With Australian property booming in 2021, you need to be at the top of your game to achieve your goals. Here’s how.
At KnowHow we’ve been talking about big growth coming to the Australian property market in 2021, and here we are! Despite last year’s predictions in the mainstream media of pending doom, the narrative has now switched and the headlines are talking about huge competition and rising prices across the country.
And it’s not stopping any time soon with new lending laws to be introduced March, providing would-be home owners and investors with greater borrowing capacity.
“Logic would tell us that if there are more loans being approved, people have more money to spend. So demand is higher and we know that property supply can’t change very quickly, and certainly not as quickly as demand can change … so that typically translates into property price growth,” wealth expert Stuart Weymss said on a recent episode of leading Australian property show Real Estate Talk hosted by KnowHow’s Bushy Martin.
Stuart therefore recommended that property investors focus on securing equity to position themselves to benefit from these proposed changes.
“That’s what I would be focusing on if I was an investor – where am I going to get the equity from? Is there any cosmetic improvements I can make to my property to make sure it values up nicely?” he said.
“The equity side of things is where we do have some control, and I guess through COVID there’s been pressure on rents and ability to re-tenant properties and so forth. And I think it reminds us that we do need to spend a little bit of money on properties to keep them up to not only tangible order, but really comparable to other properties in the location where our properties reside.”
Joining Stuart and Bushy on Real Estate Talk, leading analyst Pete Wargent explained how buyers should prepare their finances when looking to purchase a property. He said that thinking ahead and seeking the help of a mortgage broker is key.
“Usually the best starting point is to speak to your mortgage broker. And it’s worth bearing in mind that at the moment, (bank) processing times can be slow. A lot of people have been refinancing their mortgages because of record low mortgage rates. So you need to be prepared well in advance because it might take a little bit longer with some banks than is normally the case. So having mortgage pre-approval in place before you actually make an offer on a property is critical,” Pete said.
The next key steps for buyers is to research and understand the purchase process within their chosen state.
“You need to understand first and foremost what is your budget, then that should help you narrow down on the location in the best areas that you can get into with your budget,” Pete said.
“Then it comes down to actually looking at recent comparable sales … So you might need to dig a little bit deeper in terms of finding the available information. So you might need access to a sales database rather than just scanning listing portals, because there are actually fewer transactions to compare with this year.
“I [would] speak to some local real estate agents because you may need to act quickly and decisively to get a property owner in this kind of a market when conditions are so tight.
“The purchase process in Australia is different in every state and territory. So, for example, in Queensland it’s very common for people to make offers that are subject to finance and subject to building inspections. That may not be the case in, for example, Sydney where the market is tight. So understanding the local process is key.”
Finally, he said that buyers need to use the right negotiation techniques to improve their chances of securing a property.
“You need to have awareness of market conditions because that will help you to act decisively when you find the right property. So if you’ve got a good idea of what the property’s worth, and particularly if you can understand why the vendor is selling, then that’ll put you in the best possible position,” Pete said.
“When it comes to actually negotiating, it’s important to know when to negotiate hard on a property price when dynamics are in your favour. But it’s also important to know when not to push too hard, because one of the things I’ve seen a lot this year is people putting it off and saying, ‘well, we’ve had a recession, we’ve had COVID, and that’s why I’m going to offer much less than the asking price’. And it just hasn’t worked.
“And don’t be put off if your first offer is refused or if you’re unfamiliar with the property purchase process. It’s very common for vendors to come back with a counter offer … just try and keep keep calm and don’t become too emotionally involved.”
Listen to the full interview here.
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