PROFESSIONALS REAL ESTATE GROUP has recorded a surge in activity by upgraders during October 2009.
According to David Hobbs, CEO of Professionals, sales of properties in the price range $600,000 to $1.0 million during October 2009 have jumped by more than 20% compared to the previous month.
“In particular, Professionals are finding very strong sales and enquiry levels in top tier northern coastal suburbs such as Sorrento, Hillarys, Kallaroo, Mullallo, Ocean Reef, Illuka and Mindarie. Typically, we are find that property owners in second tier coastal properties in the price range between $400,000 to $500,000 are selling their property and upgrading to a top tier coastal suburb. A typical example is a property owner in Kinross selling their property for around $450,000 and buying a older style home in Hillarys for around $700,000 to $750,000.”
“There has been a surge in activity in the upgraders market because the price differential between lower and upper priced properties has significantly declined over the last eighteen months. Lower priced properties have benefit from rising activity from first home buyer and investors while house prices at the upper end of the market have declined due to discounting by sellers because of a lack of buyers. Eighteen months ago, for example, the price differential for someone wanting to upgrade from Kinross to Hillarys, would have been at least $400,000 compared to just $250,000 to $300,000 today.”
“More people are now deciding to take on additional debt to upgrade their home because of a major improvement in the local and world economy over the past three months which has boosted consumer confidence. Over the past three months, Professionals have recorded strong increases in the numbers of people attending home-opens for more expensive properties and the market reality is that these prospective home buyers are now become active buyers. The surge in activity in the upgraders market should result in a stabilisation of prices in the upper end of the property market and eventually to price increases as stock levels begin to fall,” he said.
Mr Hobbs said that anyone who was planning to upgrade their home should look to a minimum of a five year holding pattern before deciding to sell their new property.
“If you plan to upgrade, you have to take into account selling and purchase costs and it will take time to recover these. A five year holding plan will ensure that through capital growth in your property, these changeover costs will be easily re-couped through capital growth in your new property. If you are upgrading to a top tier coastal property, a good tip is to select a property that offers the opportunity to add significant value of this five year holding period. The property may only be a single story. However, by adding an upper floor, you may be able to achieve Ocean views which will significantly increase the value of the home,” he said.