It’s no secret that Queensland has continually dominated NSW in the State of Origin and it looks like Queensland buyers are also winning over NSW buyers when it comes to property purchases in the Sunshine state.
NSW V QLD STATE OF PROPERTY ORIGIN
State of Origin Game 4 – NSW loses again paying $80,000 more for the same unit
Recently two almost identical riverfront inner city apartments were sold by the same sales office, but the NSW buyer paid $80,000 more for the un-renovated apartment.
The apartments were almost exactly the same – they had the same river views, balcony and carpark size. The only factors separating the two were 6m2 in internal space and a lack of renovation – the poor NSW buyer bought the un-renovated apartment and they each sold less than 6 weeks apart.
The sad news for our NSW buyer was the over-inflation of their purchase price. As a Brisbane-based buyers agent specialising in helping my clients make smart financial decisions I put this down to four things:
- Many interstate property investors have no idea what constitutes a good property investment deal in Brisbane – the market dynamics in Brisbane are vastly different to Sydney. What might look like a bargain in Sydney terms can be a costly and unnecessary mistake. For example, unit developments in Sydney entry level can be around $800,000. The equivalent unit in Brisbane may be around $500,000. So an inner city unit on the Brisbane river at around $1,200,000 must be a bargain in comparison… right? But why would you pay $80,000 more because it sounds cheaper than your home state? With the number of units built recently in Brisbane and yet more coming on-line, it does not make good financial sense to invest in units without assessing all the variables and when established homes significantly outperform units in terms of capital growth. In fact both of the previous unit owners in this example sold at a loss after 7 years of ownership. This is considered a blue-chip location but it is certainly not a blue-chip property investment.
- Emotions and a lack of time on the ground in Brisbane are leading to bad decisions. Queensland is a property investment hotspot right now – so investors are flocking here to find “bargains”. In their rush they are letting their emotions take over and making quick decisions that are not properly researched or justifiable financially. Many sales agents have recounted stories to me of buyers from Sydney and Melbourne buying either site unseen or they do come up but do not invest alot of time looking at the property they are about to purchase.
- People are overly reliant on subscription-based property data – the automatic online valuation tools available are not 100% reliable despite the degree of accuracy rating that is attributed to the valuation report. The valuations are not necessarily correct every time and cannot be relied on in isolation of other important factors like: time on the market, number of properties sold locally, number of comparable properties on the market, vendor discounting behaviour, dwelling orientation, elevation, quality of the improvements just to mention a few.
- Agents will always work on behalf of the seller not the buyer as it is their fiduciary duty. While this is no surprise, this example shows that Interstate buyers are at the mercy of local agents who are taking the opportunity to “make hay while the sun shines” with interstate buyers who have no guidance or lack of understanding of the Brisbane market, and in this instance, paying dearly for the experience.
What to do if you want to avoid another State of Origin clash?
So, if you are a home buyer or property investor what do you do with all of this? How can you turn this around – especially if you are from NSW and want to avoid overpaying ?
Make sure you do your homework. Look at comparable local sales and do what you need to do to get a handle on what makes a smart buy in Brisbane. Spend as much time researching as you can and make regular trips to Brisbane to really learn about the market if you don’t live here.
If you don’t have the time or skills to do the necessary research – then engage a buyer’s agent. On average our fees at Brisbane Buyers Agency are paid for in terms of the time, energy and frustration you would spend in trying to find yourself a good deal and to ensure you are paying the right price by negotiating diligently. By working with us you get the benefits of our 20+ years experience in the industry. People often say “20:20 hindsight” or “I wish I had known that before I bought” … by working with us you get access to our expertise and insights and are fully advised of everything you need to know. We help our buyers make smart decisions that set them up for the future.
While great value for money is one thing – you also have the peace of mind knowing you have someone in your corner working solely on your behalf. At Brisbane Buyer’s Agency we don’t take commissions from anyone and we work on a flat fee arrangement. We live and work in Brisbane so we know the market and, as property economists we ensure all of the numbers stack up for your next home purchase or property investment. It’s very cheap insurance to make sure the wool is not pulled over your eyes or be taking advantage of.
For more information on the benefits of using a buyer’s agent read my post here.
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