What's the difference between cheap and affordable property?

Property buyers in the southern states are now chasing housing affordability and many are looking to Queensland to invest their hard-earned dollars.

But uneducated buyers can sometimes wind up with a “cheap” property because they have been seduced by the price tag alone.

Experts believe that interstate buyers need to be doubly careful if investing in the sunshine state because the market can have unusual variables.

Sydney-based Right Property Group director and buyers’ agent Steve Waters said many southern buyers did not understand the impact of flooding on the Queensland market.

“You get better bang for your buck north. Every cycle we have the same scenario,” he said.

“But the unsuspecting are going up there and saying, ‘Wow! Look at what I’m buying’, but they don’t know if it gets wet because we don’t have a lot of that down south.”

Statistics do not explain the vast price differentials that can exist in a flood-affected suburb, he said, because some streets may be high risk, and others classified as low.   

But Waters said not all “cheap” properties were a lost cause, as long as buyers understood why they were priced that way in the first place.

“Properties usually are cheap because they’ve got some sort of ‘wart’ on them,” he said.

“Whether that be cosmetic, or as we like to say they’re cosmetically challenged, which is what we look for, as opposed to something that perhaps has structural issues or is in an area that’s flood-affected.”

Propertyology market analyst and buyers’ agent Simon Pressley said buyers considering a “cheap” property must also delve into the reasons why.

“It’s a matter of understanding of why is it a stale property? Why has it been on the market for a long time?” he said.

“Often the reason why it hasn’t sold should be the same reason why you and I, when we discover it, should avoid it, too.”

Pressley said about 20 per cent of the time, a problem property could be transformed into some more desirable, but the majority of the time it would always be troublesome.

If a property was in a poor position, was flood-prone, located next to a service station, or on a busy road were all major issues, he said.

And even if the price continued to fall as the vendor became increasingly desperate to sell, Pressley said, it still did not necessarily turn it into a worthwhile investment.

“The fundamentals of that asset are still bad. It doesn’t matter what price it is,” he said.

“And when you want to sell it, as the new owner in years to come, you’re going to have the same issues as that current person has and you’ll be going, ‘Why did I do this?'”

Advice for southern buyers

• Have local people on your team who are very experienced in the areas that you’re interested in.
• Spend time with key players, including council because they have a multitude of tools to identity issues such as flood overlay maps.
• Speak to local councils and local real estate agents.
• Nothing beats being on the ground, which means physically going up there and doing your due diligence.

Source: Steve Waters, Right Property Group