The heat in Australia’s housing market is creating opportunities for disruptive businesses to address the frustrations of buyers and vendors.
Although dwelling values softened marginally in the east coast capitals last month after fresh clamps on bank lending, the dip followed a five-year bull run where values soared more than 70 per cent in Sydney and 50 per cent in Melbourne, based on CoreLogic figures.
The spiralling prices have left first home savers worried about ever being able to afford a deposit, and homeowners hesitant to sell for fear of not being able to buy back into a rapidly escalating market.
The conditions have created opportunities for a wave of small but expanding disruptive businesses, both homegrown and entering Australia from overseas, aiming to shake up the property industry from new builds to sale and investment. Fractional investment platform BRICKX for one is seeing interest from younger clients faced with surging prices for a house or apartment in Australia’s capital cities.
The platform allows users to buy a fraction of a real property, with prices starting from less than $100. It won’t put a roof over a user’s head, but it’s an affordable starting point for an investor. Some 74 per cent of the platform’s clients are aged under 35 and have never invested in or owned residential real estate before, chief executive Anthony Millet says.
“No matter how hard they can save, if the housing market continues to run away from them, it can lead to a lot of frustration and disillusionment,” Mr Millet told The Australian. “Even in the more challenging years of the cycle if you’re looking to use BRICKX as a hedge for the housing market it may still make sense.”
The selling of properties has also come under focus, with some vendors starting to question agent’s fees.
Agents say they help clients achieve better sale results, but vendors have been turning to British low-cost agent Purplebricks, which set up in Australia, and local rivals such as buyMyplace and MiSale.
Vendors who also need to buy somewhere else are conscious that prices for their new home have likely risen in value too, making a low-cost sale attractive, MiSale chief executive and co-founder Ewen Malcolm says.
The model also works as the market starts to soften: “When you’re selling, if there’s not as many buyers around, any little advantage you can get is key.”
As prices for established homes have soared, new builds start to look more attractive.
The cost of building a new home has risen less sharply than prices for existing homes, meaning the discount for buying a new house and land package has widened in Melbourne and Sydney in recent years, according to Daniel Peterson, chief executive of iBuildNew.
His website allows buyers to compare developers and home builders, and has gained users as land takes longer to be titled after an initial deposit is made, allowing buyers extra time to do their research.
Immigration into Melbourne and Sydney is driving demand, which is “terrific”, Mr Peterson says.