Making money in a falling property market?
Unless someone lived in a cave for the last 10 months, everyone is aware that the property market in eastern Australia has hit its peak and the prices are now correcting itself. Some property investors are perplexed now, as the same media outlets that was cheering the price growth and writing about  first home buyer difficulties, are now writing on price reductions and first home buyer opportunities!  
As with any investment asset class  property prices go through cycles, and the significant price growth that we experienced in NSW and VIC from 2013 to 2018, is now letting off steam and poised for a correction that we need to have. As a buyers agency we have stayed away from investing in 'Greater Sydney' areas for last 2 years due to the potential risk of market tanking.
Property investments need to be done with a long term view, as there are significant transaction costs involved in either a purchase or a sale. Knee jerk reactions and panic selling by property owners in response to for ever changing market conditions, is a recipe for disaster. For young investors who have not previously experienced  a full property cycle, let's take the performance of property in the last 25 years. (I would expect a similar review on other assets like ASX shares will  yield a comparable result)
Over the last 25 years the national median house value has risen 412% or $459,900 as per the below graph.

As evident in the chart on the left there have been times where the market has dipped or moved sideways for a period time. Which is the reason why taking a long term view on property performance, adhering to a proven investment strategy and building financial buffers for hard times is crucial.
 
What are the options available to make money in a market going down or sideways?
As buyers agents we buy properties with the ability to add value and manufacture growth. This period could be a time to do the renovation and add value, build an addition, build a secondary dwelling or lodge that DA for a subdivision. Savvy investors will also keep an eye for properties sold off in the market at a discount, by the panic sellers. It's not all doom and gloom in every property location at the moment, as there are few locations out there  that providing significant upside for property investors. 
The market downturns can be scary and difficult, but following a proven strategy you can come out from the other side unharmed. If you are a new investor or an existing investor keen to rebalance the portfolio, give us call on  02 9994 8003. 

Sydney’s property market is only “just keeping its head above water” with almost half of homes failing to sell under the hammer. This compares to 78 per cent of homes selling on the same weekend last year.
For example  In August 2016, 11.6 per cent of homes were withdrawn but by November last year that figure rose to 33 per cent. Although the numbers have improved, almost one in four sellers in February, decided not to go ahead with their auction as planned.
SQM research Louis Christopher said the downturn was a result of a regulatory double-whammy when APRA cracked down in interest only home loans and the federal government clamped down on tax deductions and depreciation on investor property related expenses and items.
Read more at:
https://www.domain.com.au/news/sydneys-property-market-just-keeping-head-above-water-as-almost-half-of-homes-fail-to-sell-at-auction-20180317-h0xilm/

More and more NSW off the plan developments are in the news, with buyers made to make additional payments to secure the property, when developers rescind the contract under a 'sunset clause'. Sunset clause allows for either the buyer or the developer to pull out of the contract, if the completion date is not met within a given time period.

There are reports that once rescinded, same properties get advertised back on the market at a higher price to increase the profit margin of the developer.

This can leave the buyers at a disadvantage at times when property prices go up, as their deposit money get tied up for a long period, and they will be required to come up with a higher deposit than previous time to secure a similar property.

Buying off the plan is a risky and speculative investment strategy and if you plan to buy property off the plan, make sure that you consult a property lawyer, as off the plan contracts can greatly favour the developer.

Australian Property Selectors do not buy off the plan properties, but use more effective and safe strategies like buying existing cheaper properties that are located close proximity to new developments.

Good read below from CM Lawyers on - what should be checked before buying off the plan property?

http://www.news.com.au/finance/real-estate/why-you-should-always-read-the-fine-print-developers-demand-1m-from-first-home-buyers/story-fndban6l-1227233970770

The Prime Minister and Treasurer today announced a raft of changes to laws that govern the foreign buyers purchasing Australian residential property.

In our opinion the objectives of the government is clear, government is trying to obtain visibility into the foreign purchases and provide local buyers an equal opportunity to purchase real estate. The fee proposed of $5,000 for property below $1 million and for any property over $1 million a fee of $10,000 for every million, is not expected to be a deterrent for cashed up foreign investors.

The biggest challenge for the regulators was the lack of visibility and data to understand the number of foreign purchases and the values. There was complaints raised that certain projects are exclusively marketed for overseas buyers and local buyers were never provided an opportunity to purchase.

The government is also pushing a for a civil penalty system with a range of fines for breaching the rules. The fines are proposed for foreign buyers, real estate agents, conveyancers as well as family members who assist any unlawful purchases.

Read the full news article at http://goo.gl/SIUMvy

Jay Karunathilake 

As we approach March, are you on track with your Real estate objectives for 2015?

Are you going crazy looking for property at the moment or did you set the bar too high and already lost interest?

It’s easy to start the New Year full of enthusiasm and optimism. But to maintain the momentum through the year, you need to set powerful, crystal-clear goals and lots of determination. The most successful investors are those who are goal-oriented and set powerful goals and objectives for themselves.

What I personally feel sad is when I meet clients, who are meticulous with the annual budgets, re-forecasting & sales planning cycles at their employment, but get too busy with life even to put together a simple time table for their personal targets. Do you need a professional helping and guiding you to achieve the property targets?

If you have not set any plans for this year, how should you get about doing it?

A. Be stretched - Let it be buying the first investment property, buying a house to live or expanding your property portfolio, always dream big and be prepared to be stretched to achieve your goals. If you feel that you are challenged in achieving them, never give up and find ways to overcome the challenges.

Remember, Obstacles are those frightful things you see when you take your eyes off your goal.

 
B. Write it – The first thing that need to be done is writing down the goals. State why you require it and how you plan to achieve it, with a deadline. Remember, a goal without a plan is just a wish.

C. Break it down – Break down the objectives to chunky size tasks that is manageable. Once you break down a goal to few manageable tasks, the daunting goals will look easy.

D. Daily on it –Work on the targets daily, keeping them fresh in your mind all the time.

E. Get Surrounded – What’s’ equally important is to surround yourself with like minded people who will motivate each other. Having others who have the same objectives, goals will allow you to share thoughts, experiences and learning's. Make sure the people you consult make you positive and people who have been there and done it before will be able to assist you.   

 F. Seek a professional – If you plan to run your first marathon, the first thing you will do it seek a trainer who specialise in training first timers for marathons. Same way, consulting an expert in your field is a fast and more assured method to get you on the plan to achieve your objectives. We help property investors daily to achieve their objectives amidst their busy life.

 G. Action it – Procrastinating on your plans will not help you to achieve your objectives. Do the due diligence, get professional advice, action it, and then look for the next challenge.

If you are a new property investor, and not using a buyer’s advocate like Australian Property Selectors, what are the steps involved in your property purchase process. What should be the steps in your plan?