How To Buy Well
“In order to be successful one must buy straw hats in winter and umbrellas in summer.” – A wealthy Japanese investor.
Over the last 3 years, I have seen the number of investors in the market reduced to a mere trickle, whilst owner-occupiers make up the majority of the market. This phenomenon has left me feeling a little confused.
Interestingly, the few investors that are buying and have bought during this period have seen the benefits that are espoused in the quote above. These are detailed below:
- Due to other investors pulling out of the market, vendors have seen a huge number of potential purchasers disappear. Lower demand has lead to vendors getting into reverse auctions with each other and buyers have reaped the benefits by paying less.
- A lesser number of investors have meant that there are fewer rental properties available for tenants. The last year in particular has seen rental vacancies tighten significantly resulting in increases in rent for properties managed by CPM Realty by at least 10% and in some cases up to 25%.
- The banks have further loosened up their lending policies in a bid to gain a greater share of what has been a diminishing market for investment loans. Investors have taken advantage.
- Prices in Sydney have dropped by up to 20% in some areas whilst rents have increased. The last time we saw prices drop this far was in the early nineties. This was followed by unprecedented price growth. Whilst I am not suggesting that price growth will be as aggressive as it was during the recent boom, there is little doubt that a rebound will occur and a small annual increase in value amounts to extraordinary investment over a ten-year period. Those who are actively in the market will reap the rewards.
The comments above should not result in you running out and buying every property you see. They should merely encourage you to NOT follow the crowd away from property. You should in fact be leading the crowd and then be relaxing on a beach somewhere when the crowd starts getting excited again.
Just remember, buy that straw hat now before going to the Bahamas.
For information on an interesting mix of quality property throughout Sydney go to www.cpmrealty.com.au or call CPM Realty on 9211 9993.