Upsizers Are The Winners In A Softening Market
For more than two decades, Sydney’s strong market has allowed home owners to capitalise the equity in one property to fund the next – buy, wait, profit, repeat. A bell curve of both property price and property size appeared as owners moved through life. From first home owners and investors congregated at the low to middle end of the market, on toward established family homes and lifestyle purchases at the upper end, then back towards smaller and cheaper residences when they downsized. By the time empty nesters sold up, they were almost assured a pot of cash to carry them through retirement.
The strength of the market ensured that almost anyone who got their foot in the door with their first purchase would make enough money to move on to their next.
Equity alone, however, won’t cut it for the next generation of home owners. With a noticeably softer market, high entry level property prices and more stringent lending criteria, first home owners are going to have to hold onto their investment and save a little longer in order to trade up. The growth is still there at the lower end, but it has slowed sensibly.
There are, however, still gains to be had by those who are already in their first or second home. Flat or negative price growth can create an opportunity to upgrade if the value of your next property has decreased further than the value of your current home. This is the time to buy if you’re looking to upsize!
According to Domain Group1 data, the difference between median apartment prices and median house prices in Sydney’s inner-west was $930,000 this time last year. Now, the gap has narrowed to $770,000, giving upsizers a relative discount of $160,000. In the city and east, the gap shrank by $186,500, and in the upper North Shore, it’s $220,000 cheaper to upgrade than it was a year ago.
Not only have prices softened but so has demand. With house values now not increasing faster than people can save, purchasers can take the time to follow a comprehensive Buying Process2 without fear of missing out on the one.
Of course, with reduced competition, lower clearance rates and more properties listed for sale rather than auction, sales agents are working harder than ever to negotiate a premium price for vendors accustomed to a boom-time market. The strength of the sales agent is, therefore, the only variable for upsizers looking to get the best deal out of their next purchase.
Hello Haus3 is Australia’s first and only expert property contract negotiation agency. We are committed to giving purchasers the resources they need to successfully navigate the Buying Process. When it comes time to negotiate price and conditions, our licenced real estate agents act on your behalf, giving you decades of industry knowledge, experience and professional negotiation skills and an advantage over other interested parties. We are experts at saving you money and we are completely free of charge if we don’t achieve a better price than your calculation of the property’s value.
Hello Haus! Follow the Buying Process today and our experienced property agents will be ready when you are to negotiate a better deal on your next home.
1. Domain Group. What you need to know about upsizing now that the price gap has narrowed. [online] Available at: https://www.domain.com.au/advice/what-you-need-to-know-about-upsizing-now-that-the-price-gap-has-narrowed-20180810-h13e3t-757462/ [Accessed 24 Sep. 2018].