Another factor is at work that makes this sector of the market even more wide open for bargain hunters – it seems that fewer baby boomers in or nearing retirement are making their great sea-change during the global economic crisis.
Anyone planning to retire within the next couple of years has not had a better time for years to prepare for a sea-change.
Another group that perhaps should be eyeing up this market are business owners who rely heavily on the internet to make sales and service customers, enabling them to satisfactorily work outside city centres.
Kusher’s picks for potential bargain coastal properties include Agnes Waters in central Queensland and Bryon Bay in the far north of New South Wales. Sales in these towns are way down and there’s plenty on the market, says Kusher.
However Louis Christopher at Adviser Edge says that while coastal properties have already been slugged by the biggest price falls in the property market, their values could continue to fall. “A bargain today can be an even bigger bargain tomorrow,” he says.
While Christopher agrees with Kusher that there may be some excellent buys among coastal properties, he emphasises that buyers should aim to negotiate prices that reflect further potential falls.
This is a particularly fragile property market that will not treat kindly any buyers who pay too much. Christopher says prices are generally flat to potentially falling, with only the lower-end edging upwards at this time. “Buyers could end up being in negative equity very quickly,” he warns.
Christopher says that buyers in rising markets would look for capital gains to make up for any overpayment for a property. But this is certainly not the position in this weak market.
He suggests obtaining an independent valuation of a property as part of your research to ensure the price is a fair market value.
Kusher says buyers can adopt other measures to guard against paying too much. “Try not to get emotionally attached to a property,” he suggests. Buyers should painstakingly research the market and set a firm limit on what they are willing to pay.
“Don’t get caught up with agents playing you off against other buyers, and be prepared to walk away,” he says. “There are always other opportunities out there.”
Significantly, given the state of the economy, Kusher suggests that buyers take into account the possibility of employment loss when deciding how much they are willing to borrow. He also says an idea is to decide in advance at what point you will fix interest rates once they begin to move upwards.
In the stampede of first home buyers wanting to take advantage of state and federal grants, some properties might have been overlooked.
For instance, Kusher suspects that there are some “ugly ducklings” in the segment up to $500,000 that may just need a few DIY renovations to really add value. Perhaps the garden is overgrown, the fences falling down and the woodwork in need of a little paint.
Such properties may have been overlooked in the focus on renovated properties.
Apart from the first home buyer segment of the market, analysts generally say that prices are either flat or falling. And all segments of the market are vulnerable, with expectations of reasonably subdued capital gains when they do occur.
Kusher believes that would-be buyers have no need to rush to get into this market. “Do your research, negotiate hard, and take your time,” he suggests.
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