Falling prices don’t have to mean losing money. Here are some opportunities to consider:
1. Take advantage of lower prices: A downturn in prices is not necessarily bad news for buyers, according to Anna Porter, founder of property advisers Suburbanite. Those who have been waiting in the wings, especially first-home buyers, should be prepared to pounce if properties prove better value than in the past few years. “This is a really great buying opportunity,” she said. “The smashed avocado generation should be getting ready.”
It’s not just owner occupiers who should be watching prices closely, according to Wakelin Property Advisors director Jarrod McCabe. “Slowing markets can provide a great opportunity for investors, because markets can start to level off,” he said. “It creates less competition for buyers in the marketplace.” Just ensure ‘bargains’ are not actually poor-quality assets.
2. Look beyond Sydney and Melbourne: The surge in Sydney and Melbourne property values in the past few years has equipped many home owners with the means to invest,” Ms Porter said. “The real opportunity will be for mums and dads with a lot of equity,” she said. “They can take that equity to invest in interstate markets that are growing, so they come back to the Sydney market in three or four years time and use that extra $200,000 or $300,000 in equity to buy their dream home.”
3. Add value with smart updates: Updating your own home or developing an investment property can increase its value, lessening the effect of broader market falls, according to Ms Porter.
“If you’re looking at under $10,000 for a spruce up, paint is going to be the best investment because it makes the house feel really renewed and refreshed,” she said. Bigger budget structural renovations create the potential for bigger profits, but changes need to be in the right areas. “Where some people might go wrong is they add a lot of bedrooms, but they’ve only got one living area or one bathroom.”
The type of property can dictate the best changes to make, according to Mr McCabe.
“You don’t ever need to go overboard with investment properties,” he said. “Cosmetic works are always a good way to add value without having to spend too much. Carrying out major structural works is not always a good idea.”
Be careful selling with only a development application (DA) for future renovations; price weakness allows buyers to be more picky, according to Ms Porter.
“Where DAs add a lot of value is where you start doing major changes, such as converting a single dwelling to a dual occupancy.”