What should you consider when buying property?

How do you decide which type of property to buy, your target suburb to buy into and whether to buy a new or established property?

It may differ slightly if you are considering to buy a home or an investment property, but the fundamentals will remain the same. When you’re looking to buy property, pay attention to these conditions;

Demand for property

First consider the big picture and how the Australian property market is travelling in general.

Is our economy in good shape? Is unemployment high? How is wages growth travelling? Are we headed for a recession or is there uncertainty on the horizon due to some of the above questions?

Or is the economy in good shape and consumer confidence high? Is there jobs growth and high business confidence? Demand for property tends to increase when the future looks rosy.

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Location

To ensure that you are buying in the right location, analyse local market factors at suburb level for the city you live in.

Things like, demographics, owner occupier percentages, free standing house vs unit block ratios, and scarcity of land available for future development can determine future value growth of a suburb. School catchments, access to public transport and infrastructure should also be very high on your checklist.

Almost always, it will be suburbs within our capital cities that will have highest demand for housing as most jobs are located in or near city CBD’s. Suburbs close to these major employment hubs, with good infrastructure, transport and schooling are likely to see the greatest capital growth.

Once you buy a property, one thing that can’t be changed is the location, the distance to train or bus stop, any school catchment, which is why you should consider these items paramount before any inspection takes place.

Street appeal

Once you have narrowed down the suburbs (best to pick 3 or 4 to ensure choice) you would like to buy into, do a drive through some of the suburban streets. You should be looking to get a feel for things like;

•    Noise – Are you too close to a busy road, train line noise corridor. Neighbours?
•    Neighbourhood – How are houses kept? Lawns mowed? Untidy gardens?
•    Apartment towers – Are they staring into the back yard or blocking sunlight?
•    Streetscape – Are there many new builds, renovated homes or derelict properties?

Check the streets to see if it has newly constructed homes, and renovated properties. It would also help to see a few works in progress, sign that home owners are undertaking further renovations and making improvements to their home.

Traditionally, owner occupiers are generally not afraid to over capitalise once they are settled and happy in a certain location and it can be evident at street level.

Property price pressure will continue where old tired houses in sought after suburbs are being improved or demolished and replaced with newly renovated or constructed homes that are now worth well over million dollars.

This is a sign of gentrification.

Alternatively, you never want to be the pioneer, so if the street or location you are considering does not have these attributes, you do not want to be the first to test the water.

House and land

Charm and character will first be established from street level and is always an important factor as it is the first impression. If it does not tick this box, are there things you can change to make it look more appealing?

The slope of the land here is almost just as important and cannot easy to judge from a picture on the internet. A flat or slight slope on most homes would be ideal, but I would be avoiding large sloping blocks, especially if they slope from front to back.

This type of slope can lead to stormwater and run off being directed towards the garage or front door.

A quick stroll around the outside and underneath the property may also establish any major cracking or structural issues that may be costly in the long run. Termite activity is also something that could be spotted at this time (it’s recommended you hire a reputable building and pest inspector once your offer has been accepted).

Things like weather damage, gutter and roof condition and boundary fences are not deal breakers buy should be noted and allowed for when considering the price.

If buying for investment purposes, you should generally steer clear of pools as they add unnecessary risks and costs and eat away profits in most cases.

Open home

This is the time to sort fact from fiction! Do the agent’s inspection photos match the property’s appearance?

Internal condition and room sizes are also something that you need to consider when making an assessment on price. Question marks should be raised if cracking, bowed ceilings or hollowed out walls and floor boards are evident.

A super keen agent may list the property as a 3-bedroom, 2-bathroom property. Upon inspection though, you may find that one of the bedrooms is too small for a bedroom and a downstairs bathroom may be dingy and unusable.

None of these may be deal breakers, but will need to be factored in when making an offer. In fact, many unpleasant or unappealing things internally can be easily changed or upgraded if you manage to secure the purchase.

Summary

It is easy to like the look and feel of a property and become emotionally attached even before you have made an offer. Often buyers look for a reason they should buy the property rather than for a reason to walk away from the property.

In a competitive property market, emotions can drive FOMO among buyers, this can lead to buyers not only paying above market value to get into their desired suburbs, they at time make irrational choices such as waiving finance and/ or building and pest inspection clauses in-order to make their offer more attractive for the seller.

Unless buying at an auction, we recommend buyers not to forego any of their rights.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.