Real estate news: Homebuyers divided, as investor warned over ‘lockdown refugees’

House hunters and investors have been warned that many of the longer term Covid-based real estate predictions are falling over now the pandemic is ending.

Soaring property prices have not put buyers off in 2022, but many are rethinking where they will buy.

The latest Buyer Barometer survey by Real Estate Buyers Agents Association (REBAA) and consumer Facebook group Property Talk Australia (PTA) revealed homebuyers and investors were optimistic.

Cate Bakos, REBAA president and buyer’s advocate, said the annual study highlighted the “sheer resilience” of the Australian property market.

“When it comes to a fear of missing out, buyers are evenly split with 48 per cent afraid they’ll miss the boat in 2022 but an optimistic 52 per cent believing they can still get a foot on the property ladder,” Ms Bakos said.

Soaring property prices have not put buyers off in 2022, but many are rethinking where they will buy. Picture: David Swift

The results indicated investors would be more dominant, with 49 per cent looking to buy a subsequent investment, up from 43 per cent the previous year.

PTA group administrator Chris Dimitropoulos said the takeaway was the love affair with property remained strong.

“People are still trying to get into the market,” Mr Dimitropoulos said.

“Just reading the data … Australians have jobs and lots of disposable income. They feel safe and they’re willing to pay a bit more because they feel conditions aren’t going to change.”

HOMEBUYERS ARE LOOKING FURTHER AFIELD

While the REBAA research indicated buyers were optimistic, 64 per cent felt priced out of their local market.

“It’s an astonishing stat when we recognise these property enthusiasts are very in touch with the market and are probably more confident than the general public,” Ms Bakos said.

“So if they feel priced out, then how does the ‘average Joe’ feel?”

She said if the pandemic had taught buyers anything, it was a lesson in adjusting expectations.

“Be willing to compromise if you’re feeling priced out of your local market,” Ms Bakos said. “You might choose to move slightly further away to the next suburb or consider a slightly smaller or older house.”

Buyers need to look further afiled. Picture: David Swift

Covid also widened people’s buying radius like never before.

“I’ve several clients who were priced out of their suburbs of choice in Melbourne and opted for Geelong. That’s one example of many high-performing secondary markets becoming popular options where buyers can get the product they want in a great vibrant city – just not a capital city,” she said.

STEERING AWAY FROM BIG CITIES

The most popular location was Queensland, with 38 per cent house hunting in the Sunshine State.

“This isn’t surprising given Brisbane was the second strongest performing market in 2021,” Ms Bakos said.

“Of those looking to purchase in Queensland, 24 per cent expect growth, ­14 per cent are attracted by the lifestyle and 13 per cent are investing for affordability.”

“We polled both owner occupiers and investors, so this data no doubt captures both sea and tree changers,” she said.

Mr Dimitropoulos said investors were realising the numbers did not stack up in some locations.

“Many investors are phased out of Sydney and Melbourne,” he said.

“It just doesn’t work to buy a property for $1m and rent it for $700 or $800 a week. So they’re buying something interstate or regionally around $500,000 and renting it for $400 to $450 a week, making it much easier to hold.”

WEEKEND TELEGRAPH SPECIAL, NOVEMBER 6, 202. Saturday auction at 34 Dwyer Ave, Little Bay with the house selling above reserve. The auction drew a decent crowd with about 3 main bidders. Picture: David Swift

HOME INVESTOR CAVEAT: BEWARE LOCKDOWN REFUGEES

The Covid-induced rush to the regions was also reflected in the report, but Ms Bakos said it should be a case of buyer beware.

“Covid opened up people’s willingness to consider other options after they saw others making a tree or sea change work,” she said.

“However, I’d still be cautious as an investor to focus on those havens for lockdown refugees. Working conditions will change. (And) I think employers and employees will want to have some time back in the office, so think twice before looking at areas outside a comfortable commute.”

HOW TO BEAT THE HOUSE HUNTING BLUES

Before throwing in the house hunting towel, buyer’s advocate Cate Bakos said purchasers should consider a property pivot.

Don’t feel despondent

Giving up or going on pause is the worst thing a buyer can do when the market is moving aggressively.

Consider your upper limit, not your preferred budget

While nobody wants to spend more than they need to, it’s heartbreaking seeing buyers miss out, only to find they increase their budget begrudgingly a few months later.

Have a firm idea of likely price

Too many people miss quality properties that sell for a fair price because they were fooled by a price guide.

Be familiar with comparable sales

Search the sold tab on realestate.com.au. It’s user-friendly for beginners and often the land size and orientation are featured in the past advertisement too.

Have a plan at auction

Wishful thinking for bargain buying in a hot market is a recipe for disappointment. Prepare for competition. Ask the agent questions such as, “How many contracts have been requested?” and “How many building inspections have been conducted?” You’d be surprised how much insight you can glean.

Be flexible

Consider neighbouring suburbs, smaller land allotments and less renovated properties if you’re finding your budget is not sitting comfortably in the location and category of dwelling you’re hoping to buy in.