The fiasco with Sydney’s cracked Opal Tower apartment block as well as volatile prices in the unit market is enough to scare off any potential buyer.
How can you buy a unit and get it right?
Lauren Goudy, buyer’s agent with Rose and Jones, shared her advice on avoiding the common pitfalls and getting the best deal on an apartment with Auction Day.
What to look for when choosing a unit
First, you need to assess your personal situation and work out what kind of accommodation will suit your needs.
Is parking the most important for you, or is it amenities close by?
Goudy says there are units to suit all levels of people in the market and in large cities like Sydney, that’s where the trend is heading.
“As we mature into a more global city, this is the way people live.
They want to be closer to the city and we do have higher density living there,” she said.
What are the crucial checks you need to do when buying a unit?
Goudy’s number one tip is to do your due diligence before you buy.
“If you are in the lift or are at an inspection, just have a chat with someone who is a tenant in the block.
“They often know what’s going on. Tenants are now able to go to strata meetings.”
Asking about the ratio of investors to owners in the block can be a good indicator of how it is run, and to get a feel of the personal interest people have in the block
The other side of due diligence is looking into the market and pricing research, Goudy says. Having an understanding of the market can save you money and give you the upper hand in any negotiation.
“I bought a property off the plan for some clients last year.
“Normally with off the plan, there’s no negotiating and they have a fixed price. But because of the due diligence I had done in terms of the pricing, we were able to negotiate $50,000 off the purchase price.
“With the evidence that we could provide the developer, they ended up budging on the price and we got it for a lot less.”
What are the deal breakers?
Natural light is a “fundamental” that never should be overlooked, Goudy says.
Consider the layout to see if there is enough separation between the bedrooms and living areas.
Buyers need to ask themselves if their property is unique enough to garner good interest and price if they look to sell.
The key is not to look at your apartment in isolation but consider the whole market and where your property sits within it, Goudy advised.
“If you come to sell or lease this property out, are there going to be a lot of other similar properties available at the same time?
“Are you going to have a lot of competition or is yours going to be uniquely placed and in high demand?”
Oversupply will create long term issues with capital growth and yield, as well as securing potential tenants or selling prospects.
Should you avoid high-rise in general?
It depends on your personal situation, budget constraints as well as the investment potential, Goudy says. She doesn’t advocate for avoiding high-rise units.
“Some of the best penthouses in Sydney are in high rise apartments.”
The winning strategy is to find a standout property within those developments.
“I had some clients who have five children and they had a budget of under $1 million for a three bedroom and two bathroom apartment in Sydney.
“We were definitely going for value in terms of high-density apartments which I normally wouldn’t be looking at.”
Goudy ended up helping the client purchase an apartment in Arncliffe, about 10km south of Sydney’s CBD, with good bedroom separation and ample living space in the north-eastern corner of the building.
The attraction of apartments is the convenience and strong yields for investors.
“If you’re looking at investment property, you might get better growth over some of the house options.
“Yields in Sydney might be less than three per cent for houses, but yields for units in Sydney are getting to around the four per cent mark.”
With the market cooling down across most Australian capital cities, Goudy predicts 2019 will be much the same as the end of 2018 in terms of prices which will give strong buying opportunities this year.
“Finance is still a big challenge for people. Buyers should be prepared for when you do find the right property and then you can snap it up,” she said.