Property Market Update September 2020 – Part 1
Spring has come around again, but this year the situation is pretty far from normal.
We’ve had COVID, we’ve been in lockdown, buying and selling is being done differently and now there are some whispers about restrictions beginning to be eased in the not too distant future.
There are a lot of mixed messages out there in the media, so we thought we’d cut through all of that and give you a market update. After all, the Binvested group of companies is buying hundreds of properties each month for clients, writing tens of millions worth of loans each month and managing thousands of properties for our investors, so we do have a fair idea of what is going on out there.
Here’s a breakdown of some of the more interesting markets.
There are good bargains to be had at the moment, especially in the inner city markets. We’ve done three bulk deals recently in the inner city, while we picked up two-bedroom units in Botany for $538,000; and one-bedders for $410,000 and $390,000. These came with car spaces and were near the airport. We had these valued soon after purchase for $165,000 more; the two-bedders for around $700,000 and the one-bedders around $550,000. We bought them at discounted rates and showed our investors there are good buying opportunities out there.
We also recently picked up a bulk deal off market in Parramatta; eight one-bedroom units for $290,000 each. Who would have imagined that was possible?
The further west we go, we are seeing lots more activity, especially in the more affluent areas and the middle family areas that house the McMansions. Word from the agents out there selling a lot of land to first homebuyers is that the markets are hotter than in 2011.
Areas like the Central Coast and outer Sydney are very hot, because COVID has seen people start considering lifestyle. Lockdown and remote working have opened their eyes to relocation, so there is a trend towards growth and expansion into different places across the country.
What to say about this market?
Parts of Melbourne are great but from an investment perspective, we’ve always steered clear because it feels like there is an oversupply for the amount of people who are there and if you want to keep building you just drive 10 minutes down the road, build a new estate and a new suburb comes up.
A lot of people are moving to different locations for lifestyle reasons and many of those are leaving Melbourne and other places for Queensland.
The Gold Coast and Brisbane markets are currently very hot. And as we go further north there are more areas that are booming and have even doubled in 2020. You won’t see these areas reported in the news or in data as you have to be on the ground to see these markets going so strong. At the moment, we won’t give any more away as we are active in these markets getting deals for clients.
But what if there’s a crash?
There are a lot of doomsayers out there saying ‘house prices are going to implode, just wait until JobKeeper finishes and the mortgage holidays are over’.
From a savvy investor’s perspective, that wouldn’t be so bad because a market crash means more opportunity to buy at a bargain. Regardless, that isn’t what’s happening. The market is heating up and there is a lot of activity from buyers out there.
What’s happening with finance?
Our finance company partner Zinger Finance has had some of its largest months ever because there’s a lot of activity in the market. The big banks are slow because they have an influx of applications and there’s been a lockdown in other countries, leaving them short staffed. Some big four banks are seeing a six week turnaround on loans; something we’ve never seen before. A lot of people are getting loans, purchasing property and injecting liquidity into the market. There’s more money creation and that could mean another property boom. Interest rates are at the lowest point ever, but we could see further rate cuts and even head into negative interest rate territory, where banks are paying you to take money away.
Rental as anything
If we look at inner city markets where there have been a lot of Airbnb listings, there’s been an oversupply where all that stock has been regurgitated back into the marketplace. However, the rental market in general is strong, with low vacancy rates and people staying put because they want security and don’t want to move.
But aren’t there a lot of tenants that aren’t paying rent? There’s always a small percentage of delinquencies across a large property portfolio, but we haven’t seen an increase in those numbers, mainly because the properties we do manage are recession proof. They have high cash flow and low risk. A lot of our tenants haven’t been affected too much and if they have they are covered by JobKeeper and JobSeeker.
If you want to talk to any of our team in relation to your property investment strategy, we’re just a click away! Book your free Discovery Session and we will work with you to devise a 2020/21 friendly strategy.