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The words and experience of a buyer’s agent can often give an indication of whether buyers are bullish or bearish, and what will get them over the line with a sale. We spoke to one buyer’s agent about his thoughts on the current state of play.
For Pure Property Investment’s founder and director Paul Glossop, confidence among buyers is palpable following the federal election in May.
However, Mr Glossop senses a wariness among younger buyers, who appreciate that basing strategies on concessions which can be revoked — such as negative gearing — is a risky approach to property investment and accumulation. The federal opposition had planned to remove negative gearing on existing properties purchased from 2020, if it were to be elected to government.
At this stage, Mr Glossop doesn’t foresee a return to pre-2016 strategies and buying patterns, where first home buyers would purchase a property they could reasonably afford and “hope” for capital growth.
This echoes the sentiments of mortgage brokers like Nicole Cannon, founder of Pink Finance, who said buyers are taking a more cautious approach to securing and structuring credit, after a tough few years of market dives and tighter lending conditions.
In a webcast with sister title Smart Property Investment, which you can access for free here, Mr Glossop also said buyers are often caught up in which suburb or region is tipped to be a “hotspot”.
He often sees this influence buying patterns. For example, he noted a common story is older Australians with significant equity in their homes buying in mining towns, anticipating significant capital growth to fund their retirement.
He fears similar patterns will begin to surface when the Adani mine in Queensland properly gets underway.
In NSW, Mr Glossop has witnessed FOMO taking hold of buyers with house and land packages, particularly in Sydney’s south-west region. A significant portion of the NSW government’s infrastructure spending in Sydney to date has been directed towards the south-west of Sydney and the north-west corridor.
“Those are the ones which scare me the most,” Mr Glossop said. “People got caught up in the hysteria.”
He noted the house and land packages are often a considerable distance from city centres and infrastructure, because they were built on the “next bastion of available land” on the outskirts of Sydney.
Although there are signs of life for most capital city markets, CoreLogic’s Tim Lawless cautioned against investors and professionals alike assuming pre-2016 conditions will return for some time.
“Housing credit polices remain much tougher than they were prior to the [banking] royal commission as lenders continue to move away from the Household Expenditure Measure and examine borrower spending behaviours and expenses more closely,” Mr Lawless said.
“Also, lenders now have the benefit of comprehensive credit reporting whereby borrower debt profiles are more transparent, providing lenders with the ability to assess creditworthiness in more detail.
“The ongoing tightness in housing credit is expected to keep a rapid rebound in housing values at bay, despite the lowest mortgage rates since the 1950s.”
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