As property prices continue to rise in Sydney and Melbourne, homebuyers and investors are increasingly looking interstate to pick up comparatively cheaper apartments and stand-alone homes.
Melbourne-based buyers’ agent Janet Spencer says industry colleagues have reported a rise in the number of clients interested in purchasing property in other states over the last 12 months.
“There has been an increase because the rental yields have dropped in Sydney and Melbourne as property prices have grown,” says Ms Spencer, who is a director of Kew-based Buyer Solutions.
PRDnationwide national research director Asti Mardiasmo agrees that Melbourne and Sydney-based investors are looking to buy interstate to boost rental yields and “to improve capital growth in the medium to long term”.
Ms Mardiasmo says there has been an “increase in activity in the last 12 to 18 months” from buyers/investors in Melbourne and Sydney wanting to purchase interstate, mainly along the eastern seaboard.
“I am aware of a major private investor from Sydney buying multiple investments in Tasmanian property,” she says. “They are doing it to diversify their investment portfolios and to improve their rental yields. There is no particular interstate market they favour. They are pretty open to where they go.”
And increasingly these buyers are turning to buyers agents to find them these comparatively cheaper properties in other states.
Traditionally, prospective buyers have searched property websites and then contacted real estate agencies in the city or town they would like to purchase in, but buyers’ agents believe they offer a more independent and cost effective way of obtaining a property interstate. They also maintain there are potential traps which they are well trained to identify, saving the potential purchaser from costly mistakes.
Ms Spencer maintains real estate agents want to “get the best price” for those selling their properties, so are not looking out for the interests of potential buyers.
“If you are not a property professional and don’t know anything about the market interstate you need to get an accredited buyers agent, someone who is a member of the Real Estate Buyers’ Agents Association of Australia (REBAA),” says Ms Spencer, who is Victoria’s REBAA representative.
“They (prospective buyers) need to remember that the (real estate) agent is employed by the vendor to represent their interests.”
Ms Spencer says a buyer’s agent can research suitable areas in other states for their clients and ensure they are not paying too much for a property.
She adds that potential buyers need to do several checks before buying a property interstate. Initially, they should do their research on the area they are intending to buy into.
“Ensure you are not paying too much in an unfamiliar market,” Ms Spencer says. “If you are coming from Melbourne and Sydney to buy, say, in Brisbane, what might cost you $800,000 to a $1 million in one state may only cost you $600,000 to $650,000 in another state for the same sort of product.”
Ms Spencer also recommends that potential buyers have building and pest inspections carried out at any properties they intend to purchase. “They are important because if you have a significant building fault it can be very costly to rectify,” she says. “You need to know about it before not after.”
“And if possible visit the area and talk to your neighbours to get a feel for the suburb you intend to live in. Get to know the social fabric of your area and whether it will suit your family and its needs.”
Another handy tip involves potential buyers phoning or visiting the local council covering the area they wish to move to and ascertaining whether any major construction projects are being built near the property they intend to buy.
“If there are construction works planned for next door or nearby they may impact on your lifestyle, so it’s important to know about them before you buy,” she says.