In recent weeks, there has been buzz about the housing market heating up after a period of decline. Auctions are supposedly becoming more competitive, with buyers vying for properties. However, a closer look reveals a more nuanced picture. This article aims to dissect the current market situation, separating perception from reality and identifying potential opportunities.
The Apparent Market Warm-Up: A Closer Look
While there's talk of a market revival, recent observations paint a different story. Despite high attendance at viewings and auctions, it's not uncommon to see a lack of active bidding. This raises questions about whether the perceived market warmth is genuine or an illusion. Is the market truly on the rise, or is this just isolated incidents of high-demand properties?
Case Study 1: Roseville Chase - A Developer's Calculated Risk
A Quick Flip for Modest Profit
A newly built, modern house at 8th Warrington Road, Roseville Chase, garnered significant interest and ultimately sold for $6.25 million after an auction that reached $6.06 million. What's surprising is that the final sale occurred shortly after the auction. This suggests a single determined buyer drove the deal, highlighting that the market isn't necessarily "crazy" but rather that the right product met the right buyer at the right time.
The Developer's Strategy: Time and Targeted Appeal
The developer's operation was noteworthy. The land was acquired and reconstruction completed in just nine months. After calculating construction costs (including interest and design), purchase price, taxes, maintenance, and sales allowance, the profit was estimated at less than $400,000. This exemplifies a business model focused on leveraging time and catering to a specific buyer profile, rather than relying on broad market appreciation.
Case Study 2: Greenwich - Cheap Land Doesn't Always Equal Opportunity
Development Potential Unfulfilled
An old semi-detached house at 310 Pacific Highway, Greenwich, packaged with development potential (apartment conversion, scenic views, high rental income), was offered at a seemingly attractive price of $2.35 million. Despite these factors, there was minimal interest, with no registered bidders and a small audience observing the auction.
The Reality of Picky Buyers
The auctioneer resorted to a Vendorbit to secure a $2.3 million bid, highlighting the disconnect between perceived potential and actual buyer interest. This demonstrates that cheap land and development potential alone are not enough to guarantee a sale in the current market.
Case Study 3: Roseville Chase - Design Matters
The Importance of Practicality
A newly built house at No. 90 Bar Beach Road, Roseville Chase, bought as vacant land in July 2023 for $2.48 million, took two years to develop, and was guided at $4.5 million before auction, but ultimately failed to sell. While the developer aimed for a $5 million price, the design was deemed impractical for mainstream families, negating potential interest, even with premium features like an elevator. The layout didn't fit modern living.
The Importance of Understanding Mainstream Family Lifestyles
The current market favors homes that align with the lifestyle of mainstream families. The earlier cases highlight that buyers aren't necessarily willing to overspend; instead, they prioritize homes that fit their specific needs and preferences. It's not enough to just build a house; it must be well-designed and functional for target customers.
Case Study 4: Roseville - Policy Advantage Misinterpretation
Taking Advantage of Policy Hot Market?
A house at 2 Kings Avenue, Roseville, was on sale. The owner had bought it for 2 million three years ago and after some minor renovations, was now selling it for $3.65 million while doing short term rental. It's not within the coverage range of LMR policy. The house next to it was on the border of the new LMR and was sold for $3.5 million. The owner was trying to take advantage of other people's house price.
The Truth: Buyers Are Informed
Buyers are asking if the land is in the protected area, if it can go to the CDC, how much is the volume of interest and if it is in the coverage range of LMRTOD.
Case Study 5: East Linfield - The Downsides Can Be Overlooked
What About Retirees?
A three-story house at No. 15, Clare Road East Linfield was put on sale. The house looked like it has been self-sufficient for a long time and the owner bought it in 2015. The problem of this house is that it has no elevator, has a big slope and is a three-story building.
The Truth: The Market is Picky
The house was on auction for half a day. After the auction, the agent told that he had sold 4.75 million shares.
Avoiding Common Misjudgments in a Complex Market
It's crucial to recognize that high-value deals may not represent the overall market sentiment. Many houses are sold at good prices because one person is willing to make a move. There may be more cold fields than hot fields. The most easily misjudged in the market now is not the price but the atmosphere. One should not be anxious when someone buys a house and should not rush in.
Key Questions to Ask Before Buying
When evaluating a property, shift the focus from broad market trends to the specific asset. Ask:
- Is there anyone who is more willing to buy than me?
- If I don't buy, who will buy it and at what price?
The focus should be on the intrinsic value of the property.