Evening ladies and gentlemen!
Hope everyone had a great weekend – yes yes I agree, it is too short.
Yesterday, I attended a few property inspections in my local area of Inner West Sydney – an area which has seen some phenomenal price growth during the latest boom.
I wanted to do a spot check to gauge the market right now. The media report either a plateau or fall in price.
And you know what? The market is different to a year ago, very different.
The first inspection was a fairly standard 2 bedroom, 2 bathroom, 1 car spot (2/2/1) apartment. I stayed for the duration of the open because I wanted to have a chat with the selling agent and to keep track of people coming in (maybe 3 or 4 groups).
The price quoted was in the high 700k range having been reduced from $800k at the beginning of the 3 week campaign. The agent disclosed transactions and inquiries have really slowed for him in the last 6 months.
Second inspection was a more modern 3/2/2 – asking price just over $1m, on market for 2 weeks. I didn’t stay too long at this one, there was no one there bar the selling agent. Poor bastard, hope he gets the sale – he looked desperate.
Third inspection after lunch, a rental this time. Standard 3/2/2 asking $650-$680/wk. I was quite blown away with the level of interest here.
Couples young and old, young families with their toddlers in tow, people like myself for a quick looksie – it was abit chaotic and the managing agent was very overwhelmed.
I counted around 6 application forms being taken, no doubt it will be snapped up asap.
The last inspection I attended was a property to be sold at auction, so I stayed to see what it might sell for. It was an older style 2/2/2 with a good floor plan and decent location close to amenities.
First thing that struck me pre-auction was that there wasn’t many people. Not just for the auction but for the inspection also. There were more staff and agents milling around than the public – not a good sign if you’re the seller.
Here in Sydney in order to bid at an auction you must register first.
This makes it very easy to spot who your rivals are going to be because they are the only ones holding the bidding paddles.
I’ve attended a couple of auctions in the same block last year and each time there were at least 4 or 5 paddles in the crowd. On those occasions, the properties sold for $760k – $780k.
Today there were only 2 paddles.
The bidding started at $650k, then slowly moved up until it reached $720k. Then the auction stalled… and stalled… and stalled some more.
After about 10 minutes of stalling, I got an itchy back so decided to sit down to give it a good scratching.
At 15 minutes, with agents rushing to and fro – both bidders were shown the reserve price ($760k, I overheard) and one of the bidders walked out.
I think they went to buy a good back scratcher.
Surprisingly, I thought the remaining bidder would stop and enter into private negotiations directly, but she raised 2 more bids against herself before stopping – $730k and $740k, at which point the property was passed in i.e. didn’t sell.
It was extremely anti-climactic and I walked away unsatisfied with that itch still on my back.
Here’s some food for thought from my day out:
- The property market (at least where I am) is definitely slower, mood has dampened, less interest, less activity, should translate into lower prices.
- Sellers are still anticipating price levels similarly to last year, i.e. expectations have not changed.
- Much less investor activity now compared to last year. There’s no frenzy anymore.
- Rental market on fire, it’s a jungle out there.
- Bring a good back scratcher for those out of reach spots.
Twas a Saturday well spent.
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P.S. This is a small snapshot of my local area – ensure you do your research properly and don’t just rely on the thoughts of a witty and insightful finance blogger, even if he is devilishly handsome.