As featured in Domain.
The trouble with Easter eggs is that you don’t know what’s inside them until you’ve cracked open the shell, and sometimes there’s nothing. But by then, it’s too late.
That’s how some property buyers are feeling as the Easter holidays usher in a temporary lull in the property market. Many home hunters are now using the time for a spot of quiet reflection on whether the next purchase will be a golden nest egg … or an empty promise.
“A lot of people have spent the last two years consumed by FOMO with prices rising so quickly and so high,” says buyer’s agent Dan Sofo. “As a result, they’ve sometimes bought anything just to get a foothold in the market.
“That might have been all right with prices rising so much – they’d always get their money back. But with the market cooling, it’s important that they make much wiser decisions with homes that are well-located and have good features and that will hold their value.
“They don’t want to end up with ones that have the wrong aspect and a bad outlook, that are in a very, very busy street with too much traffic noise or have building issues.”
Recruitment business owner Simon Cust was only too aware of the potential dangers when he bought recently. He felt he and his wife Justine might not be aware enough of all the pros and cons of the properties they were looking at and considering buying.
As a result, he asked Sofo, the founder and chief executive of Unicorn Buyers Agents, to help them make sure they didn’t succumb to the market frenzy.
“Dan is an expert and he gave us the information we needed about homes on the market, and what was positive and negative about them,” says Cust, 34, the NSW partner of Sharp & Carter.
“We’re quite time-poor as well, both working full-time with three kids. And it’s such a competitive market, if we liked something, we wanted to make sure we were in with a good chance of getting it.
“So many friends fell in love with a property and then were blown away at the auction when the price climbed much higher than they’d thought.”
Now Cust and Justine, 33, who works for beauty, fashion and luxury PR company Echo Communications, are about to move into their new house in South Coogee with Zoe, 5, Nina, 3, and one-year-old Leo. “It’s perfect!” Cust says.
Domain’s latest fortnightly property report shows that Sydney’s previously frenzied market is now definitely slowing, and the pendulum is swinging back in favour of buyers.
Listings are now up 13 per cent on the year, views per listing are down 31 per cent and clearance rates have dropped from 80 per cent this time in 2021 to closer to the mid-60 per cent now.
In addition, dwelling values fell in Sydney by 0.2 per cent in March; the second month of decline. Last weekend saw the biggest auction weekend of the year across all capital cities.
“When a market is slowing down, buyers feel they can afford to be more cautious and not compromise on the fundamentals of good buying decisions,” says Domain chief of research and economics Nicola Powell.
“It’s about reading the property cycle, particularly if first-home buyers are using the 5 per cent home guarantee scheme.
“There’s sometimes the risk of getting into a negative equity position which becomes apparent when you sell. But it depends on your long-term plans, and how long you intend to hold a property.
“You have to factor in the likelihood of price falls and interest rate hikes later this year and your mortgage costs going up.”
Most buyers, however, are relieved that the market delirium is settling down and are using this Easter period – when so few auctions traditionally take place – to rest and regroup.
“People were paying some silly prices that couldn’t be substantiated or justified at all,” says buyers’ agent Brendan Jack, director of Buyer’s Service for Real Estate. “But they were desperate and felt if they didn’t get that property, they wouldn’t get anything. We came across that a lot.
“They were digging a deep hole for themselves, particularly if interest rates rise, and then falling into it.
“They threw all caution to the wind, quite often not even getting building inspection reports or strata reports for apartments. But now, with prices softening, it’s even more important to make wise buying decisions.”
Sofo says buyers should never be swept away by beautifully styled homes that capture the imagination but can hide myriad problems.
He visited an older property in the eastern suburbs recently that was fabulously staged as a treasure of shabby chic, with second-hand retro furniture and a tapestry on one wall.
“It looked amazing,” he says. “But then I lifted a corner of the carpet to find rotten timbers underneath and looked under the tapestry to find paint bubbling on the walls – a sure sign of damp.
“I bet if I’d have visited that property one month on from its fresh coat of paint, I’d also see the telltale ‘tea’ stains on the ceiling, too.
“Good styling can be masking a lot of potential problems, particularly at this time with older damp or mouldy properties. I do my inspections with a damp meter that cost just $80.”
Similarly, Sofo counsels buyers to be wary of homes that have room scents, candles or diffusers at inspections, as well as open windows, to cover smells, and all the lights on and lots of mirrors to make them appear to receive much more light than they really do.
The presence of smaller furniture, like undersized double beds, to make rooms seem bigger should also be noted.
They should also be alert to the times of inspections – these are usually carefully planned to show a house or apartment off to its best advantage.
Sofo attended another open home recently and was surprised to find no fewer than three agents there, one standing beside the front door, who closed it quickly after every person who came in. As he left, he was assailed by the deafening sound of traffic roaring past.
As the market continues to soften, buyers should be even more attentive to possible problems with what they first see as their dream home. Many agents are noticing that’s indeed what’s happening.
In the inner west, Paul Pettenon, proprietor of Raine & Horne Concord/Strathfield, has seen a big change.
“The numbers of people coming through inspections, and making inquiries, has cooled a bit now, but we’re finding now that buyers have done their homework and know what they want to spend, and are willing to let a property go if they don’t think the price is right,” he says.
“In the past, some buyers would buy anything and there was a real sense of urgency, but now they’re becoming more selective and are willing to wait for the right property for them. They’re choosier and more careful, and it’s all a lot calmer.”
It’s similar in the eastern suburbs. Nixon Alex, principal of Century 21 Centennial, says where the market is stabilising, owner-occupier buyers and investors alike are becoming more prudent.
“They are being much more cautious and wise,” he says. “A lot of it is because prices have risen so high, so there’s an issue with affordability, as well as concerns about inflation, the economy and the effects of the war in Ukraine.”
On the lower north shore, Max Wagschall, partner at The Agency, dealing with Neutral Bay & Cremorne, also sees purchasers giving more thought to their decisions.
“They have to be mindful that the market is softening and have to make sure they’re not overpaying for a property,” he says.
“That’s even more important too if you’re buying first and selling later, as you have to be cautious about how much you buy for when you might receive less for your sale.
“But FOMO has now come out of the market so people aren’t fighting tooth and nail for properties.