Want to upgrade your home but nowhere to go? This strategy could help you make the move fast.
There’s no doubt we’re in a state of low stock and high demand here in Brisbane and this is causing huge frustration with those who are wanting to upgrade their house, and there are many people who fit into this bracket. Those with growing families who want better access to schools and amenities, those who want to take advantage of the 10% capital gain realised in their current property over the last 12 months (Brisbane’s average growth), and those from the southern states and overseas who are still migrating to QLD for a better lifestyle.
According to SQM research in 2019 there were 275,170 homes listed in Brisbane (ave 22,930 per month) and 104,381 units (ave 8,698 per month). In 2020 we saw a drop in house listings by about 9% to 250,700 listings (ave 20,891 per month) and a 14% drop in unit listings to 89,664 (ave 7,472per month). So far this year (Jan – Apr) House listings have averaged 17,082 per month representing a whopping 18% YOY reduction. Unit availability has bounced back a little with 8,026 ave listing per month.
Auction clearance rates are another indicator of just how bullish the current Brisbane market is with February through to April average clearance rate sitting at 74%. Brisbane is much more used to auction clearance rates of around 40-50%.
So, what are the options when dealing with a bull market and wanting to upgrade our home with nowhere to go? A few thoughts
Building a new home or buying off the plan buys you time and offers the opportunity to save and make money in the process. In most cases (if buying from a developer) you only need to pay a 5% deposit up front. Banks are suggesting that Brisbane still has another 10% growth to come, so, if you buy a property off the plan today for $800,000 and it takes 12 months to build (if the banks are right) it will be worth $880,000 by the time you move in. That’s a nice little salary in the back pocket right there and you’ve nearly doubled that initial $40k deposit in 12 months.
Sounds like a good option right, but you still need to get the timing right in selling your own property. Why not go ahead and take advantage of the current market, sell now, and look at one of these options:
Seller Rent Back
Both the home owner and investment markets are on fire in Queensland right now. With the sting of COVID still fresh in our southern neighbours minds (particularly those in Melbourne) we’re still seeing a lot more focus on South East QLD whether it’s people migrating north or seeing it as a great investment for the future with huge investment going into building new infrastructure, particularly Brisbane and the Gold Coast.
For an investment buyer, a Seller Rent Back agreement means they are guaranteed a renter from day one of settlement and completely removes the stress of finding a renter for their investment property.
For the seller, a Seller Rent Back agreement can be desirable as it means you can sell and settle quickly (typically 30 days) and have money in the bank to fund the new home project which can remove the stress of complying with banks tedious owner-builder process. Additionally, it means you can avoid the stress of moving and renting somewhere else for 12 months while the build completes.
Another option, if the buyer is agreeable, is to request a long settlement. This means you have a contract on your house with normal “unconditional” terms but it doesn’t settle until you’re ready to move into your new house. It means that your funds are still locked up in the house you have sold but you have a guaranteed sale that works with your time line.
Getting your way in this market means getting creative and sometimes being a little unconventional is the best way forward!