Ep 48. What to Expect in 2024!
In this episode, Michelle what is expected for the real estate market in 2024.
Here’s what you’ll learn from today’s episode:
Timeframes for purchasing.
What may cause delays.
What types of properties we will see more of for sale.
What is the fastest growing demographic in the market is.
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
Follow Us:
Enjoy the show?
Don’t miss an episode, follow via iTunes. If you like it, please leave a review!
Or, find us on the podcast app of your choice, such as Spotify.
This podcast has been produced and edited by Snappystreet Creative
Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
Listen to the Episode Now
VIEW TRANSCRIPT
Hello and welcome to the first episode of 2024 of the Buy Your Side Property podcast. My name is Michelle May and I am the Principal of Michelle May Buyers Agents here in Sydney. Now have you had a good break are you still on your break, and is this the first property podcast you're listening to this year? Well, welcome! I am here to run you through what I think you can expect for the coming year.
Ah 2023 was certainly a tumultuous year in the property market. I think from my perspective as a buyer's agent, it was a difficult year with not a lot of stock, with subpar stock ie stock that I really didn't recommend my clients bought, and therefore the timeframes to purchase even for us as professionals were drawn out because we don't compromise on our values and quality of what we buy, so it just took a little bit longer, and I think that is set to continue for 2024. It'll be a slow conversion for most people because it's important to stick to your values and what the property needs to do for your life and your lifestyle, so as long as you're sticking with what it is that you need and want, I think you can probably expect to take potentially up to a year to purchase. I think potentially also still in those areas within the metropolitan areas where there is high demand, and not a lot of supply. It will just take a little bit longer because you may potentially get outbid at auction or someone's prepared to pay more when it comes to a sale price, so don't get disheartened. I think that is something we need to take into consideration for 2024.
I think financing and loan approvals will be another area of delay as well. With still stricter lending and also diminishing borrowing power for you guys, your budget will probably be less than what you're hoping for because these interest rates have been really putting a firm dent into what you were able to borrow before.
With these extended timeframes, let's look at what we can expect to be for sale. I think there will be more and more new apartments coming on the market, and with that, if you've ever heard any of my other podcasts before, proceed with caution when it comes to a new apartment in my business. My team and I have a role that we really don't buy anything that has less than 5 years strata history because we want to know the quality of what we're buying and whilst it might for you as a buyer if you are particularly new to this. Look easier because there's more choice and it is actually in my experience more difficult to find a good newer apartment, so don't don't get blinded by the lights and the shiny finishes, you know because you really want to make sure you're not buying a dud. Whilst it's been reported that around 39% of all residential apartment buildings constructed between 2014 and 2020 harbour serious defects in the common property. But also you know the lots themselves I think actually that number is higher just from experience from the things that we have been looking at, gosh we see some major disasters because even if you just Google apartment defects just for shits and Googles, you'll be dumbfounded by the number of articles and it's not just Sydney. It's all over New South Wales, it's all over Australia due to building cutting corners, developers cutting corners, private certification, etc, etc.
So if you are stuck with the new apartments also but potentially because you know your budget has been cut back and you're stuck with an apartment just please do your due diligence and find one of my older episodes of what to look out for in strata reports because, it's not all that what is it all that glitters ain't gold and that's certainly the fact with these new apartments. So, make sure that you do your due diligence. I Think with that, the lack of stock or the lack of variety in the stock, I think FOMO is definitely going to come back rearing its ugly head. Also potentially because you guys might be wanting to leave the rental market, you might be coming up with the end of a lease agreement and you really are stuck with a very tight timeframe and so the former will be part and parcel of that that property search, do not let it get to you, please do not make a short-term decision to bring you some relief that will give you a really long-term headache. I always say you know the realisation of unpacking your boxes in the wrong property is that feeling of dread. You know your feeling of joy will turn to dread very quickly, and it's a very expensive mistake to make, so don't let your emotions get the better of you. I know that you know there's still potential for interest rates to continue to go up and yes, you will you know potentially be able to borrow less if you don't buy within a specified time frame ie the time that your pre-approval runs out, but now is not the time to make rash decisions, so make sure that you don't let that take over.
With that, one of the things that I've been thinking about a lot recently is that Ai is making its mark on real estate as well. So, more and more videos, virtual floor plans and all this kind of stuff now particularly if you are thinking about rent vesting. For example, when you're buying a property not where you are locally and Ai is not a or videos or any kind of non-personal inspections are not a risk placement for you checking the property happy yourself. And I even would urge you with those buyers agents that are out there if you're spending money on a bar's agent that do interstate purchases I wouldn't touch them with a barge pole because they do not know the local landscape. They do not know the rat runs for example, I find that you really just need a local buyers agent with local market knowledge and experience who has the relationship with the local agent. I really think that if you're spending any kind of money whatsoever then you should also be willing to spend the money to go and visit the property yourself, so it's not ever a replacement for a physical inspection and not just one, two minimum because the first time you'll have your roast into glasses on the second time those will most likely come off and you can inspect the property more critically. And just because potentially you're rent vesting it, you're you're renting it up to tenants, you can't have the attitude of oh that'll do because tenants are looking for a home. So if it's not up to your standards because say it's a hot box and it doesn't have aircon then why should it be okay for tenants to live in it. So think about those things.
The other thing that I can see more and more happening in 2024 is that the singles and the great all spiders are on the rise. . Since 2022 the single female property buyers group has been the fastest growing home biodemographic despite the challenges of having to do it by yourself. Go girls, good for you! What I'm also seeing is that part of that single female property buyers is of a certain demographic that have been married well over fifteen twenty years, and you know they are doing it for themselves as well because they're getting out of the long-term marriages. So definitely lots more single buyers out there. Male, female, and anyone in between and who identifies differently, so, that's exciting. But also I get that it's a scary prospect to do it by yourself. So we actually have seen that in my business over the years that more and more single buyers are reaching out to people like us because they want that sounding board and not necessarily want dad's opinion or you know the smug older sibling who bought ten years ago giving them unwanted advice and not necessarily good advice either. So I think that is definitely going to continue for the years ahead.
What we're also seeing is that these grey divorces are now also a growing segment keen to downsize. So what? What we're seeing as formal former marital homes will be up for sale and they're looking for a lower maintenance home. So those lower maintenance homes have to still be of a certain size. So those 3 three bedroom apartments or those low maintenance townhouses, duplexes, that is where we're seeing most demand in because they're in short supply anyway, but more and more people wanting them also because again of affordability young families who would naturally have regressed from a 2 bedroom apartment to a 2 bedroom house who had from started a torrens title they're no longer, so they're now stuck longer in strata. They're now longer stuck in the apartment cycle because they can't so the gap between houses and apartments is just getting bigger and bigger, because of the lack of stock. So anyone who can land a 3 bedroom apartment is doing well because you're also again the younger generations are competing with the older generations who are snapping them up and they have the deeper pockets because they have already offloaded their long-term home, so be aware of that that the competition may well be coming from that older generation. Now that older generation is also responsible for the generational inheritance, so as the boomers are reaching their golden years, many are considering early inheritance as a way to pass on their considerable resources to their children, and really as property prices have been going up and up and up this is for many ways the only way to to get into the property market, so if you are a younger person who is getting either an early inheritance alone or a gift from your from your parents or family members, can I give you one piece of advice and that is to really think about this very carefully look at all the different angles particularly where it can possibly go wrong. And have that discussion with your parentals, siblings, whatever, upfront and not when the the poop hits the fan because for example, let me give you an example, a couple of examples here; you get a loan from your parents to help you pay for your deposit but interest rates have been going up steadily, now you're struggling to pay the mortgage because it's much more than what you started off with and so the parents you can't you actually can't pay back the loan. What happens in that scenario because potentially your parents have borrowed money against their asset, their house, against the equity in their home to give you that money, what happens then you've got to be honest with everybody in that equation because your parents might struggle with that as well. , you know we're assing that these baby boomers have got tons of pots of money. But of course that's not always the case so whilst they may want to help you. We've got to look at the downsides of this. The other things are obviously.
To consider is if if they give you money or they lend you money. Do they get a say in the property transaction. Do they get a say on where you get to live or what you buy , will they charge your interest. , how long is the term of the loan if you and your partner split up. How does that work. You know do they have to pay back something. Do you give them money. Do you have to sell the property. Do they owe your parents money. , really things to think about. so sit down write the questions everybody write their own questions and then. Get it formalized because really, that's the only way to avoid destroying potential relationships if it does go wrong. , you know you' best you best ahead to be ahead of the curve and hopefully and it'll never happen and you paid off or they gift it to you even better. But you know, . Just want to avoid any issues potentially for you down the track because I have actually seen it happen where it goes you know, abysmally wrong. So , what I'm also thinking is going to happen that stock is still going to stay low ah particularly the aid grade property and that. As you know is the only type of property. You should be buying the a quality so top performer of the class. Forget about the c's , think about the bees only if you want to renovate and you are absolutely 100 % sure you can add value.
And when it comes to those properties for sale I am thinking that also more potentially the investors will be selling up because obviously for those investors. The interest rates have also gone up. , and so they may not be able to cover their. Borrowings , now be careful with those investor properties. some will have long leases still in Place. There may be a reason why they're selling up because potentially they're not getting the rent they want and it might not be a good quality building So Make sure you do do diligence with that. Ah, before you commit to anything , when it comes to the interest rates. Obviously we've discussed this before they've been going up and up and up. the economies are now saying that you know potentially they'll they'll. Ball at some point in 2024 depends on who you listen to when that will be but as we all know economists change. Ah you know their predictions at the drop of a hat. So I think it would be good to make sure that you have a buffer. For any potential rate rises and make sure you're working with a really good broker. , we know that the government is working on fixing you know trying to fix housing affordability and and supply. But obviously it's going to take a time before they come. You know become available and again.
Questioning the , the quality so make sure that you check that as much as you can so all in all I think , it's going to be quite a ah tough year ahead. . So if I were you? , you know, keep your keep your mind open to exploring different areas and you know gentrification gentrification continues its way across Sydney and and the greater you know, New South Wales area obviously also with for example. The upgrading of the of the rail links like the metro links and and and other transport options. , so for example here in in Sydney you know we've seen Asheville becoming a a super popular suburb because you know after Marrickville that's the new hotspot to be really. , you know prices are going up and up and up and Ashfield all of a sudden seems to , provide great value for money. , and it's gentrified and it's , changed a lot over say the last fifteen years or so. , so think ah think along those lines you know, think along the the railway links that other transport links and the property the the suburb that you really want to be in may potentially be out of reach for you. So take the next one down the line and see.
Whether that works for you and potentially you can , reap the benefits of being part of that gentrification and regeneration. you know and I always think about you know the property needs to be suitable for you for you for at least you know 7 to 10 years for it to make financial sense because the cost of of purchasing and then the cost of selling. They're obviously very high so any potential capital growth that you would be having during that period of time needs to be greater than those costs of course because you don't want to be left with with a debt at the end of it. So check out. good transport links. and look at you know the sold section of domain in real estate to do your research to see what you know the prices are there for the type of property that you are looking for so plenty plenty of things to think about for the year ahead I wish you all the best please keep listening to the episodes because I hope that and I think that you will pick up a few things that will be helpful to you.
Thanks for listening for today and if you have any questions get in touch hello at buyyourside.com.au. I'd love to hear your questions and until next time.