doubt this stance. Increases of this size would not be sustained as affordability thresholds would hamper these gains.

The consistent story for price changes is a period of steady growth, which seems highly likely. The downturn does appear to be behind us.

Population Growth

Population growth remains strong in NSW and will remain a positive driver. The economy is driven by productivity and population growth. For NSW, this migration comes internationally of course.

Population GrowthInterestingly, Evans predicted when the impact of migration on prices would really be seen. Forecasts at the moment are that construction completions will level off in the middle of 2020. After this we can expect to see stronger demand as a result of strong population growth.

Rental Market

Sydney’s rental market is in it’s worst state since the early 2000’s. Vacancy rates are at 3.3%, and we are noticing this directly in our office. Despite this our property management team have had some properties leased off first inspections. But this is only when prices are correct at the start of a campaign.

Otherwise we’re seeing old apartments in particular suffer from longer vacancies and days on market. Based on the insights from the Breakfast, we see this picture changing once construction completions level off in the middle of 2020.

Summary – what does this mean for me?

If you are looking to buy in Sydney, the next 12 months seems like a great time to do so. Particularly if the rental market is rectified to help with those holding costs.

This doesn’t shift my opinion in terms of what to buy though – check out our resources at Sydney Listings for guidance on good area features and property features.

If taking advantage of low interest rates, make sure you allow a buffer but we don’t expect a sharp rise any time soon. It never makes sense to be fully leveraged, especially when there is uncertainty in other areas of the world economy.

By Joe Wehbe

Marketing and Selling Properties · News & Updates

Should you show a price when selling your property?

To price or not to price?

Should you display a price or not when advertising your property for sale? In this day and age, speed and convenience are more important than ever before, shaped by a digital and consumer world where everything is faster and more optimised. 

Should you display a price to the marketplace?

Buyers don’t want the headache of trying to track down an agent that usually doesn’t answer their phone. They want to know straight away without the hassle or headache. They want to know the price immediately so they know whether they will come to the Saturday inspection. 

List your price to the market when advertising your property for sale

You should list your property to the marketplace. If an agent is telling you not to display the price, it may be because they don’t have the confidence in the actual price point. Sometimes, they may even be misleading you with the price. One of the cheapest tricks in the book to get listings is over-quoting

At times the thinking is to display ‘contact agent’ in an attempt to drive inquiries. This is because buyers will have to call to find out the price. But when a price is listed, we know that any phone inquiries or attendees at an open home are already interested in this property at this price range. 

If the price has disqualified them, why would they show an interest? 

Text saying best price over water

Obviously there is an exception for those who are just browsing or at the earlier stages of looking at the market. 

How to get your property priced accurately

Before you reach a price when advertising your property for sale, it is important to price cautiously. Pricing should take into account:

  1. Current market conditions
  2. Recent Sales in the area
  3. The opinion of a real estate professional

We have some detailed modules on this subject in our Sydney Listings Academy. You can simply request an SMS appraisal to get a hassle free understanding to begin with.

We hope we helped you answer whether you should display a price when advertising your property for sale. See you again soon!

Investments · News & Updates · Property Management

Do you need to have landlord’s insurance?

Do you need to have Landlord’s insurance? This is an important question to ask and an important conversation to have.

Reece Sammons on whether landlord’s insurance is necessary.

It’s not necessarily feasible for landlords in certain circumstances especially if they own a lot of properties. This is because continually paying lots of premiums will be more expensive than any out of pocket costs that can just come out of the excess rent. 

But if you’re a landlord who owns a small number of properties it is generally quite important for you to have landlord’s insurance in place. 

The first defence against any issues in the property caused by the tenants is of course the tenant’s Bond, but once the Bond is exhausted then that’s when landlord insurance kicks in.

It covers you as a landlord for anything that goes wrong above the tenant’s Bond. 

What is covered? 

  1. Loss of rent
  2. Property damage from storms
  3. Damages from certain types of illegal activity
  4. List others

It is worth noting that landlord insurance will generally cover you for everything that home insurance covers and more, as it is specific to landlord needs. 

Storm damage to a house showing why landlords insurance is necessary

How much does it cost?

Of course landlord insurance ranges depending on the individual circumstances, but we have seen cases starting from as little as $350 to $380 per year. For most rental properties, a policy in this sort of range is an inexpensive solution to the range of potentially very expensive problems that can happen in a rental property. 

But what about my property manager? Don’t they protect my property and find me a good tenant? 

Arguably the best ‘landlord’s insurance’ is a property manager in many respects. At Sydney Listings, we take this perspective of our service particularly under our Contemporary Property Management model.

Property Manager shakes hands with landlordWe take effort to screen tenants before securing them in our landlord’s properties. This is by conducting reference checks and gathering a wealth of supporting documents on an application. We also place an emphasis on pre, post and mid tenancy education of our tenants. Check out some of our videos here for instance to learn more. 

Conducting routine inspections is also vital to this process. But for anyone who knows people, knows that they are unpredictable. People change – in my experience I’ve seen tenants never be late in rent for years. Then suddenly everything changes and they fall behind following a change in circumstances!

I’ve seen perfect tenants turn and suddenly let things go at the end of a tenancy and present properties horribly when moving out. 

But why?

It’s a little thing called the human condition I’m afraid! Accountability goes away. Then people fall back to their own standards, rather than yours. We try everything we possible can to instil our high standards on to tenants for our landlord’s benefit. But it is impossible to do this completely, people remain too unpredictable. 

In my opinion the goal of Property Management is to reduce stress, reduce risk, and cover our fees so that we’re not really getting paid. We rather ‘take a commission’ from the money we save our landlords.  If we’re not doing that, then what is the point of having a property manager? You’re better of doing it yourself!

You may be someone who can’t withstand up to 2 months without receiving rent. Or settle a bill of more than $10,000 following storm damage. Then be aware that there are some things that a Property Manager or Contemporary Property Manager cannot protect you against! 

It is a good idea to understand how we’ve designed Contemporary Property Management to be a semi-landlord insurance policy by downloading this fact sheet

Who to use for landlord insurance?

Our official landlord insurance partner at time of writing is PI Plus who have a pretty strong commitment to protecting our landlords. But we are equally happy to discuss some other options who we don’t share a commercial relationship with. 

Terri Scheer for example position themselves as one of the forerunning brands in landlord insurance. If you have your own insurance broker, speak to them about what policies they can recommend as they will likely be the most aware of your individual needs.