Brisbane buyers are taking advantage of the current market conditions, adapting a fixer-upper strategy that provides substantial equity boost, says an expert.
The strategy is apparent in some suburbs in Brisbane, where buyers are able to grow their equity by rebuilding homes, said Melinda Jennison, managing director of Streamline Property Buyers.
"It really is a case of destruction plus construction equals profit. When you actually run the numbers, the tactic makes sense, but location is crucial, otherwise you’ll be left out of pocket," she said.
Melinda said ideal locations are typically near-city areas where it is easy to demolish an existing home and build a new one.
"The surburb must also have wide price disparity between new and existing homes, gentrification, strong family-buyer demand, and desirable attributes such as views," she said.
Wavell Heights is one of the suburbs where the flipping strategy is widely used. It is only nine kilometres away from the central business district and is dominated by detached homes on generous allotments.
"Wavell Heights has huge price disparity — the difference from the entry price to the exit price is significant because the end product is so highly desired by the local buyer demographic," Jennison said.
Seven Hills is also a good suburb for the flipping strategy, Jennison said. Located only five kilometres from the CBD, the suburb also has a significant price disparity, allowing for a significant equity boost.
Gordon Park is another attractive option due to its proximity to infrastructure and services. It has a “parkland” lifestyle that could be very popular for family buyers, Jennison said. Other popular suburbs for property flippers include Corinda, Alderley, and Tarragindi.
Jennison believes the flip-for-profit strategy makes sense as competition for high-quality homes becomes tighter due to the shrinking number of listings. This gives builders an upper hand as they can capture the demand from executive-level buyers who are choosy about their homes and are unlikely to look in the existing pool of listings.
"We were seeing strong net interstate migration prior to the crisis. While this momentum has slowed due to border restrictions, there’s no doubt once they’re lifted, huge numbers of southerners will make Brisbane their new home," she said.