Low supply and high demand are forcing people to use extreme tactics to buy a home in Queensland.
While technically legal, these tactics are leaving many hopeful homebuyers without a chance – especially when homes are fetching up to $60,000 more than the listing price.
First home buyers hit hardest
On paper, now is an exceptional time for first home buyers to get a home, with Government incentives and low interest rates on offer. But, it’s also the newcomers to the market who are feeling the brunt of the extreme tactics the most.
Properties are being snapped up by loaded interstate buyers willing to pay well over asking price, as well as more experienced auction-goers, and those prepared to buy sight unseen, despite the risks.
In an offer showdown, first homebuyers often don’t have the credit history, mortgage repayment proof and financial strength to beat those with a solid property track record.
Radical tactics are pushing out legitimate buyers
While property across Australia has boomed over the last quarter, South East Queensland is seeing particularly solid price growth, shorter times on the market and high inspection attendance numbers.
Queensland recorded the highest number of interstate relocations in the last quarter of 2020, with the majority choosing our lifestyle zones as home base: Brisbane, Gold Coast and Sunshine Coast.
The triad of positive drivers (high migration numbers, low interest rates, and low market supply) have created an unexpected property boom that’s forced buyers into extreme methods to get a home in an increasingly competitive market.
Tactic 1: Buying out before auction
Buyers are offering well above reserve price to buy property before it even gets to auction day. These buyers are well aware auction attendance rates are exceptionally high, Brisbane clearance rates are an extraordinary 89%, and that their only option is an extreme bid prior to sale day.
For even cashed-up buyers who made a mint selling their Melbourne or Sydney home, this could be a bitter pill to swallow. It may be many, many years before the market catches up to their buying price and they see any kind of gain in their property. Ultimately, they face the risk of selling at a loss down the track.
Tactic 2: Door knocking
Like encyclopaedia salesmen, some buyers have taken to going door-to-door to find a home – and oddly enough, it’s working.
The skyrocketing buyers’ market is a hot topic, and there are plenty of homeowners quietly calculating their profit if they chose to sell. They’ve seen what their neighbours earned from their sale, and it’s an enticing prospect. A face-to-face offer – especially a generous one from a determined buyer – not only builds immediate rapport between the two parties, it’s also a win-win arrangement.
Settling privately cuts out expensive agent’s fees, open homes and gives them control over settlement conditions. Thus, plenty of homes are being sold before they would have even hit the market.
Tactic 3: Buying sight unseen
It used to be only rare circumstances that would cause someone to buy an investment as important as a house without viewing it first. Now, it’s a norm that’s been labelled ‘FOMO Buying’, where the fear of missing out is strong enough to risk buying a home that may have major issues or be totally unsuitable for the household’s needs.
‘Conventional’ buyers can’t even get a foot in the door – literally – when others are buying based on a few photos or a video walkthrough, especially when the offer is so generous, it can’t be refused.
Tactic 4: Outrageous offers
In March 2021, a home in Burleigh, Gold Coast, with a price guide of $1.2m sold for $1.6m – a whopping $400,000 over asking price. It was sold to a Melbourne buyer moving north to the Sunshine State.
And that’s not the only example of the high price people are willing to pay for property right now. Reports of homes being sold for hundreds of thousands of dollars over the list price are becoming all too common.
It’s a boon for sellers, but a difficult, if not impossible market for homebuyers without the extra cash to spare.
The better option for buyers
The new home market, where you purchase a house and land package, is relatively free from the competition plaguing existing homes. You can live in the location you choose and design a home that suits you and your household.
First homebuyers can also access the First Home Owner’s Grant as well as other Government incentives on offer.
Most importantly, the new home market has a firm price tag, one that isn’t driven by low supply and radical offers. It’s immune from the extreme tactics that are leaving other homebuyers out in the cold. Once you’ve chosen your lot and your home design, the cost is set, and construction begins.
It’s well worth exploring all the options across the housing market before facing the disappointments and mad determination of buyers in Queensland. Otherwise, you risk paying too much, regretting a quick purchase, or being left out altogether.