Agents and Auctioneers see the market differently.
Agents have a far more grassroots understanding of the market. The Agent sees the individuals that come to a particular property and, from the number and type of buyers interested, makes generalisations about how the market is doing. Strong demand for one property or another will often be seen as strong demand for all such property. They are usually correct, but their view of the world is that of someone watching the waves but not noticing the tide.
On the other hand, Auctioneers move around our city, seeing the interest in one property in one location and comparing it to a different property in a different area. They typically conduct 20 auctions or more over a week, so see a lot more activity than even the busiest agent. They get to see the market’s overall health, which areas are doing well, and which type of property is in demand. Good auctioneers can look past the properties and see the buyers because it’s the buyer groups that drive a market for a property type or make it fall. They notice which life stages are the most engaged in buying, who have the deepest pockets, and who are the more cautious.
Our auctioneer has been sharing with me what he sees out there, and what implications that has for our property market.
The thing that is standing out to him is if he is auctioning a property that ideally suits a downsizer, he knows it will be a strong auction. I emphasise the word “ideally” because downsizers are picky. They want a property to be single-level; they want the floor plan to work and to be on the larger side. They are buying villas and units that are up to date because they don’t want to do work.
And the property must be in a well-managed strata plan. They dislike the idea of strata but know that it’s a necessary evil, as they say. If the strata plan has issues, they will dismiss the property.
At an auction, two or three of these buyers can see the price drive past the reserve by 10 or 20 per cent, which can be a massive windfall to the seller. They have usually sold a large home in the same area and are cashed up. They are buying for the long term, so they are less about ‘Am I paying too much?’ and more about ‘This is perfect, and it took too long to find this one, so I’m not letting it go’. If you are a young couple or young family bidding against these buyers, you will also need deep pockets.
Downsizers are the one market segment growing faster than any other group. We are living healthier for longer. If you are 65 years old in Australia, you can expect to continue living for another 20 years or more. And 90% of those years will be spent living independently outside a nursing home.
Yet the popular focus regarding housing is on younger buyers, so more entry-level stock is being built. Our housing problems are not just a lack of entry-level stock. There is an increased need for quality properties that suit downsizers and that is preventing downsizers from moving sooner.
If you drive around Ryde, you’ll see how many duplexes are being built. These are two-storey, four- or five-bedroom properties. Ryde council stopped developers from building villas, which are single-level, two- and three-bedroom homes. Villas, while strata-titled, are low-rise and usually avoid most of the issues common in large blocks of units.
I think we can expect increased demand for properties suitable for downsizers. However, it will be a while before we see changes in development laws to match up to that demand.
Author: Stephen Jackson
