Was it overpriced? No. It was right on.
What did you think it would go for? I thought it would go in the high threes.
What was surprising about it?
It was sold to someone initially looking for a rental. You wouldn’t think you would put a $3.8 million house on the market, and it would be bought by someone in the area looking for a rental.
There’s a terrible shortage of rental properties. A father decided – he had two sons and a daughter, all in their 20s – because nobody would rent them in Paddington, he said, “I’ll buy you a house”. They’re all moving in. That’s their new share house.
Usually, when property goes up in price, people move to rentals. When rents go up in price people move to buy. But they’re almost the same now. It’s cost neutral. There’s such a shortage of stock in terms of rentals.
What’s the market like?
The big picture is that we went up 47 per cent during COVID. Last year we lost 20-25 per cent. Anybody who bought during COVID and now sells – they’re going to sell for less than they bought it during COVID. They’re the ones caught out.
We’re always the first to fall and the first to bottom out. There’s only a certain bottom you can go to in a suburb like Paddington. We haven’t moved in terms of prices since October last year.
About five years ago, we had a lot of north shore buyers. We’ve got north shore buyers coming back in and downsizers coming back in. A lot of north shore people buy something and rent it out. When they retire they’re going to come here.
What are rental yields like?
They’re all about 2.5-3 per cent in Paddington. Some places might be 3.5 per cent now. But you also get the capital gains.
I’ve not sold a property ever to somebody originally looking for a rental property in that same market. They had literally gone out looking for a rental property and ended up buying a property.
Do you reckon we’ll see another result like this: a) next week b) next year c) next cycle d) never?
I think we might see it next week if the rental market stays as tight as it is. If you have one put aside, why wouldn’t you invest in a rental property, put your kids in there and this is still a good investment for you.