However, what we need to keep in mind is that our demographic is changing.  Whilst families remain our most dominant group, lone households are our fastest growing group here in Australia, with the ABS predicting that they are projected to grow by an average of 2.2% per year, from 1.9 million in 2006 to 3.2 million in 2031. Other factors, such as affordability and convenience of location mean that increasing numbers of single person households are opting for the cheaper and smaller dwelling ie: studio and one bed units.

Of course, the other advantage of smaller units for investors is that they present an entry level opportunity to get a foot in the door of the real estate market.  With prices starting from the $200,000 range here in Sydney they should be considered for those investors who are after a more affordable investment, but one not necessarily lacking in return, if the latest increases are any indication. There is also no hard evidence that two bedroom units outstrip one bedders when it comes to capital growth, despite popular belief to the contrary.

Especially in this more challenging market we’re experiencing here in Sydney, it’s the agents who operate ethically and responsibly who are gaining our attention.  In a boom market, or so it’s said, property can almost sell itself.  In 2003 and 2004 we missed out on buying properties simply because we weren’t prepared to better an unconditional contract the agent held in his hands before the open for inspection was over! It wasn’t uncommon for agents to hold “mini auctions” on front lawns or sell before any listings appeared on the web.  Still, in this environment it was the agents with integrity that fought to obtain the very best deal for their vendor, as they do in all markets consistently.

Sadly, and due to the very competitive nature of the industry, there are many selling agents who continue to plague the industry with its poor reputation.  We’ve experienced it all- gazumping, under-quoting, non-disclosure, dummy bidding and lying.  However, the agents that retain good reputations within the industry and continue to supply vendors and buyers with a high quality of service, communication and results can continue to hold their heads high. Ensuring the longevity of any business is all about making sure the importance of trust and integrity is not to be underestimated.

Our job as buyers representative is not to “sell” a property to our buyers, but rather address all the positives and negatives of each shortlisted home, ensuring that they are fully aware of the property as a whole, and not just the features that the pretty advertising focuses on.  Following up with negotiating a fair price that is not based on emotion may be difficult for those owners choosing to go it alone, as they can often overlook the reality and become caught up in the spiel of an enthusiastic or scaremongering selling agent who reads them well, and is able to secure a higher price than may be realistic in the current market.

Auctions are another situation altogether, as I’ve lost count of the number of emotional outpourings I’ve seen at auctions.  Buyers grapple to come to terms with the fact that all their hard work (and money) is going down the drain, as the bids soar past their limit, reducing some to tears and others to anger and sheer frustration.  Many clients now seek our services and appraisals prior to auction, to ensure that they are being realistic and not wasting more time in a possible fruitless outcome.  Possibly the most heart-wrenching scene I’ve witnessed at an auction was a wife bursting into tears, and her two young children joining her, as she failed to cope with the outcome, some $120K over her last bid.  Had she engaged the services of a pragmatic and non-emotional buyers agent beforehand the result could have been quite different in saving her much angst.

Most buyers are well-educated these days, with up-to-date technology and property information at their fingertips; it appears to be an easier process for them to locate and purchase with such a wealth of research behind them.  However, it’s not so easy to prepare for and keep that emotion in check when purchasing one’s castle.  Hiring an independent agent to represent them and ensure that rational decisions are ultimately made can be the best money home buyers may spend.

The trouble with such govt intervention in the housing market, however, is that it can create an artificial short-term stimulus, causing prices to rise for a brief period, and then deflate again when 25% of the buyers have disappeared.  The proof is yet to be seen, and we won’t really know the outcome until the quarterly growth figures have been published in Jan 2012.  However, anecdotally, we have experienced increased competition from first home buyers in the last 10 weeks and have found ourselves competing with more than the usual number of purchasers, sometimes as much as 3-4 FHB’s on the one property.

There are always going to be some properties that are less “attractive” to first home buyers, however, and these can include “renovator delight” properties, those with development potential or land value sites only, as well as those over the mid $500K’s value.  As the stamp duty exemptions apply to those properties up to $500,000 and then a sliding scale applies until full stamp duty is payable at $600,000 there is less competition at the pointy end of the $500K budget.

Investors appear to be hanging back for 2012, particularly those who are buying “bread and butter” properties in those suburbs that contain median prices around the $400-500K price bracket.  We believe that, as a result, though there may be fewer FHB’s about in early 2012, investors may turn out in larger numbers and subsequently re-balance the market demand.  Should interest rates continue to fall (with the major lenders passing on these cuts) there may be just as much competition as we’re currently experiencing.  Interesting times ahead for 2012, we’re sure.  Now who has that crystal ball?!

House Search Australia was the buyers agency who sourced the homes, across a variety of suburbs and in differing price brackets.  It was a highly challenging but ultimately satisfying brief and we are very proud to have been chosen as the buyers agents to have purchased these houses for the show.  Not all “renovators delights” are equal and it was indeed quite an experience to watch our selection become transformed from ugly ducklings into the swans they became.  Well done to all the contestants and all those who worked behind the scenes. Great job!

As buyers’ agents one of our roles is to liaise between parties such as solicitors and conveyancers, building inspectors, property managers and lenders in order to effect a successful sale for our clients.  Not only does this ensure the process is an easier one for purchasers but it can often expedite the exchange of contracts and avoid being gazumped, especially in a sellers market situation.

Part of the due diligence here involves obtaining a copy of the contract of sale and passing it on to the buyers legal representative for review.  However, it’s in the best interests of our client, as their buyers’ agents, to double-check the “black box” in the middle section of the front page of the contract, which contains the inclusions and exclusions of the property for sale.  Vendors have been known to omit articles that were “assumed” to have been staying with the property eg: curtains, pool equipment, dishwasher- that are not necessarily considered fixtures of the property.  It is vital to not only check these inclusions upon inspection but also to take note of any exclusions and inform our clients.

Sometimes we need to itemize  other inclusions to ensure clarity here. For example, “pool equipment” as an inclusion can be vague and we have heard of cases where buyers turned up to their new home to find that the $800 auto pool cleaner had disappeared yet the pool scoop and brush had been left behind, constituting the “pool equipment”.  Dishwashers are a common inclusion that buyers assume are staying and, if unchecked, can find themselves doing the washing up by hand when they move in, to their surprise!  Items such as curtains, blinds and light fittings have been known to have been substituted between exchange and settlement, so it’s also good practice to take note of these and photograph them as a record for the pre-settlement inspection.  We do this for all clients and also take the time to test everything electrical in the property both at initial inspection and again prior to settlement.

Checking inclusions may seem like common sense and assumed to have been carried out and double-checked by buyers legal representatives, however it’s our duty of care to our clients to ensure that these are correct and recorded as accurately as possible to avoid any nasty surprises at settlement.  So, if you’re buying a property soon make sure you double-check and clarify those inclusions and take photos as an extra form of protection when conducting that pre-settlement inspection!

However, not all the news is unsettling.  Recent affordability index figures released by the Housing Industry of Australia (HIA) and CBA  show that affordability improved 3% to 55.7 for the March quarter.  A softening in house prices was one of the main contributors with national figures falling 0.6% in the same period.  According to John Edwards from Residex, Sydney, Perth and Brisbane currently appear to be at the bottom of the current market cycle- a genuine opportunity, in his opinion, to buy discounted listed properties in a buyers market.  But, I hear buyers argue, how do we know it’s the bottom?  And, if this is the case, what if prices fall further?  Even a modest 8% fall in the current median price equates to a loss of more than $50,000.

We’ve all heard the saying “Its time in the market, not timing, that counts”.  After all, the general theory being that if you hold property for a sufficient long enough cycle eg: 7-10 years the market will correct or catch up.  Capital growth tends not to be consistent year in year out, but rather spasmodic, with highs and lows.  Some of these low periods may include negative growth. However timing also does make a difference.  After all, when growth stalls prices also fall, often creating opportunity that wasn’t present in high growth periods.  The hard part is knowing when to jump in- as none of us have a crystal ball that forecasts capital growth rates or intimate knowledge of what moves the federal or state governments are likely to make, that impact on the market. We will never be able to accurately pinpoint the “bottom” of the cycle, until well after the event, despite the best intentions of the field experts out there who claim otherwise.

However, property still remains a popular choice for Australian investors and whilst banks are happy to heavily leverage on an asset that’s considered as “safe as houses” investors and home buyers will continue to jump right in.  Falling prices or not, historical growth has demonstrated that holding well-located median-priced Australian property over the longer term (and I would advocate 10yrs as a more accurate holding cycle than 7 years) pays off for many purchasers.  Sure, there might be a few troughs and hills along the way but it’s the whole ride that counts in the end.

However, with yields continuing to rise on the back of tightening rates, it seems that the tide may well be turning.

MD Louis Christopher also said the middle and outer suburbs of Sydney would represent good value for investors over the next 12 months, especially if the incoming government took a decision to boost the city’s housing market by cutting sales tax.

“There is an under-supply situation occurring for NSW. We are actually building less dwellings now than in 1984 and have been building less since the year 2000,” he said.

“In 1984, the population of Sydney was about 3.2 million. We now have 4 million”

It’s a well known fact that, due to high prices, that freestanding houses in the more popular parts of our city are not the first choice for investors.  Many, instead, elect to buy into a unit or townhouse complex as a cheaper alternative.  With households shrinking, it makes logical and financial sense for Sydneysiders to downsize into affordable dwellings, investing in lower maintenance assets whilst retaining funds for financial security later in life.

However, there will always be a demand for rental properties as not everyone wants to or indeed can afford to buy into the “Great Aussie Dream” of home ownership.  Whilst demand is strong and supply is low, with just 1.5 properties out of 100 available to rent, and affordable interest rates, it may well be time for investors to take a fresh look at what the Sydney property market has to offer.

The question we asked: When a property has any of the following tags instead of a listed price (or guide/bracket) do you contact the agent or simply pass it by in preference for those that do have a listed price?

By Negotiation

Just Listed

Express Sale

EOI (Expressions of Interest)

POA (Price Upon Application)

By tender

Auction (with no price guide provided)

The respondents were provided with three options as answers and the results were as follows:

1. Yes    8.6%

2. No     74.2%

3. Only if listings are limited in this area   17.2%

We weren’t really surprised with the responses given that buyers have been expressing their frustrations to us for years about advertised property with no price or guide/range.  In our experience, the large majority of purchasers haven’t got the time or inclination to follow up with agents to enquire about price guides. From the results of our survey and subsequent comments buyers expressed the following reasons as to why they passed “no price tag” properties over.  These included:

They don’t wish to leave their details with dozens of selling agents and receive follow up calls, get added to email databases that clog up their inboxes or have extended conversations with agents seeking new listings.

They don’t want to play second guessing games with agents who ask them “What’s your budget?” rather than provide them with a price guide quickly.

Agents who couldn’t provide them with price guides didn’t know their market well enough- the general consensus being that the estimated price provided on the listing agreement with the vendor should be provided to potential purchasers.

They believe some properties without a listed price advertise this way because the vendor is unrealistic and the agent doesn’t wish to scare potential purchasers away.

Auctions came under particular attack, as underquoting is still a concern with Australian buyers in the marketplace.  With over 74% of our respondents not even bothering to enquire on such properties without price guides, it begs the question: Are vendors doing themselves a disservice by listing without a price tag?

As buyers’ agents, it’s our job to enquire on every property, regardless of whether or not it’s private treaty, auction, price or no price.  We also find that we’ve been able to secure some terrific property for clients who wouldn’t have otherwise bothered, due to the missing price tags.  It takes time, lots of legwork and persistence at times, however saturating the entire marketplace for our clients is part of the job.  If you’re one of those buyers who pass over properties without price guides, then you could be one of the 74% of buyers missing out here on a potential great deal on a new home or investment property.