Sellers spending $60,000 on renovations to attract ‘picky’ buyers
As the housing market cools, sellers are having to splash out tens of thousands of dollars on renovations to make their homes look brand new to appeal to “picky” buyers.
According to Carrie Law, chief executive of real estate portal Juwai.com, Chinese buyers in particular want “like-new” properties, while Chinese vendors are faster to spend on renovations than locals.
“Chinese buyers are the biggest international buyer group, but they are picky,” she said.
“They are especially picky in this market. They want a gorgeous home so they can show the pictures to their friends back home and make them jealous. They tend to like homes that look as close to new as possible.”
Foreign buyers are able to buy only established, second-hand property if they have Australian residency or have become citizens.
Concern about Chinese buyers driving up prices forced state and federal governments to implement a number of tax changes last year, causing many to go elsewhere. Chinese investment in Australian real estate has fallen by roughly 70 per cent since 2015.
Ms Law said Chinese vendors tended to be much more aware than others that property needs to present well to sell well “because that’s what’s expected in China, too”.
“The Chinese in Sydney who we see selling today are much more likely than other vendors to have invested in pre-sale renovations,” she said. “While others ask if they should spend $5000 on staging, Chinese vendors are spending five times that on a new bathroom.”
In mainland China, many Chinese keep investment properties empty so it’s in better shape when they come to sell it. Sometimes they even maintain it as a shell, with no ceilings, floors, walls, kitchen, or bathrooms.
“From the day of purchase, they are calculating how to generate the best return when they sell,” Ms Law said.
“In China, rental yields are very low while price gains have been extremely high. That explains why many property owners don’t bother to find renters for their investment properties.”
Raine & Horne luxury sales agent Matthew Mifsud is currently selling a $2.3 million waterfront apartment in Pyrmont that the owners have spent upwards of $40,000 preparing.
“I’d call them improvements,” he said. “It’s carpet, paint, LED lights throughout, bathroom restoration, repolishing the marble, grouting, changing shower heads, new appliances in the kitchen, lots of cosmetic stuff.”
Mr Mifsud said in a slowing market, if the property “doesn’t stand out the buyers won’t even come”. Falling prices have brought out “bargain hunters” who are looking for discounts of up to 5 per cent.
He said the renovations had worked, with the Pyrmont property attracting more interest “compared to my other listings”. The trend had started within the past two years “but even more so now”.