Over the past few years, all properties have been selling incredibly well. You didn’t need to do very much to offload a less-than-quality property when there were low interest rates, tight supply and plenty of keen buyers.
Now that times have changed, there are opportunities for buyers to pick up really good deals. However, you need to be very careful with the types of properties you’re buying.
In the current market, A-grade properties are still selling incredibly well, whereas it’s the B and C-grade properties that are struggling and are likely the ones selling at sharp discounts.
What constitutes an A-grade property is going to be very different in each city and location but it’s important to make the distinction between quality and just an average property if you’re currently in the market to buy.
What’s an A-grade property look like at the moment?
If you’re looking in the inner west, which is an area that we buy in, then you’re looking for a terrace or a semi on a quiet street, with good sunlight, good width with parking and is close to one of the villages. In the current market, you’re probably paying around $1.5-2 million.
In the eastern suburbs, you’re probably looking at an apartment if you’re an investor that wants something they can hold onto.
Here you’re really looking for boutique blocks, north-facing with good floor plans, walkups with a lockup garage on a quiet street and uninterrupted views. Again, you’re going to be paying $1.5-2 million.
If you’re looking in the hills area, you’re probably looking for something that’s in a good school catchment which is incredibly important to the buyers and renters in those locations. You also want a level block with a regular shape.
In Brisbane, what constitutes A-grade is also very different. In Sydney, suburbs are far more densely populated and there isn’t the urban sprawl that we see in a smaller capital city like Brisbane.
So up in Brisbane, you want a property that is within 5km of the CBD. You don’t want to be buying apartments in Brisbane, because 80% of the population lives in houses. Things like your worker’s cottages or Queenslanders are timeless and there’s a large degree of scarcity to them which makes them more appealing and helps drive up values over time.
You also want to have large parcels of land that ideally has rear lane access and something you can manufacture growth and add value with.
In Melbourne, again it’s very different. You probably don’t want to be buying 30-40km out in Melbourne in greenfield locations, because there’s an abundance of land.
You really want to be in the inner ring of Melbourne, like Port Melbourne, where there are villages where you can easily walk everywhere, Torrens title properties, not apartments.
It’s also worth remembering that you can easily buy in the right area but purchase the wrong asset type.
A-grade properties are a combination of the right property in the right location. Get both things right and you’ll have a rock-solid investment for life.
If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.