IT’S the modern day version of a “get rich quick” scheme — find the next property hotspot, sink a few hundred thousand into the worst house on the best street and watch the dollars roll in.
Well, those days are over and industry insiders say don’t look for the next “it” suburb, but rather stick to what you know.
Real Estate Buyers Agents Association of Australia (REBAA) president Rich Harvey said conflicting property predictions suggesting prices in various locations will rise, or fall, could confuse buyers into making the wrong investment decisions.
“The problem with any forecast is trying to sum up the direction of a diverse range of property markets into a single figure or hot spot,” Mr Harvey said.
He pointed out that there were more than 15,000 suburbs in Australia with about 700 in Sydney alone, more than 540 in Melbourne and around 450 in Brisbane.
“So to say that Sydney will rise by four per cent can give a misleading perception to a novice investor thinking that buying an overpriced off-the-plan apartment in Zetland will actually see price growth in their property,” he said.
“That poor investor may well see a five per cent decline in the value of their property due to the rapid increase in supply in that local market.”
Instead, Mr Harvey recommends buyers and investors look at the individual drivers of supply and demand within a smaller zone — at an individual suburb level.
“While the overall predictions give you some comfort that property is a good asset class, it is far better to think long-term and become an expert in the local housing market and make informed decisions accordingly,” he said.
“In markets where values are escalating quickly, it’s a potential minefield for buyers who feel under pressure to buy.”
Mr Harvey’s tip to potential buyers is to ensure they understand what is driving supply and demand, and to work out if they are in the right price pocket for a particular location.
Avoid: High density apartment blocks. Much like the Sydney market, avoid areas like Docklands and possibly Fisherman’s Bend and other areas that are being oversupplied with new, high-rise apartment blocks.
Recommend: Low density developments that are well built with manageable ongoing running costs. Land is in short supply, so if you can afford to buy property in a good, well-serviced location with some land, then do that.