In an active seller’s market, how can home owners make their properties shine and ultimately maximise profits?

New research from Westpac found that seller confidence has been rebounding as buyer demand continues to rise across Australia, with one in three home owners intending to sell their property in the next five years.

According to Westpac’s managing director of mortgages, Anthony Hughes, the big shift in property aspirations, which involve seeking bigger space and outdoor amenities, not only fuels buyer demand but also motivates “more Australians to think about selling their current property so they can purchase a new home to better meet their future needs”.

With more sellers expected to come onto the market over the next few months, Westpac shared five top tips for preparing a home for sale:

1. Increase curb appeal

A property appealing to the eye can help generate further interest. Simple measures like cleaning the front porch, adding some striking pot plants, or giving the front door a fresh coat of paint can help increase your curb appeal.

2. Declutter

Removing everyday items can help provide clean and spacious areas that prospective buyers can envision living in. Consider removing personal items like family photos during inspections to help the buyer mentally ‘move in’.

3. Make the kitchen and bathroom shine

Minor repairs or cosmetic changes can help transform a space into an inviting, modern living area. Painting old cabinets, updating doorknobs or cupboard handles and adding fresh towels, candles or flowers can help freshen up your kitchen or bathroom.

4. Increase natural light

Natural light can help make the home feel bright and spacious. Make sure to open all your curtains and blinds, wash your windows and prune back any plants that might block out the light ahead of any inspections.

5. Improve outdoor areas

Outdoor living is popular for many Australians. Sprucing up your outdoor areas by mending fences, weeding the garden and adding a couple of extra plants can help entice prospective buyers.

Property research can be daunting, especially for first-timers, but two property gurus and self-proclaimed data nerds lay the groundwork for smart investing.

The co-founders of The Property Nerds, Arjun Paliwal and Kent Lardner, recently released a 154-page Australia’s Top 20 Investing Regions for 2021 report, using data to track down the best-performing markets in the country.

In terms of methodology, the duo explained their processes of data shifting on a recent episode of The Smart Property Investment Show.

“We had to sit back and thought, ‘There”s regions I like, there’s regions Kent likes and then there’s regions where we think others may like. This made it pretty hard to begin with,” according to Mr Paliwal.

“But then we came back and thought about it and said, ‘What do investors really want? They want good capital growth in an area with relatively low incoming risk, combined with a property that gives them a good yield and is easy to rent.”AdvertisementAdvertisement

Putting biases aside, Mr Paliwal and Mr Lardner “let the data speak” and came up with six key metrics that ultimately helped them identify the best markets.

1. Building approvals

When studying price growth, the building approval pipeline could tell an investor about the potential movement of the market over the short- to long-term.

“We made a conscious decision to focus specifically on houses… because at a national level, we saw a lot of risk associated with apartments.”

“We effectively look at how many properties are in the building approval pipeline, relative to how many properties are in that region,” Mr Lardner explained.

According to Mr Paliwal, looking at the last 12 to 15 months of approval data can also reveal possible risks.

“So, the key is when we look at those last 12 to 15 months of approval, we’re genuinely able to see, ‘Hey, what’s going to come up here,” Mr Paliwal noted.

2. Inventory levels

Determining inventory levels means “perfectly combining listings and sales in one picture”, Mr Paliwal said.

Inventory levels look at the combination of sales averages and numbers of active listings online. “Low inventory number equals more market pressure” as more people can sell faster on the back of a surge in buyer demand, according to the researcher.

“It tends to mean that a vendor can sit back and go, ‘Why should I discount? Why should I make my price cheaper?’”

3. Days on market

This looks at how fast a property is selling in comparison with historical data, Mr Paliwal said.

‘How fast is something selling? What was the difference between last year?’ are some of the key questions The Property Nerds ask.

4. Vacancy rate

Vacancy rates are a reflection of all the available properties in a rental market – properties still vacant after three weeks of advertisement.

“We measure that relative to how many properties are advertised by real estate agents. So, it’s not how many properties are rental properties in a suburb or the region, but how many are advertised,” Mr Lardner said.

According to Mr Paliwal, a vacancy rate of 0 to 1 per cent spells a rental crisis. The next range of 1 to 2 per cent represents a tight market, while the 2 to 2.5 per cent range signifies a “tighter” but balanced point.

Mr Paliwal noted that anything above 2.5 per cent is when the caution alarm goes off.

“Above three, renters you choose your price,” Mr Paliwal said.

5. Rents

Talking about rents from a data perspective, Mr Lardner explained that the reference point here is the advertised rental.

What investors need to pay attention to is the median price of the advertised rental and the percentage changes – looking for those rising rents.

“When we’re talking about houses, we’re looking to group houses and duplexes. When we’re talking about units, we’re talking about anything that is strata,” Mr Lardner noted.

6. Rental yields

A rental yield is the annual rental expressed as a ratio of the purchase price.

Mr Lardner advised investors to be cautious with the published rental yield data, because most are derived on the basis of the median rent and the median sale price, meaning that if you’re buying a property that is not at the median, you can’t be sure that’s going to be the most likely yield.

“The smaller priced properties, the bedsits, have always had that higher yield,” Mr Lardner revealed.

“What I always like to do is to take the median of a one-bedroom unit in terms of both sale price and rent price and use that to calculate the yield. That gives you a bit of a more accurate figure if you’re doing the analysis as an investor,” Mr Lardner said.

This can then be adjusted depending on the size of the property you’re looking to buy.