We speak to the team behind the weekend’s most intriguing property sale.
The property: A one-bedroom, one-bathroom apartment at 68/48 Alfred Street, Milsons Point, NSW. Sold before auction for $925,000.
Who was the agent/agency? Todd Houghton, Duncan Grady, Raine & Horne North Sydney.
How long was this on the market?
[Grady] Two-and-a-half weeks.
Why did this one sell?
[Houghton] The clients buying this were people from out of the area, wanting to secure something close to Sydney. They bought it for their daughter to live in longer-term.
Was it overpriced?
[Grady] No. Fair market value was achieved on the day. It went a little better than we initially expected.
What did you think it would go for?
[Grady] $850,000-$925,000 was our broad range. It went at the top end of our range.
[Houghton] $850,000-$875,000. Duncan’s pretty optimistic.
What was surprising about it?
[Grady] Owners are cashing out one style of investment to replace it with another they can get lifestyle use from. This was a fully furnished one-bedroom unit on our executive rental program. We leased it fully furnished to business people on short-term higher rents.
[Houghton] When COVID hit, Duncan was proactive in reading what the market was doing and converted our short-term rentals to long-term, 6-month at least, reduced-rate rentals to ride out the COVID period. This apartment was sold with a tenant in place.
[Grady] The landlord contacted me and said: “I’m thinking of selling and looking at buying a new house.” It was listed and sold within two weeks. There were two or three people fighting for it in the end.
We’ve had three sales where people who held investments are now wanting to spend more money on themselves – to buy a bigger house or buy a holiday home on the beach or out in the country.
It’s a new concept. We haven’t really had people selling residential investments with a common reason. It was either death, divorce – the forced reasonings. This is a choice people are making, and they are proceeding with that choice. They’re acting on it.
But isn’t that just because they don’t have a tenant?
[Grady] It’s definitely not because they have to. These owners are wealthy enough to be able to weather a weaker rental market. North Sydney had the perfect storm of difficulty because investors left, there was not a huge amount of owner occupiers moving into the suburb, internationals were not coming in and it’s not known as a lifestyle suburb. We’re now back in a recovery market. If we dropped [rents] back 15 per cent, we’ve recovered at least 5 per cent because vacancies are no longer there. The quality [property] does well.
We’ve seen in the last two weeks some stock sitting here for some time has started to get snapped up. One apartment we had on the market before Christmas in Neutral Bay couldn’t sell – we sold it last week. [This] one we had on the market before Christmas. We’ve seen what probably is starting to look like good value.
We cross-sold both of those sales. We met those buyers in other properties outside of North Sydney. We said: “If that’s $1.4 million, come and look what you can get for $1.2 million.” It made more sense from a point of view about value.
It’s definitely due to COVID-19 and people reassessing how they live their lives. Some people don’t have a strategy. They buy residential property and don’t have an end game, such as: “Do I sell when it’s worth X?”
They just buy it and feel warm and fuzzy when it goes up in value. But they don’t necessarily have a strategy. There was a constant roundabout of “What is it worth?”
That’s exciting and then 24 hours later, after people have spoken to their accountant, crunched the numbers, looked at the realities of cashing out [capital gains tax, agents fees, having to buy another property], it’s just more cost, or they have to only put the money in the bank. I’ve heard it 1000 times: “What am I going to with the money?”
But people are now acting and saying: “I’m cashing out, I’m selling it and I’m changing my strategy.”
For every 10 appraisals we do – probably every 20 – only one hits the market. But we’ve found we’re appraising and now people are saying: “Let’s go for it.” They’ve got something else to do with the money.
Do you reckon we’ll see another result like this: a) next week b) next year c) next cycle d) never?
a) Next week, definitely. People are home, they’ve got two hours’ more time at home when they’re not in cars or on public transport, they’re looking at their home in a different way now because of COVID-19. That’s going to be lasting another six to 12 months.
(Fin Review – April 2021)
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PROSPERA FINANCE — Geoff Norman
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