Local real estate agent Scott McElroy on October 4 gave CBD locals a “warts and all” assessment of the current state of the market.
The Hocking Stuart agency principal outlined a generally-flat residential market where buyers were waiting and sellers were equally hesitant.
“Buyers have decided to sit on their hands as they believe the market will go down,” Mr McElroy told the monthly Residents 3000 forum at the Kelvin Club. “Sellers don’t sell as they have nothing to buy and, vice versa, buyers go into hibernation as there is nothing out there to buy.”
Mr McElroy predicted changes denying investors stamp duty savings when buying off the plan would mean fewer residential towers in the future.
“You have to ask yourself why would you buy ‘off the plan’ as an investor? You might as well wait until it is completed – hence making it very difficult to secure pre-construction sales which banks require for development financing of projects.”
“Time will tell how this will impact on the market in the next one to three years as many developments under construction now have already obtained development finance,” Mr McElroy said.
He said there were a number of typical buyers in the current market:
Savvy bargain hunter investors. CBD rents are still very strong compared with similar sized apartments in the suburbs;
Downsizers. Still an active segment of the market, although more cautious than they have been;
First and second home buyers seeking a city lifestyle. The convenience of living in the city is obvious and, given transport costs and commuting times, it is little wonder there are people looking to live and work in the city? and
City pad buyers. There has been a very strong move in recent years of people moving to both sea and tree changes and many opting for a small city base for both work and leisure purposes.
Mr McElroy said developers building for owner-occupiers were doing well in the current climate.
“There has already been a large shift by savvy developers to develop owner-occupier stock,” he said. “The key to these properties is size. The most active of these owner-occupiers are downsizers seeking low maintenance lifestyles.”
“The cycle is there, but there has already been a softening in demand for larger homes in the suburbs where many of the downsizers are coming from. Selling the big family home on 1000sqm in the inner-east for example needs buyers coming through with the money to buy,” Mr McElroy said.