With house and apartment prices falling – to the extent that some people who bought off-the-plan at the height of the boom are potentially looking at negative equity –opportunists are circling, like vultures over a lion kill in the Serengeti.
Take the emotion out of property purchasing, which means you are talking purely about investment and not about your home, and you can see opportunities starting to emerge as the tsunami of recent property price rises recedes to a low tide.
Will that tide turn? For sure. When will that happen? Your guess is probably better than mine – but then I’m not in the business of buying and selling property.
The significant issue for apartment investors is that brand-new apartments are coming on stream and the people who paid for them may be desperate to offload before prices drop any further.
Your challenge is to work out whether or not the market will bounce back above current levels – and when that will happen.
In the meantime, you have a virtual smorgarbord of completed apartments from which to choose. And brand-new apartments could be the bargains you’ve been seeking.
Firstly they are better than off-the-plan projects because they actually exist. They are not an architect’s dream, subject to whatever variations in size and finish that have been tucked away in the darkest corners of a contract’s small print.
You can open the cupboards, turn on the taps and thump the walls to check that the state-of-the-art sound insulation isn’t, in fact, amplification.
You can see the car space and make sure it can fit a massive crew cab ute, rather than barely a Fiat Bambino.
Also, you will be getting something close to the true value of the unit – not some best-case scenario where the developer has already factored in optimistic estimates of what the unit would be worth when it was finished.
Now, are brand new apartments better buys than older ones? Older flats should have an established community (or not) and you won’t need to be Sherlock Holmes to deduce if the blocks are friendly and efficiently run.
A brand new apartment is a blank sheet, in that regard. However, new apartments will still be under whatever paltry warranties exist, so you will be able to get things fixed if there are defects.
Older apartments might have skipped that process and it may be only now, long past their defects claim date, that the cracks (sometimes literally) are starting to show.
New flats have been built using modern methods that should take care of potential “old unit” issues like concrete cancer.
But older apartments have probably been built to greater tolerances, meaning the transmission of noise from unit to unit and room to room, is a lot less.
So what do you choose? Right now is probably a good time to start doing your research. What new buildings are coming on stream and which older ones are starting to turn over units.
Will the unit block allow Airbnb (in NSW), and is a that a good or bad thing from your point of view?
Regardless of what you want, there are a few ducks that need to line up before you plunge into the market: the NSW state and Federal elections, Brexit and Trump’s on-off-on trade war with China could all affect property prices.
So do your homework. At the very least, when things do start to settle down, just make sure you are one of the vultures and not part of the kill.
This column first appeared in the Australian Financial Review.
