Sydney is Still on the Menu for Chinese Buyers
Just when you think Sydney property market is finally going to slow down yet another crazy story is told to me last week. A Chinese buyer arrived at an auction last Thursday night and without having seen the property proceeded to outbid all of the other purchasers to secure this 2 bedroom art deco unit. it was obvious that she could have continued bidding with an owner occupier being the only other person standing at the end wilfully bowing out and letting her buy the unrenovated property.
This oversized 2 bedroom 1 bathroom art deco Neutral Bay unit has one undercover parking space, and attracted an enormous amount of interest through the marketing campaign. There were just over 40 contract holders all all in varying levels of interest in this great well-located renovation project. The spread of buyers were from investors, either planning to renovate and hold, to other renovators keen to onsell it quickly after completing the works (or “flip” the property). Owner occupier interest was from either upgraders or empty-nesters hoping to renovate the property before calling it home for many years. Despite all of the due diligence, all of their feasibilities, and all of their research over the weeks was all rendered useless on the night.
Buying in the Sydney market at the moment is extremely difficult. You have to hold some sympathy for first time buyers after potentially years of saving for the deposit they just watching that dream of homeownership slowly slip away. Then for the upgraders and empty nesters as they struggle to purchase meanwhile continually delaying their plans. This delays their properties getting to the market which adds to our ongoing situation extremely tight stock. All of these factors continue to drive up prices.
For some time my belief has been that international investors started the drive with this current growth cycle for Sydney and Melbourne a few years ago. They would prolific in purchasing right at the start of the boom reducing supply and driving up prices. They were involved in really getting things going. Though their level of interest continues. It make perfect sense when you make the comparison of Sydney and Melbourne property prices to Beijing and Shanghai. When you factor in the exchange rate there is no question the we are still very, very cheap. But how is it a fair market for Australians and they can’t even buy in the city they grow up it.
The hammer fell at $1.23 million for the successful international buyer who had not even inspected the property that they had just bought. The only delay of exchanging contracts was for the agent having to spend an hour counting out the $50,000 in cash they bought along as their deposit. For local buyers following the rules, attending auctions and trying to break into the market, it is these scenarios that must be so very bitter for them.