Why the time is right to buy
04 | 02 | 20
Just about everyone has a story, or knows someone with a story, about that magical property bought and sold ‘at the right time’. But when is that right time to jump into the market, or buy your next property?
When Justin Doobov opened his mortgage business Intelligent Finance almost 20 years ago, one of his first clients had $150,000 cash in the bank and his eye on a $300,000 semi-detached house in Bondi.
“He had the money and wanted to buy, but just as we got him pre-approval, he decided not go ahead. He did that so many times. He’d find a property, we’d get him the pre-approval, and then he’d get cold feet.
“Eventually he didn’t have the $150,000 in the bank – he’d spent it on holidays and cars – and he didn’t have a property, that 20 years later would be more likely worth $2.5M.
“For him, no time was ever right to buy. He always found a reason not to go ahead. That was his loss.”
“If you look at every one of Australia’s top 200 wealthiest people, or pretty much anyone you know who has amassed wealth over the last 50 years, whatever business they were in, they also made a large amount of their money from property.”
Ranked consistently among Australia’s top independent brokers, Justin has seen a number of property cycles come and go, and has plenty of stories of people who missed the boat through inaction, but even more about those who have reaped the rewards of making a move and building their personal wealth.
“If you look at every one of Australia’s top 200 wealthiest people, or pretty much anyone you know who has amassed wealth over the last 50 years, whatever business they were in, they also made a large amount of their money from property,” he says.
“Even if you bought pre-GFC, in most areas, the market has gone up since then and at that time it seemed doom and gloom and it would never recover, and when you’re in it, it feels like you’re going to lose everything, and yet, in reality over time, it’s just a blip on the graph.”
Now he’s watching as another period of growth kicks in and cites a 30 per cent lift in lender enquiry in 12 months.
“A lot of our long-term clients were buying last year, and the year before, even when it seemed like the market would drop further.
“They never once mentioned they were concerned or worried. They were confident to buy because they’ve seen the cycle and they understand it’s timing in the market,” he says.
A raft of industry reports and surveys support the view that after a difficult two years of stagnation, the Sydney market is indeed embarking on a time of growth.
In Corelogic’s 2020 Outlook, Head of Research Tim Lawless says:
…After leading the nation for capital gains during the previous growth cycle, Sydney’s housing market moved through the largest downturn on record, with dwelling values down 14.9% from their July 17 peak.
Since bottoming out in May 2019, Sydney dwelling values have rebounded by 8.2%, with a larger gain for houses (+8.8%) relative to units (+6.8%). As values increase, market activity is also rising, with our estimate of settled sales 7.1% higher year on year across Sydney, but still 18.5% below the decade average.
These figures also suggest that, although the second half of 2019 recorded a positive swing, the rebound from the record-breaking downturn will take time. Confidence is returning, but patience is also required to reap rewards from the growth cycle.
In CoreLogic’s January 2020 Home Value Index housing values are shown to have risen across every capital city in January despite slower growth.
Australia’s housing value rebound continued into 2020 with the CoreLogic national home value index up by 0.9% over the first month of the year.
This now takes the annual growth rate to 4.1%; the fastest pace of growth for a twelve month period since December 2017.
The report also shows Sutherland recording an 8.6% rise in dwelling values over the 12 months to January 2020, earning the area a place in the top 10 performing capital city regions.
“The most successful property investors take a medium to long term view. They block their ears to what the market is doing, and over time, they have their win.”
A host of factors have bolstered this return to confidence and spurred buying activity, including a good showing from first home buyers, who were encouraged by the more stagnant market helping housing affordability, as well as stamp duty exemptions in New South Wales and Victoria.
The return of the Federal Government at the May election took proposed changes to negative gearing and capital gains off the table, while historically low interest rates also helped the market find its trough and begin a rebound.
The latest ANZ/Property Council Survey also indicates a clear lift in industry confidence, buoyed by the strengthening residential market and better growth expectations.
“The growth of some confidence in the residential market is a positive sign for the state economy, and with better growth expectations across this sector and better availability of finance for housing, we hope to see continued growth in confidence,” says Property Council NSW Executive Director Jane Fitzgerald.
The Urban Development Institute of Australia (NSW) also cites a lift in confidence among its membership.
“There is definitely a renewed sense of optimism at the start of 2020. UDIA NSW’s latest Residential Developer Market Intelligence (RDMI) report showed renewed confidence in the residential market as developers across Sydney are seeing a rebound in enquiry and sales volumes,” says Steve Mann, UDIA NSW CEO.
“Research shows residents across NSW are expecting this trend to continue with 48% expecting prices will increase in next 12 months (UDIA-Urbis Home Purchaser Sentiment Survey, Sept 2019).”
Steve says he expects demand will play a role on price growth, particularly until new policies focus on creating more supply.
“The recent decline in housing approvals will see the apartment market remain tight until the NSW property market is able to course correct and focus on generating supply to match future population growth.”
On a day-to-day basis, Justin’s Intelligent Finance team is noting a shift in sentiment among valuers and the credit departments of banks and lenders.
“The tone has improved and they seem more happy to lend, and from a valuation perspective, even six months ago there was a lot of negative outlook, but now the valuers reports are saying the market has come back and stronger,” he says.
While every cycle is distinct, Justin says this reminds him of the post-GFC recovery.
“I am more of a pessimist than an optimist, but I’ve seen first-hand what’s happening, when we’ve looked at data, there’s evidence the property market is recovering.”
Interest to buy is coming from all purchaser types, but he’s noted a strong showing by seasoned investors.
“The most successful property investors take a medium to long term view. They block their ears to what the market is doing, and over time, they have their win,” he says.
Justin says picking the right location, the right development and the right builder is also critical for long term success.
“There’s no doubt that location, and proximity to things like great schools, hospitals, transport, employment play a huge role in the success of a property investment. And lifestyle matters more now than possibly ever before in how people are choosing where to buy,” he says.
“….from my perspective the Shire has been very resilient.”
Long-time Shire locals Chris and Sherryl Pardy have their own story of a magical property deal.
“I bought a place in 1980 for $175,000 and I sold it in 1987 for more than $800,000… so if people think we’ve never seen a market like the last boom – it’s happened before..” says Chris.
Chris says he’s always liked property, which makes sense as part of the family responsible for building more than 20 properties in the Shire – including one of the area’s tallest tower, the iconic Matthew Flinders building.
“I’ve seen three declines – the one in 1987, then in 2007 and this one, which was different again. It just stagnated. But from my perspective the Shire has been very resilient,” he says.
When it came to picking the time to buy, Chris says he is less concerned about what the market is doing. Instead, it’s a new life stage that’s driving his latest purchase.
After five years of looking, the couple has found the ideal downsizer in the final stage of Woolooware Bay.
Set high up on level 14, with north-south views that will deliver a stunning ocean outlook, their purchase is an amalgamation of two apartments – a two and a three-bedroom floorplan converted into an oversized 250sqm three-bedder.
They’ll also enjoy all the convenience and benefits of the Bay Central shopping centre, medical and specialist suites, a waterfront dining precinct and a revitalised Sharks Club, all linked to local transport to take them wherever they need to go.
“We’re coming out of a 700sqm home, so this is a big downsize for us, but it’s going to give us access to all the facilities we want and there’s nothing like that anywhere else in the area,” he says.
The Pardys are not alone, with the appeal of the convenience of having everything on your doorstep, a key factor for Woolooware Bay purchasers at all life stages.
To find out more about why now is the right time to buy your next home or investment property at Woolooware Bay, visit the sales suite at 71-73 Cronulla St (Cronulla Mall) or inspect the onsite display apartment.