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Investors find opportunity amidst market downturn
Investors can still achieve strong results by understanding the state of the market and doing their own due diligence, rather than relying solely on external assistance.
While the majority of the national real estate market has entered a downturn, it hasn’t been all doom and gloom for investors, according to property commentator Tom Panos.
On the latest episode of Property Buzz, Real Estate Gym founder Tom Panos said investors needed to do their due diligence and have accurate information about the property market rather than simply relying on what agents told them.
With auction volumes more than 30 per cent lower than last spring, Panos said buyers needed to understand the market's relative weakness compared with the historical surge.
Additionally, Panos said the increased likelihood of another rate rise before the end of the year had placed further strain on the national property market.
“Rates are tipped at only a 20 per cent chance of going up in September, but there’s a high probability they are going to go up again because of this inflation,” he said.
“The last thing we want as an industry is to be sending the message that the clearance rates are a lot better than they are.”
Opportunities in the market
Despite falling prices nationally, Panos said buyers still had opportunities in the current market.
“If you’re buying and selling in the same market, then really nothing has changed.”
Panos said that individual property markets had been impacted differently based on the combination of location and price point.
“The most expensive properties in Australia have copped it the most, with drops of around 15–20 per cent,” he said.
While the more expensive end of the property market had seen a drop in values, Panos said competition intensified at the affordable price points.
He said affordable properties had appeared to attract interest from first-home buyers, as well as investors who were being more conservative with their real estate plans.
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Geographically, Panos said that Sydney and Melbourne led the decline in property values, while the mid-sized capitals of Brisbane, Perth and Adelaide had held firm until recently.
Taxation changes
Panos said that the government intervention in the property market had ruffled feathers across the country, with agents and investors heavily impacted.
“What we’ve got here is most people, nearly all people, are unhappy,” he said.
“The people that own real estate aren’t happy because you’ve told them the equivalent of ‘your kid’s ugly’ because their house has dropped by 15 per cent.”
He said that the government had missed the opportunity to show real leadership and had actually compounded the national supply problem.
“At no stage did they actually say ‘we’ve got a housing supply issue here, let’s address it. In fact, what’s happening post-budget, less houses filled, and developers are going belly up.”
While the property taxation changes had dampened overall market activity, Panos said the current market was perfect for investors who didn’t require negative gearing benefits.
“If you’re my kind of investor, which is that you weren’t the type that had 50 properties on the go relying on negative gearing, now you’re buying good value at 10–15 per cent lower, rents are going up, it’s happy days.”
Listen to the full episode here.
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