Sydney is a wonderful place to buy property and rent it out to other people or sell it. However, sometimes the rental demand might increase while at other times you won’t be able to find any tenants.

Low auction clearance rates have an effect on the rental demand in Sydney. Let’s discuss the definition of a clearance rate before we move on to the main theme of this article.

Understanding Clearance Rate

A clearance rate is a major element of the property market. A low or high clearance rate tells if the market is favourable for the buyer or the seller. These rates are expressed as percentages and denote how many properties are at auction which are either sold or cleared.

A high clearance rate, between 75 to 80 % shows that the market is favourable for the sellers. It indicates that the available housing stock is low and the buyer demand is high.

On the other hand, a low clearance rate (almost 60 %) shows that the market is favourable for the buyers. It indicates that the house prices are declining and there is a low auction interest.

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Housing Demand in Sydney Was Strong

Two years back in 2016, the demand for houses in Sydney was booming. Auction clearance rates as high as up to 84 % were also set.  Almost 7 million dollars were paid for a four-bedroom house that was sold in auction. However, this meant that banking regulator APRA would make lenders to tighten credit to investors.

At that time, high auction clearance rates meant that the sellers could take any price that they wanted. Buyers were willing to buy properties at high prices.

Auction Clearance Rates Have Now Dropped in Sydney

Every region in Sydney is affected by the latest tightened lending restrictions. This has caused a huge increase in housing supply. Last year, home owners could sell anything with a roof over it. Now, they are trying hard to sell houses even built in prime locations.

Recently, auction clearance rates in Sydney have undergone various changes. These changes mainly range from 51 to 63 %.

The low auction clearance rates have made the market strong for the buyers. Buyers are looking for the cheapest possible options. On the other hand, renters are worriedly searching for new tenants.

Low Auction Clearance Rates and Rental Demand

With low auction clearance rates, the ball goes in the buyer’s court. The home owners are forced to sell their houses on low prices and the buyers are happy to purchase on low prices.

Even big properties with proper fences and a huge garden are being sold on low prices in Sydney. The case was quite different two years back. In 2016, even small properties were highly valued. Now, the rental demand has gone down due to the low

We all make mistakes, but making a blunder while purchasing a commercial property can have long term consequences. A property that just looks good should not be bought without doing proper homework.

Let’s discuss some things you should avoid when you invest in a commercial property.

Don’t Rely on Inflation

You should not rely on inflation to decide whether to buy a property or not. Although the current economic conditions of the location can give you some hint on the value of the property, you should consider other factors as well.

Property buyers should keep in mind that there are some costs related to owning a piece of land such as the maintenance costs and taxes. If you understand this, you can make a wise investment with a bright chance of getting high returns in future.

A good step is to see the bigger picture. Put yourself into the shoes of the person who would buy the same property from you in the future. If you think the property is worth investing in, then you can go ahead and buy it.

The location and condition of the property can decide its value in the coming years so make sure to inspect it thoroughly.

Not Working With a Reputed Company

Companies that have been in the commercial estate market for a few years can guide you much better than new firms in the same industry. These companies are experienced and have gone through several stages of learning which has helped them to become a professional in this field.

If you choose a wrong company, chances are that either you would buy the property at a high price, or the location would not be suitable for selling it in the future, or the condition of the building would be poor. Whatever the case is, it is better to look for a reliable firm for consulting before buying a commercial property.

StamfordCapitalInvestments.com.au is a reputed firm and has the capability to identify excellent investment opportunities.

Examine the Entire Property and Don’t Rush

An initial look of the building cannot provide you the full picture. You need to carefully go through all the different areas of the property to analyse its condition. A building in a poor condition would need repairs which would cost you more than you think.

Moreover, don’t rush into buying a piece of land because it looks “awesome”. Don’t let your emotions cloud your judgment. Sparkling chandeliers, new appliances and other stuff like that should not be your priority. These attractive things do not decide the value of a property.

Spend some time to go through different properties to find the perfect place for you. Compare the sizes and prices of various buildings to get a rough idea about the cost. Investing in a commercial property is a long term move, so make sure that you don’t take it for granted.