Highlights from this week:
- Why house shopping is so unique
- The Brisbane magic
- 2 factors other than location that impact prices
- Why are investors leaving Auckland?
- Sellers come to terms with a changing market
Why house shopping is so unique – Miriam Sandkuhler
Kevin: You know, it’s a truism that if you invite five real estate agents into your home, ask them to tell you what they think your property will sell for, you will get five different prices. And quite often, they can be varying. So, why is pricing a property so difficult? Because it is. You could even get two different valuations from sworn valuers that will be different as well. But it’s particularly the case, in a hot market, at auction, and even in softer markets, they’re all the same.
Kevin: Miriam Sandkuhler from PropertyMavens.com.au joins me to talk about this. Miriam is also a bestselling author. Her book, look for it, is called Property Prosperity. Good day Miriam, how are you doing?
Miriam: I’m great, thank you Kevin.
Kevin: This is a topic that absolutely fascinates me. I mean, it’s reasonable to assume that it’s going to be difficult to price a property because it’s all about emotions, but also, every property is different. You can’t say that two properties side-by-side are going to be worth exactly the same amount of money. So how do you go about working out that price?
Miriam: Yeah, that’s exactly right. So there are some basic fundamentals to take into account. So there’s the land value of the property, and different suburbs will command a different land value on a cost per square metre basis. And then there’s the cost of the building that’s on top of that property, on top of that piece of land. And then the cost of the building may or may not be depreciated depending on how old it is. So, that’s a basic consideration.
Miriam: Then, other factors are taken into account, like the particular street that it’s in, the particular part of the suburb that it’s in. And the reason that some of those things are factored in is because from an emotional perspective, there are buyers who will pay more of a premium to be in a certain part of the suburb or in a certain street in a suburb. It’s also, I was going to say, it’s also quite not uncommon for there to be a 5% leeway between say, one valuer’s valuation which is deemed quite acceptable because of course, we’re not dealing with an exact, we’re dealing with, in a hot market, a moving market as well.
Kevin: Yeah, and it’s even dependent on which side of the street you’re on as well, because you know, if you’re on the high side of the street, you’re going to get better views, you’ll get more breezes. On the lower side, it’s likely to be a little bit hotter. So, you’ve got to take all of those things into consideration.
Miriam: Absolutely. And the aspect of the property, the shape of the block, is it flat, is it on a slope? So there are a lot of attributes to do with the property itself, that will influence its ability around being what we’d call an A-grade property, but also the price on it.
Miriam: And of course, in a rising market, when you’re the average buyer, they don’t necessarily know or understand that. They take quote ranges literally into account. But often they underestimate the cost of competition and they don’t price for an emotional buy. Therefore they miss out, and they end up chasing a market because they often lack the courage or don’t have the guidance to make smart, informed decisions.
Kevin: When an agent comes to you, as they will do with what’s called a CMA, competitive market analysis, they’ll normally give you a snapshot of some of the recent sales in the area, and they can go back as far as six months in some cases. They’ll look at six months, three months, and even the last 30 days, if the market’s really selling and moving along quite well. You’ve got to be very careful, which ones of those you take into account, Miriam, in my experience because the market does change, both up and down quite rapidly.
Miriam: Absolutely. And look, often I have a bit of a chuckle when an agent gives me a comparative market analysis, because sometimes they’re not even comparing it based on the same property type. We might be looking to buy a house, and they’re giving me comparables in terms of say, a villa, unit, or a townhouse. So, I will always do my own market comparables, regardless of what the agent’s putting out there.
Miriam: And part of it, is with the changes to underquoting, there’s no legislative requirement that requires them to have a comparable property based on land size, or land value. So often, they’re a little bit meaningless.
Kevin: I always find too that real estate agents look more towards the future. They’ll probably give you an indication as to what they think the market may pay for your property, whereas the value is very much in the moment. They’re grounded, they also look at the history to take all that into account.
Kevin: But, we’ve also got to bear in mind that real estate agents are not registered valuers. A valuer is actually trained for many, many years to try, and work all this out. So it is a science, Miriam.
Miriam: Absolutely it’s a science. And a sworn valuer, can only make an assessment based on past sales, which then allow them to create a conclusion in the now. A real estate agent can only ever do an appraisal, but they do take into account the sentiment of the market, and the emotion in the market. And of course, the type of property will determine the level of interest and attraction and emotion, and potential price where that property might go.
Miriam: But of course, you never know until the day. And then of course, conversely in a softer market, sometimes it’s the polar opposite. But there’s other complexity that comes in, particularly, certainly in a hot market, you’ve got social proof of many other people potentially competing for a property and driving prices up. Whereas in a softer market, you might not have people bidding, and then buyers are very doubtful about what to do because there’s no social proof of there being demand for a particular property, even though it might be a fantastic property and a fantastic buy.
Kevin: I always say that anyone who needs to know what their property might be worth, they should spend the money, and get a registered valuation done. Then by all means, call some real estate agents, and ask them. Don’t necessarily tell them you’ve got the valuation, but when they give you a CMA, challenge them. Ask them why they think that your property is worth what they’re saying it is. It doesn’t hurt Miriam?
Miriam: No it doesn’t. And I agree that if you do get an independent formed valuation, use it to set your minimum reserve price. And there’s no reason why you can’t challenge any agent that comes in and is giving you figures different to that. Again, a sworn valuer might come up with something very different to an agent. But a sworn valuation again, doesn’t take in buyer sentiment, and there can in a hot market be a substantial difference to that. And also, in a softer market, there can be a bit of a difference to that. And in a softer market, this is where people can buy well in under-market value. I’ve done that before in soft markets, having bought off mark, and bought $50 grand under the bank valuation. Unfortunately, they don’t add that, take that into account, they just lay the buy and borrow at the contract price. But yeah, absolutely, at a minimum, it’s a smart idea for vendors to do that.
Kevin: Yeah, another tip too is if you’re looking at putting a price on your property before you list it, certainly go and look at open homes, but don’t necessarily take the listed price as a guide for what the market is doing. You can only ever assess what a property sells for.
Kevin: A good example of that Miriam, is that show, Selling Houses Australia, with Andrew Winter, where they’ll actually take the people they’re renovating their home for, through similar sales to actually help them work out really what their property’s worth.
Miriam: Yeah, and I think the Love It, or List It as well, is a little bit similar too, where this is what it’s currently at, and now we’re going to add value to it, and let’s see what effect that has on the market. And again, it’s getting social proof or evidence from other people, and again, estate agents as to where it now sits, because of the value that you’ve added. Or, the difference in this property versus your property, and the pros and cons of a property too.
Miriam: Because when I assess a property, I’ll always look at the cons of it, and are they tolerable? Or are they so compromised that we can’t buy on that basis? So, again, if people don’t understand that, then it’s also very difficult for them to price or gauge where a property might sit. And of course, if they keep missing out on options because they don’t know how to do that, well then, that’s where engaging a buyer’s advocate can really help them.
Kevin: Miriam Sandkuhler, thank you so much for your time. Always great talking to you.
Miriam: You too, thanks Kevin.
Why are investors leaving Auckland? – Kelvin Davidson
Kevin: Looking at the New Zealand market now, and we’ve heard for some time about the phenomenal growth in Auckland. So much so now, that the total return is probably suffering a little bit in some of the suburbs, leading me to believe, anyway, that some investors may actually be looking outside of Auckland.
Kevin: CoreLogic in New Zealand, and Kelvin Davidson in particular, have been looking at this and produced a report on it. Kelvin, thanks again for your time.
Kelvin: It’s an absolute pleasure.
Kevin: Yeah. I’m really interested in this and looking at total return, because most investors want, you know, if they can get the double whammy, that is a good yield and some capital growth. It’s heaven for them. But they may have to now leave Auckland City. What are some of the areas in New Zealand that are actually giving you a good total return, Kelvin?
Kelvin: Yeah, so you really have to go, as you’ve just mentioned, outside Auckland. The prevailing yields in Auckland are very low, as well as capital value is actually sliding back a bit in some parts of the city.
Kelvin: So, outside Auckland, I think right now, you’re looking at perhaps, sneak into Hawke’s Bay, certainly down the bottom of the South Island. We know Dunedin and Invercargille are offering pretty good rental yields, as well as some capital growth as well. So yeah, it wouldn’t surprise me if some investors are starting to look into those parts of the country.
Kevin: Okay, so we’re looking predominantly the South Island, or is there a fair bit in the North Island as well?
Kelvin: Yeah, there’ll be places in the North Island, too. We know capital growth is really strong and in, say, Whanganui, around Palmerston North, New Plymouth. So the value to buy property in those markets is also a bit lower, and I think there is still more scope for capital growth there. Because of those lower starting values, you’re probably going to be making a higher starting yield. So the two sides of the equation for an investor are probably looking pretty good, as I say, in those other parts in the North Island, too.
Kevin: Apart from a little bit of stability around 2010, 2013, the gross rental yield’s been almost on a fairly slow decline in New Zealand since what? Since almost 2000.
Kelvin: Yeah, it has. In some ways, it’s a mathematical thing, you know, property value’s been outpacing rents, so of course the yields are going to fall. Probably in the last six to 12 months, just that situation’s bound to turn around again. I mean, rents haven’t, it’s not anything to do with rental growth really, it just tracks along at a fairly consistent sort of 5% or 6% a year. But because of the slowdown in property values below that growth in rents, we’ve actually seen yields start to rise again. I mean, investors have still been piling in despite these low yields. I think the returns on offer from other asset classes haven’t perhaps been all that good. So property’s still been pretty appealing to investors, and that will just start to get a little bit more appealing with yields rising again.
Kevin: Now Kelvin, just looking ahead a bit. What do you think will happen with gross rental yields across New Zealand?
Kelvin: Yeah, I think they’ll continue to rise. There may not be a sort of sharp or significant rise. It’ll be a slow burner because, as I say, rents do tend to be restrained by what tenants can afford. That’s restrained by your income growth, which in New Zealand has been pretty subdued for a while. So I think rental growth will probably track along at that 4% to 5% mark. Values, if they tick along at, say, 2% to 3% a year, then yields will rise, but it’ll be a slow burner.
Kevin: And what’s the news out of New Zealand given the extra regulations in cost that are being imposed by the government on landlords? What’s the news there?
Kelvin: Well, so there’s a lot going on. As you’ve said, there’s lots of extra things being imposed, threat of capital gains tax down the line, but lots of different fiddling at the margins that has changed the economics of property investment. But yeah, there’s not a lot of other alternatives. People trust property and want to invest in it. So really from our stance, what you’re really showing that investors are still pretty keen to buy. It suggests that they’re just kind of shrugging off these extra costs or at least taking account of them and still deciding that property’s a good thing to do and still buying.
Kevin: Kelvin Davidson, senior property economist with CoreLogic in New Zealand. Kelvin, thanks again for your time.
Kelvin: That’s quite a pleasure.
Sellers come to terms with a changing market – Louis Christopher
Kevin: Louis Christopher from SQM Research tells us that listings around Australia have increased, but what’s behind that? Why are they increasing? Louis, hello and welcome to the show.
Louis: Good day, Kevin.
Kevin: What’s behind it, Louis? Is this a sign of confidence or is it that’s stocks not selling?
Louis: It is more the case that, okay, the month of March is usually really the first proper month where the housing market is fully open. And you generally do see an increase in listings compared to the month of February, where the month of February, vendors are just starting to come to the market for the new year. So we normally get an increase in March. What’s important here to understand how the numbers have changed year on year. Through looking at those numbers, there are some very interesting findings. Melbourne, for example, listings actually rose year on year by 24.9%, which is a huge increase. But there’s now 42,000 listings in Melbourne, and compared to this time last year, there was 33,000 listings. So I ..
Kevin: Have you got to breakdown on that whether it’s houses and/or units?
Louis: It’s an increase on both, I think, probably. We’re seeing it across the board. This is a classic sign of a deepening housing downturn occurring in Melbourne. When we see a rise in listings, basically it means that supply is increasing and stock is not moving. Our measurement is based on total listings available to buyers, not just new listings.
Kevin: Yeah, yeah. Of course, that’s the report we’re getting from agents as well, is that listings are abundant, but sales just aren’t happening.
Louis: That’s right. Many agents will complain at the moment there’s not enough new listings, but the thing is, they’ve got plenty of listings on their book, they just cannot move them. I think it’s just an ongoing tussle to get their existing vendors to understand that the market, particularly in Sydney and Melbourne, it’s still falling, and if these vendors want to sell in this market, they need to meet the market quickly.
Kevin: Well, of course, then that translates into asking prices, which I know is something else that you monitor as well. What’s happening there?
Louis: Yes, that’s right. We monitor what vendors are doing with their asking prices. For the month, it was mixed. Just once again talking about Melbourne, the asking prices for Melbourne fell by another 1.2% just for the month. Sydney for houses was actually flat. It’s the first time we’ve recorded a flat rating in a while, but units fell by about 1.7%. Brisbane recorded some minor falls in asking prices and houses were down by 0.3%, units down 0.1%. The area which recorded a rise was Canberra, where houses went up by 0.3% and units up by 0.2%. But overall, asking prices did fall nationwide for the month.
Kevin: Yeah, and when you look at that graph that you supplied us, if you look at the weekly asking prices year on year, a lot of red ink in there, and the two that you’ve highlighted, both Hobart and Canberra, the only two markets that had growth year on year in both houses and units.
Louis: Yes, that’s right. Just to those particular cities, that year-on-year growth is definitely slowing. I wouldn’t be surprised later in the year if we were to record some type of year-on-year falls for those cities. They are slowing down, both Canberra and Hobart, and I think those markets are being affected by the same thing that’s been affecting the other cities, which is ongoing restrictions on lending and very little buying confidence out there, particularly among investors.
Kevin: National, all house price variations come back year on year by that 1%, but if you look at the capital city average, it’s as high as 7.3%, which indicates to me that the price disparity is not as strong in the regions as it is in the cap cities. Am I reading that correct?
Louis: No, that’s true, Kevin, and that’s been a story that really hasn’t been told that much out there, that the regions are actually doing far better than the capital cities right now. If I was to take a closer look at the regions, it’s actually a lot of the mining towns now which are recording fairly strong recoveries, particularly in Western Australia and South Australia. We’re recording some rather large increases in some of those towns, particularly for example Karratha, where the market’s picked up by about 12% since the bottom, and we’re expecting further increases. Keeping in mind, of course, that the mining downturn that we had that ran from 2012 through to about 2017 was an absolute shocker for investors.
Kevin: That’s right. It was a shocker. Yeah.
Louis: yeah. But now we’ve got a recovery going, so investors that have been buying there or been holding there through the downturn have finally got some good news.
Kevin: Yeah. Great stuff. Always a good report and a good man to talk to is Louis Christopher from SQM Research. Louis, thanks again for your time and your wonderful insight.
Louis: Oh, thank you, Kevin.
2 factors other than location that impact prices – Jodie Walker
Kevin: Well we are certainly in an interesting time in terms of property in Australia, the market has changed a lot compared to what it was 18 months ago. Clearance rates have fallen, prices have stalled in some areas, and deteriorated rather rapidly in many parts of Melbourne. At the same time, we’re seeing urbanisation continue with more and more people wanting to live closer to the city and closer to all amenities. In addition to this, population growth is continuing to rise rapidly.
Kevin: We do know that what separates good property is what we’ve always called location. Location, location, location. Well according a new secret agent report it has a lot more to do with two other factors; walkability and greenery. Jodie Walker from Secret Agent, is with me, Jodie welcome to the show.
Jodie: Thanks Kevin.
Kevin: Yeah great report which we’ve now got on the website too. So go and have a look for that. Jodie, can I just ask you, for the report you allocated properties into three generic buckets. Tell me about that? What are they?
Jodie: Yeah so at the moment what we’re seeing, we like to allocate property into three buckets based on pretty much structure and location. So A grade is defined as having a really good structure in an amenity rich location, B grade kind of has one of those characteristics, and C grade doesn’t really meet the mark on either structure or location.
Kevin: Okay well they’re three very specific buckets. Can you broaden that out a little bit for me, if I could just ask you what makes a good location? What is it?
Jodie: Okay, so that can be, that’s a very complicated question obviously because it does depend on the person. But what we’re finding more so is that a good location is something allows the resident to walk to these lifestyle locations like cafes, restaurants, obviously being able to walk to public transport is important, and if possible like employment or study areas.
Kevin: We’ve had a general description in the past about a location and we’ve thought that it was important to be away from main roads but close to all facilities like shopping and school and so on. But walkability has become a lot more important. Do you think the general description, the expectation and importance of walkability has changed say in the last decade and if so how?
Jodie: I think so just because obviously the increase in our cities in particular, like the congestion, more people living in the populated areas. People are just over it, like spending half their day in a car, you know? So they want to be able to walk to work or walk to, wake up in the morning and walk downstairs and get a coffee. Saves time and it just saves that stress of being stuck in congestion.
Kevin: Yeah, of course there’s sacrifices you have to make when you do that and that could be, you know, maybe downsizing because to go into a built environment already which is where people want to live, you’ve got to recreate the living which means probably putting more houses into smaller space.
Jodie: Yeah, and you know at the end of the day we’re found as well, that people actually don’t seem to mind that. They want kind of more compact spaces because it’s easier to maintain and we’ve spoken about that before in terms of downsizing. So it kind of like links up nicely.
Kevin: With walkability being so important, how much have you been able to work does walkability impact on the price of a property?
Jodie: So when we did our study back in 2013, that was based on 2012 prices and obviously a different market to what it is now. You know, the market was growing strongly back then. The price premium back then we found was almost 300 dollars per square metre. Like for every five points over 60, in terms of walk score value. So more walkable property you can expect to achieve $300 per square metre more for every five point increase in walk score. That was obviously in a different market, so what we are interested in now is conducting a study like that in a few years time once this downturn is kind of over to see if walkability has the same premium.
Kevin: Well I imagine it would be a greater premium given the fact that we do know that volumes come down. In other words, you know, properties are now smaller therefore the per square metre rate is actually going to be larger purely because it has to because we’re in a smaller space. But it will be interesting to try and compare apples with apples, to try and get a comparison. Yep.
Jodie: Definitely, and we do feel like we have looked at studies overseas, in America, and they were mentioned in the report and walkability does seem to have a protective effect there. So we feel like it will be similar in the Australian market too.
Kevin: Well this report of course deals with walkability and greenery. Green space, it’s something that is really hard to make, especially in established areas which is really what we’re talking about here. So do you find that the developers are creating this and you know, they’re understanding the importance of developing green space in new developments?
Jodie: I do think they are starting to realise the importance of it and there is a lot of work in the urban planning sphere to kind of work out the best sacrifice between green space and more accommodation for growing population. So it’s a very hard like difficult thing to work out, but I think they are aware of it and they’re doing a better job of starting to appreciate the importance of it.
Kevin: Okay, just to close off, what was the final conclusion of your report?
Jodie: Okay, final conclusion is that basically it’s really hard to tell what makes a good location and how certain variables influence property value. But we do feel that walkability and greenery are going to continue to increase in importance and are going to be something that people desire long term.
Jodie: So if you have a property that is walkable or is in a green location it’s going to continue to do quite well regardless of the economic conditions.
Kevin: Thanks Jodie. Jodie Walker there from Secret Agent, and you can check that report out on our website as well. Thanks Jodie, talk to you again soon.
Jodie: Thanks Kevin, bye.
The Brisbane magic – Darren Piper
Kevin: Well there’s no doubt we’re seeing more and more evidence every day of just how varied the property market is. I guess we’ve always known that. We’ve said for many years that it’s not just one market, it’s several different markets. And Sydney and Melbourne, while they may be suffering a little bit, they’re still very popular. But then a lot of buyers would also be looking outside, so we’ll have a look at the Brisbane market. I’m talking now to Darren Piper from Universal Buyers Agents based in Brisbane.
Kevin: Darren, you remain very positive about the Brisbane market. What’s behind that enthusiasm?
Darren: Yeah, good question, Kevin. It’s really a number of things. A lot of it’s to do with demographic changing in certain pockets and sub-markets, infrastructure such as the airport upgrade, Howard Smith Wharves and a lot of job creation, especially inner city. But I think a lot of it is following the slowdown in Sydney and Melbourne. A lot of focus is now Brisbane and also from an affordability point of view.
Kevin: You cite in your release, your latest release that there are 68 suburbs that have reported growth far above the average level. Is that any particular corridor, or is it in different sectors over the city?
Darren: Yeah, it’s in completely different sectors over the city. We are seeing sub-markets, so to speak, move significantly. What we’re seeing first-hand, from a competition point of view, is that sort of 700 to a million price point is definitely where the most buyers are, and then there’s quite a significant jump to the sort of two mil plus range, and that’s where you’re still seeing multiple offer situations like we were six, 12 months ago frequently.
Kevin: Yeah, Louis Christopher, in his report, which has just been released, numbers, listing numbers in Brisbane continue to climb, 6.9% growth year on year, and even month on month it seems to be growing. Are you concerned about the levels of stock? ‘Cause as he points out, it’s stock that’s not selling. It’s taking longer days on market.
Darren: Not necessarily. The only, I guess, part of the market that we’re seeing, inverted commas, an oversupply, a bit of a glut still is the apartment market in the city. But from what we’re seeing is there’s really good buying opportunity in the inner city apartment market, if you know where to look, and that’s the key part with it.
Darren: Because it is going through a slight correction off the back of the construction boom in 2016. There’s a lot less cranes in the sky now. Brisbane City Council has appeared to tighten up on development applications, et cetera, so I think that part of the market is where you’re still seeing a slight oversupply. But as I said, we are noticing it start to go through a bit of a correction at the moment, which is good.
Kevin: So what are the pockets that are popular for apartment buyers? Are there any areas that they should be looking at?
Darren: Look, I’m a big fan of the likes of New Farm and Teneriffe still, from a proximity to the city point of view. I think when it comes to apartment buying, I always try to focus on smaller boutique complexes with low body corps.
Darren: I think off the back of that construction boom, the vast majority of the stock that has hit the open market is in very large complexes, high body corporates, and they’ve got all the bells and whistles from an amenities point of view. But you also pay for that as well, and that obviously eats into your return from an investment point of view.
Darren: So, 6, 10, 12 packs, late ’70s, early ’80s, existing stock is we’re seeing the best buying at the moment and I think you will see the best growth.
Kevin: In the housing market you’ve particularly focused on areas, budget areas around, you say, 530 to 600. You mentioned Keperra and Chermside West. Why have you chosen those areas?
Darren: Just from an affordability point of view and also location to city, amenities, major shopping centres, motorways. You can get that further south, but what we’re noticing with buyers is at that particular price point they’re wanting to buy north from an ease of access to the city. You don’t quite get the traffic that you do on the south side coming in, and that’s both investors and owner-occupiers really focusing on that north corridor of Brisbane as opposed to south.
Kevin: Yeah, middle ring, a little bit more expensive, around the 650 plus mark. You’ve highlighted Cannon Hill.
Darren: Yeah, so as far as the middle ring goes, Kedron, Tarragindi, Holland Park, that southern pocket, so Mount Gravatt East, Mount Gravatt, that’s where we’re seeing the most activity and that’s where a lot of the southern investors, predominantly Sydney, are purchasing at the moment too. I think a lot of that has to do with price points as well, and there’s also a flipping scene down there at the moment in some of those catchments and some great money to be made.
Darren: So that’s where we’re seeing, I guess, the most focused in the middle ring point of view. And then as you step into inner city it’s the New Farms, the Teneriffes, the Wilstons, the Paddingtons and the Hamiltons are still just powering ahead, as they always have, and I firmly believe that they will always continue to do so.
Kevin: As a buyer’s agent, I would imagine the majority of your clients are investors, people looking for investment properties. What are they specifically looking for? What is it that they request of you?
Darren: Yeah, good question. It really does depend on the client’s situation and circumstances, because it is very much case by case. If we’re talking out of area, so Melbourne and Sydney investors, the key driver seems to be the rental returns. Obviously down there you’re banking on the capital growth side of things, which we also focus on up here, but the big driver seems to be the returns ’cause they’re double if not triple in some cases up here from a cash flow point of view.
Darren: The local clients are more so capital growth-based, so looking to be able to manufacture equity in a property or flip it. It’s a different style of brief, generally speaking.
Kevin: So are they looking for renovators? You mentioned there about adding value. Are they looking at the prospect of flipping, or are they definitely looking at a buy and hold proposition?
Darren: It’s a bit of both from what we’re seeing. We’re definitely seeing a lot more of the buy and hold, but the focus of the people that we’re dealing with in Brisbane from an investment point of view is purchasing something that has potential upside. So not necessarily buying a turnkey townhouse or a turnkey unit where really your hands are tied from a flexibility point of view.
Darren: The buyers that we’re dealing with local at the those price points are really wanting to purchase something they can do a cosmetic renovation on, or a significant renovation on, or hold and move on down the track.
Kevin: Yeah, I guess the skill of being able to buy below market value, or even buying below intrinsic value, that requires a lot of skill.
Kevin: Given that you’ve mentioned in this interview that there’s a possibility of oversupply, particularly in the unit market, do you see some developers looking at having depressed stock coming on the market? Is that an opportunity?
Darren: Yeah, absolutely. Mate, you’re exactly right. We’re seeing that now in some cases. The apartment market, there’s just so much choice out there for the buyer, so you’ve really got to do your homework.
Darren: The perfect example, without naming the development, is you look at Newstead. There’s a development down there that mid construction boom, or sort of late 2016, had sold out while everything else was happening, and there’s a complex 200 metres up the road that was finished just prior to that and they still haven’t sold out.
Darren: So it really is about doing the correct homework, understanding who the developer is, what other projects they’ve built. It’s not all about price, it really isn’t. It’s about value at the end of the day, and they’re two very different things in a lot of cases.
Kevin: Good talking to you. Darren Piper from Universal Buyers Agents based in Brisbane.
Kevin: Darren, thanks for your time.
Darren: Thanks very much, Kevin. Appreciate it.