In a recent interview with the Sydney Morning Herald’s Jim Malo, Wendy Chamberlain calls property price guides ‘a work of fiction.’ If you’ve been on a fruitless and frustrating house-hunting expedition in Melbourne’s property market, you’ve likely come to the conclusion that she is right.
The Sydney Morning Herald article explores the correlation between price guides, actual sales prices and buyer expectations, particularly those of the inexperienced first home buyer. The difficulty for first home buyers or new buyers to the market is that they might assume that if their budget is within a stated price guide, that they can reasonably expect to have a good shot at buying that property. It’s a fair assumption, but unfortunately it’s not accurate.
Regardless of whether the property price guide is underquoted or fierce competition amongst buyers drives up the price, Melbourne homes are selling for well above the price guide or reserve price in most cases, leaving buyers out in the cold.
Wendy advises buyers to only look at properties where their budget is near the top of the quoted price range. She says if the buyer’s budget is $800,000 they shouldn’t bother looking at properties listed for $800,000 to $880,000 because the vendor wants $880,000.
“Low pricing generates interest, competition, and a higher sale price. It’s their strategy,” Wendy explains. “How they (the agents) position the pricing… the vendor wants to get the top of that range.”
So if you’re a first home buyer with a budget of $600,000 you can save yourself a lot of wasted time and disappointment, simply by looking at properties advertised in the $550,000 to $600,000 range, knowing that the vendors are actually looking for $600,000.
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