There’s a locust plague at News:
Buyer’s agent Nick Viner believes now is the time to buy in Sydney and Melbourne, with many discounted premium properties available with minimal competition.
“This environment is the absolute perfect time to buy because you’ve got more time to consider your options and there’s more choice in terms of available homes,” Mr Viner, principal of Buyers Domain Australia, said.
“You also have the ability to focus on really blue chip properties in your budget. You can bag a more superior property that you can really only get for cheaper in markets like this.”
Most economists believe the total property price falls in Sydney will be within the vicinity of 15 per cent, which means some prime suburbs have already bottomed out.
“I saw the data out on Monday that the market in Sydney has come off nine per cent from its peak last year. What I’m finding in some suburbs is that price declines are probably closer to 10 to 15 per cent, even 20 per cent in some instances. I think we’re probably reasonably close to the bottom.”
“In general terms, the closer you are to the CBD the more likely prices will hold and then recover first.”
“That makes it an interesting time for investors,” he said. “I can’t recall a time where rents and sale prices have gone down concurrently.”
So why would prices stop falling then? There’s too much downwards momentum now for yields to matter. Everybody knows yield is only an excuse to lose money on negative gearing for capital growth in Australia anyway. At least until Labor removes that option.
This dill seems to think that this adjustment is all some personal choice. It’s not. Prices are falling because of a structural shift in market dynamics:
- less credit via rising lending standards and rising bank funding costs;
- interest only reset;
- fleeing Chinese, and
- negative gearing reform.
The only thing that will stop prices falling now is the next RBA rate cut coming in H1 2019. Even then it must be remembered that the market may well remain spooked. During the last easing cycle, which is still this one actually, the RBA cut late 2011 and there was little rebound until 2013 and only then when the Chinese arrived. Now they’re leaving.
Don’t get me wrong, I do expect the next round of rate cuts to have some impact. Just not for very long as the end of cycle bust arrives on top of weak markets.
Surprise, surprise. Domain is also swarming FHBs:
Real Estate Institute of NSW president Leanne Pilkington said changes to lending meant first-home buyers should initially seek to understand their borrowing power before going too far with their search.
…Wakelin Property Advisory director Jarrod McCabe said first-home buyers were generally quite cautious, but should avoid paralysis by analysis.
The Property Mentors chief executive Luke Harris said first-home buyers should be realistic, and shouldn’t expect their first purchase to be their dream home.
The first thing to do is ignore all of these horribly conflicted “advisors”. If there were a royal commission into real estate today then all of their remuneration structures would have them in the dock.
If you want to buy now then there is only one way to go about it. Start extreme low-balling every property you’re interested in and let the vendors crumble to you. Don’t bid on anything that you’re not prepared to walk away from in disgust at a greedy vendor or “advisor”.
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The bad grammar alone is warning enough 😯
“Buyer’s agent Nick Viner believes now is the time to buy in Sydney and Melbourne”
In other news, car salesman Vick Niner says it is now time to buy a car, and a local painter, Kink River declares it is about the right time for everyone to paint their house.
“A lick of paint doubles the price – as the saying goes”, he was quoted as saying.
Kink went on to say that he can give you an obligation free quote for $50, and he only charges $250/hr because “things are tough all over, business has been slow and I’ve got a mortgage and 5 kids to feed”.
Good luck Kink.
The way you got from Nick to Kink was nothing short of flawless, well done.
Did someone say kink?
*wink* 😉
Reus, what kind of figures are required to get you out of that blue suit and brown shoes you magnificently good looking bastard?
15% from peak? 20%? 40%?
“The Property Mentors chief executive Luke Harris said first-home buyers should be realistic, and shouldn’t expect their first purchase to be their dream home.”
I really get sick of hearing this whole thing about having to be realistic as a way to excuse ridiculous prices.
My first home (purchase) is going to be f#cken sweet because it will be a quarter acre block for $250K and I can smell it getting closer every month b!tchez!
How low is low balling? I’m looking at a place that sold for $770k in 2016 Dec. Vendor wants $1m I was gonna offer $800k. My mum thinks I’m nuts and they will never accept. Personally I want to offer even less. Lol.
Lovey’s mum had that conversation with me. Apparently low-balling shows a lack or respect. Got quite snipey over it she did. Lots of her old pensioner friends are trying go sell so that might be it.
My mum says kick ’em in the balls and run away if they don’t want to face reality,
Yeah I don’t get it, my mum is funny like that. She doesn’t share my 50% drop belief though! Still she has this thing that it’s almost insulting. Personally I think asking $300k on top of a price you paid 2 years ago is insulting. But hey what would I know? I’m tempted to offer them the same price they paid back then!
Thing is the Agent is probably the most honest Agent I’ve met so far, in that at least he’s upfront with things but I shouldn’t let that deter me from offering a reasonable price.
Showing lack of respect to a RE agent in any dealing is a feature, not a bug.
Low-balling shows respect for your savings.
Gav your properties tend to be a bit unique and special so perhaps that changes the calculus. But I’d say you’ve waited this long, 20% is nowhere near enough of a discount!
Vendor wants 30% return for holding 2 years in a market that is now crashing? That’s insulting.
Offer $500K, leave a card and tell them you can wait six months only.
“Insulting.”
That’s it! That’s the word lovey’s mum used! Insulting.
Pay what they’re worth she says. That’s why I low-ball I says, to pay what they’re worth. *insert cat’s bum face*
Yet I get asked by everyone else about how to get a deal on various items because I’m a tightarse. Not houses. That’s sacrilege.
It’s a strange cognitive dissonance isn’t it? The whole houses must go up mantra!
Apparently they are divorced and the husband cheated! How do I know? The agent told us.. Incredible. I’d never say that or even want to know to be honest, but now I do.. Even my own partner thinks they won’t look at our offer and I’m thinking, why not? What kind of reality are they living in where they think something should be worth $300k more in 2 years?
If I don’t want to burn the bridge I could always get a friend to put in a low ball offer and see how it’s received? Then counter with a slightly higher offer lol..
Gavin, let me tell you now there is no bridge to burn here – the agent isn’t your friend although he is good at making feel like it. Nor are vendors and if you believe like many do that prices are going nowhere you will have plenty of opportunity in the future.
The $1m price tag is just an attempt at anchoring price expectations (read “Thinking Fast and Slow” if you haven’t already). They fully expect someone to come along and lob something “low-ball” but it will be anchored to their initial price. If you then offer $800K they will dismiss it at first, but then the agent will get back to you and suggest you meet halfway. But if you end up getting it for $900K it is unlikely to be a bargain.
Plenty of potential distressed sellers out there. Don’t see a problem with making it clear that you are an all cash bidder that can settle in very short time-frames, no parasites required. If you need banks permission to cover the bid amount then you are not low-balling enough. Set plenty of low balls with no expectations. Some may come back later once the pain becomes to great or expectations have been reset. Don’t know about lack of respect – think it shows discipline.
Not all cash, I’d still need some finance for stamp duty + remainder (small loan). But I do like the way you think. 🙂
l second the Bogan’s call there…
I’m getting elbowed in the ribs from wifey to put offer on a wee block in perth western suburb… they just reduced asking price down to high 7’s…. considering I need to fund the demolition of a pile of shltty bricks, I’m starting to think an offer in the 5’s might be over-paying … the new year with direct line of sight to the election of Shorten is going to hasten this correction properly !! bring it! #Crash #Straya
Lowball it.
Via a lawyer/trust if you need a semblance of anonymity.
You can use multiple lawyers and trusts if you need. Not that expensive.
Thanks, some good tips in here too!
https://www.realestateview.com.au/advice/buying/step-by-step-guide-to-your-first-offer/
As you’d expect I got lots of bargaining practice in China and in my home town I eventually managed not to pay the ‘ foreigner tax’. One particular episode I remember is buying a camera case at the yaxiu market in sanlitun. I was offered rmb120 which was a fvcking insult as I asked for the price in perfectly accented Chinese and I should not have been offered rip off tourist prices. I said rmb10, stuck to my guns and gave her a grudging rmb5 increase (you have to give something) we haggled for a while but I ended up with the respect as I bargained ‘harder than Chinese’. This was pre taobao, so I had to pay more than the rmb8 it was probably worth. Make mining Bogan’s mum proud, don’t price anchor to recent (ie last 10 years) prices and stop being so nice. Look out for yourself Gavin!
At least in that instance you’re bargaining with someone who has an idea of what something is actually worth. We’re talking OZ property here, where many market participants think in 2018 if you aren’t making 25% capital gains in two years, you’ve been hard done by. Trying to set a new low-ball anchor against that delusion is hard.. Especially when the long term average price of the asset-class lies well-below even half of the asking price..
“If I don’t want to burn the bridge I could always get a friend to put in a low ball offer and see how it’s received? Then counter with a slightly higher offer lol..”
Ive done this… so a vacant land middle of tassie sat there for 4 years, I put in a bogus offer 30% below asking price, it sold that week.
Still can’t wrap my head around it, did it sell or were they that offended they took it off the market.
Ive dealt with real estate agents before where I made an offer just below asking price and he replies “SOLD”, that’s all he said.
I replied, “that’s great mate, as a business owner I usually turn away potential customers with my arrogance too”. He then replies with a sales pitch how can I help etc, nope.
Reality is vendors have had the majority of the power for the last 20-30 years in this country when it comes to selling. It’s only now that buyers have the upper hand in negotiations. Might take a while for them to see how the shoe fits.
FHB he maybe had a genuine offer in from someone else at 20% off sitting there for ages, he wasn’t keen but your 30% offer scared the [email protected] out of him and he took the other one.
Low balling for me is, if this place doesn’t sell in the next 12 weeks get in touch because I might be in the market then.
If you have a partner: 1 of you do an inspection first. Show zero emotion.
Leave it for a week then put in an offer. If you have the same last name as your partner, don’t disclose your last name in the offer. Make an offer of say $785K
On the same day as the first offer above, partner 2 does the inspection, show lots of emotion..”Love it..Dream home..bla bla….” Tell the agent you are putting in an offer tomorrow. Tomorrow comes, ring him up all excited and tell him the bank will loan you 80% so the offer will be $760K…
The agent will phone up the partner of the first offer of $780K and start negotiating. You will be in the box seat.
Prices have been falling in Sydney since Sept 2017, so that’s 15 months of falls. Going 15 months back on the other side of the peak takes you to June 2016, so I would say that’s where the current price is.
But market is in a downward trajectory with more downside to come, so factor that in too. And on top of that you are dealing with ‘motivated sellers’ who are probably keen to sell the place and sort out their divorce.
I wouldn’t offer anything over $700.
Looked at a property similar circumstances, they paid $750K in 2015. Wanted $700K for a quick sale, sold for $659K.
Snap. And you’ll probably end up underwater at that price.
Fortunately, wasn’t me that put the bid in.
You should always offer as much more than the asking price as you possibly can so as to secure the place of your dreams!
Yes its true. There is a psychological fact that the more you pay for something, the more you will enjoy it. Always take the anything goes, unprotected option, if its on the menu.
And if you’re smart, you can leverage the place of your dreams into many more places of your dreams! (and/or nightmares, if that is what you prefer)
The RBA Dep Governor flagging the possibility of QE for Australia … now what will that do for Aussie youth ? and what will it do for Aussie Boomers… who wins? What a F&KING disgrace, just let the RE bubble burst you pr!cks !
I would actually like to know what it will do, perhaps MB can run a post on scenarios and how they think that will play out? I just see it as more theft from the people.
QE injection … $50,000 for anyone who has a home loan with negative equity!
@Gavin
“Apparently they are divorced and the husband cheated! How do I know? The agent told us.. Incredible. I’d never say that or even want to know to be honest, but now I do.. Even my own partner thinks they won’t look at our offer and I’m thinking, why not? What kind of reality are they living in where they think something should be worth $300k more in 2 years?”
I bought our place from a divorced couple, easiest low ball buy ever.
haha. nice.
Seriously divorce = urgent quick sale, low ball the crap out of them. They aren’t going anywhere. In any case its probably going to be there in 6 months time anyway. So whats the rush? Get over Xmas & Summer & see whats going on in Autumn.There is no rush to buy at the moment. Its just heating up. Keep Calm! If RBA is talking QE that is serious stuff. They will wait a bit to do that so you’ve got time. What is QE anyway??? Is that like snorting white powder?
The “discount” is more palateable for a divorcing couple because each side only bears half of it.
Oh…FFS.
Read the comments. Does it not occur to anybody that we are all being property locusts? MB members are contrarian property locusts. Big deal. Houses are for shelter, living in, conducting a life from. All I see here is desire..grasping desire…so close now…almost mine…precious.
Yes, wanting a house is reasonable. But reforming tenancy laws so that tenants are no longer second class citizens would be a greater good.
More greater fools being sucked to the collapsing property market. The economy is now in a spiral of accelerating decline and there is nothing the idiot politicians or the clowns in the RBA can do about it.
Spot on Arthur. Fixing tenancy laws is the much more important issue. Fix that and prices would adjust to reflect real economic values.
People could choose not to buy at all and have a much more interesting life.
Low balling advice: you’re probably the ONLY offer.
Them: 1m
You: 500k
Them: 950k
You: 450k
They’ll get the idea.
+1
+1