With the December market firing on all cylinders and still around 1000 auctions to go before Christmas, I think it is time to take stock of what has happened this year and also look into the crystal ball again to see where we are going next year.
Sales exceeding 1000 reported to the REIV almost every non holiday week since February Clearance rates in the 80% range almost all year. Properties under $500k have increased in price week in week out. Both first home owners and investors have flooded the market and are still ringing for help with one week to go before Christmas. The higher end of the market began recovering in May and by October we began to see record prices back into the over $2M mark.
Let’s look back to what we said this time last year:
Extract from Market comments 15th December 2008
‘All in all, properties that are in good locations that show a history of good capital growth, have an improving yield and are under $500,000 will be the hottest property for the first six months of next year. In the later half of the year, depending on the economic outlook and what consumer sentiment brings, properties between $500,000 and $1M will be the next bracket to move. Once the economy begins to recover, properties above $1M will rebound extremely well. If you are in the market for this type of property, spring 2009 may well be the last time to buy at reduced prices before a recovery in early 2010.
It has been a tumultuous year throughout the world. Next year will probably be easier to read than this one. Although some downsizing in nearly all industries is a fact that we will need to get used to, it will also be a time for opportunity. Don’t look back in 2010 and say “why didn’t I buy property last year”’
If we go back to October 2008
‘In my opinion, this can only lead to a growth in property prices. It will start in the sub $700k category and then move, slowly, into higher price brackets. Within the next 6 - 12 months, properties below $700 will begin to sell strongly. And, if we add to this the government incentive of doubling and / or tripling the First Home Owners Grant, we should see very good growth in this sector. Properties over $1.5M will always sell depending on whether the agent and vendor pitch to the correct price. Good property always sells well; average or poor properties sell at the right price and tend to fail when marketed above their correct price range.’
Even in the depths of despair during 2008 we could see that population increases, over 1000 reported sales most weeks and rents increasing steadily, were keeping the market buoyant. 2009 has shown us that quintessential elements of price movement are supply and demand. All other forces will cause a change to these fundamentals. The biggest single force is the unemployment rate and as this is slipping down again, I do not think we will see the 10%+ numbers that economists were throwing around in 2008. Interest rates tend to have a positive effect on the upward movement of price in the property market. Assuming the RBA knows what they are doing the more they raise interest rates, the better our economy is doing and the more people will pay for houses.
Overall, 2010 will bring us a fresh round of record prices. I think we will see at least 10% - 15% upward movement in the inner city and established suburbs around Melbourne. I think this is a conservative estimate as well. I think 2009 will be seen as an average growth year for Real estate in Melbourne over the coming decade. We may see a much lower rate of increase or even a slight decrease in the new “estate” suburbs as the First Home Owners Grants decrease.
Over the next decade, I believe we will see generational change in home ownership in this country. If you are an owner of property within the next decade, you and your family will always own; If you do not it will take generations to buy a family home and the deposit needed will take a lot more than a single wage.
I would like to thank all the readers of this column for their feedback and support throughout the year. I would like to wish you and your families a very happy festive season and we will be back early in the New Year.
Our office is closed on Tuesday 22nd December 2009 and re-opens on Monday 4th January 2010.
Ian James
Monday, December 14, 2009
Tuesday, December 1, 2009
Market Comment - Monday November 30th 2009
We have seen the first weekend since May that the clearance rate has dipped under 80%. And it only dropped to 78%. It has taken the biggest auction weekend of the season to do it. There were over 1500 reported sales to the REIV last week. This equates to about 50% more than normal. AND STILL THERE WAS A 78% CLEARANCE RATE.
The market is not slowing down; in fact it is picking up pace. Agents are already starting to book auctions for February. This, at a time when there are still 2500 auctions gazetted to occur before the end of the year.
There is quite a bit happening in the world at the moment and most of these things will impact heavily on rising house prices. Joe Hockey is primed to take over the Liberal Party, Reserve Bank Governor, Glenn Stevens, is set to give all the mortgage holders in the country a Christmas gift they do not wan to see. Interest rates will probably rise by another 0.25% this month. On top of this all our utilities are about to get substantially more expensive thanks to Mr Rudd.
Don’t forget the Emissions Trading Scheme (ETS) is simply a way to increase our cost to purchase anything that relies on fossil fuels to a point that will make alternative fuels economically viable. In other words, raise the price of fossil fuels by extra taxes to such a point that people will switch to renewable energy because it will then be cheaper.
People are not selling houses as often as they once did. Immigration is also still increasing as is our natural population growth. Our kids are staying home longer than ever. More young urban professionals want to live in smaller dwellings closer to the cities however those wanting a family are looking for the “McMansion” out in the new estates. These areas will be the ones most impacted by rising interest rates and the lack of average capital growth.
All of these things will impact on price of property over the next five – fifteen years. In Europe they have a home ownership near 25% unlike Australia which has historically been around 75%. But this will change, and I think it will change this generation. Young professionals will start to look at long term leasing rather than renting. People will need generations to purchase homes. The average young family will simply be priced out of the market.
Over the next 5 – 10 years those who can afford to purchase property should do so, and buy as many investment properties as they can. This could be the start of the “haves” and the “have nots” When our kids need $200,000 as a deposit for their first flat, if the parents do not have equity to cover this, it will be almost impossible to save this money. On top of this rents will increase rapidly in line with ownership percentages. The lower the ownership percentage, the faster rental prices will rise.
All in all, the Melbourne property market is in for another boom era. As we were saying in our market comments early last year, during all the gloom and doom; Prices of Melbourne property will grow at about 10% per annum, doubling every seven years for the next five to ten years. The exception will be in the new estate areas where growth is usually limited to less than 7%, and considering these areas have been given the artificial stimulus with the increased First Home Owners Grant, the next 5 years will probably be less than 7%
If you require any assistance in purchasing property, please do not hesitate to call us for a free no obligation meeting
Ian James
The market is not slowing down; in fact it is picking up pace. Agents are already starting to book auctions for February. This, at a time when there are still 2500 auctions gazetted to occur before the end of the year.
There is quite a bit happening in the world at the moment and most of these things will impact heavily on rising house prices. Joe Hockey is primed to take over the Liberal Party, Reserve Bank Governor, Glenn Stevens, is set to give all the mortgage holders in the country a Christmas gift they do not wan to see. Interest rates will probably rise by another 0.25% this month. On top of this all our utilities are about to get substantially more expensive thanks to Mr Rudd.
Don’t forget the Emissions Trading Scheme (ETS) is simply a way to increase our cost to purchase anything that relies on fossil fuels to a point that will make alternative fuels economically viable. In other words, raise the price of fossil fuels by extra taxes to such a point that people will switch to renewable energy because it will then be cheaper.
People are not selling houses as often as they once did. Immigration is also still increasing as is our natural population growth. Our kids are staying home longer than ever. More young urban professionals want to live in smaller dwellings closer to the cities however those wanting a family are looking for the “McMansion” out in the new estates. These areas will be the ones most impacted by rising interest rates and the lack of average capital growth.
All of these things will impact on price of property over the next five – fifteen years. In Europe they have a home ownership near 25% unlike Australia which has historically been around 75%. But this will change, and I think it will change this generation. Young professionals will start to look at long term leasing rather than renting. People will need generations to purchase homes. The average young family will simply be priced out of the market.
Over the next 5 – 10 years those who can afford to purchase property should do so, and buy as many investment properties as they can. This could be the start of the “haves” and the “have nots” When our kids need $200,000 as a deposit for their first flat, if the parents do not have equity to cover this, it will be almost impossible to save this money. On top of this rents will increase rapidly in line with ownership percentages. The lower the ownership percentage, the faster rental prices will rise.
All in all, the Melbourne property market is in for another boom era. As we were saying in our market comments early last year, during all the gloom and doom; Prices of Melbourne property will grow at about 10% per annum, doubling every seven years for the next five to ten years. The exception will be in the new estate areas where growth is usually limited to less than 7%, and considering these areas have been given the artificial stimulus with the increased First Home Owners Grant, the next 5 years will probably be less than 7%
If you require any assistance in purchasing property, please do not hesitate to call us for a free no obligation meeting
Ian James
Wednesday, November 25, 2009
Market Comment - Monday November 23rd 2009
Whilst the reported sales by auction was down slightly on the previous week, the reported market volume in dollars was up. The market looks to be going to complete this year on a much higher note than both the previous years.
There was an article written in the Herald Sun this morning about younger buyers having difficulty getting into the market place. It talked about Generation Y buyers being held out of the market place by Baby Boomers and Generation X home owners not selling as often as people did in the past. The study was done by Craig James of the Commonwealth Bank.
If we add this to the fact we have a population growth out stripping new building, more investors coming into the market place instead of putting their money into shares and only 15% of people with a mortgage have sold their properties since 2004, then it is no wonder property prices are sky rocketing.
Every time we talk about how difficult it is to purchase a property we come back to supply and demand. Well now for some good news. We have purchased over 50 properties in the last few months. There are properties out there to buy. You need to be very focused on what you are going after. When you find the right property, it needs to be analysed for both its positive and negative attributes and also what its true value is.
People come to us having been looking for years. Last month we bought for a client and this is what they had to say:
“We are absolutely delighted with our purchase which meets all our requirements and we could not have done it without you.
From beginning to end (all of 1 week), we found the JPP team to be extremely professional, efficient and most of all friendly and easy to communicate with. We will definitely be back.” C & A
It does not take two years to find a property; in fact the market will have moved so much after just 4 months that what you were searching for at the start will be vastly different to what you are currently looking at. Searching for property is something that anyone can do. But to do it effectively and efficiently is a real art.
If you have been trying to secure your first home, your dream home or an investment property without much success, why don’t you give us a call? There is no charge or obligation at our first meeting.
Ian James
There was an article written in the Herald Sun this morning about younger buyers having difficulty getting into the market place. It talked about Generation Y buyers being held out of the market place by Baby Boomers and Generation X home owners not selling as often as people did in the past. The study was done by Craig James of the Commonwealth Bank.
If we add this to the fact we have a population growth out stripping new building, more investors coming into the market place instead of putting their money into shares and only 15% of people with a mortgage have sold their properties since 2004, then it is no wonder property prices are sky rocketing.
Every time we talk about how difficult it is to purchase a property we come back to supply and demand. Well now for some good news. We have purchased over 50 properties in the last few months. There are properties out there to buy. You need to be very focused on what you are going after. When you find the right property, it needs to be analysed for both its positive and negative attributes and also what its true value is.
People come to us having been looking for years. Last month we bought for a client and this is what they had to say:
“We are absolutely delighted with our purchase which meets all our requirements and we could not have done it without you.
From beginning to end (all of 1 week), we found the JPP team to be extremely professional, efficient and most of all friendly and easy to communicate with. We will definitely be back.” C & A
It does not take two years to find a property; in fact the market will have moved so much after just 4 months that what you were searching for at the start will be vastly different to what you are currently looking at. Searching for property is something that anyone can do. But to do it effectively and efficiently is a real art.
If you have been trying to secure your first home, your dream home or an investment property without much success, why don’t you give us a call? There is no charge or obligation at our first meeting.
Ian James
Tuesday, November 17, 2009
Market Comment - Monday November 16th 2009
1375 properties were reported as sold last week by the REIV. Just over 650 of these sold at auction. The market is running hot and will most likely do so for at least another three to four weeks. Enquiry levels are still high and I don’t see any other trend for property price but up. We know that rental vacancies are still at an all time low, we know that property investors are re entering the market in droves and we know that even with a couple more rate rises; money is still cheap and easily accessible for residential purchasers.
So where will the market go next year. The historical averages going back to 1980 show us that according the Valuer General’s data, approximately a third of suburbs in Melbourne have had an average median price increase in excess of 10% per annum. In ‘layman’s terms’ property prices in Melbourne’s best performing suburbs have doubled every 7 years. The best 10 – 20 have doubled every six years.
We have had tremendous competition this year for property and it has pushed our median price up quite strongly. Anecdotally, most of that growth has occurred in the last 4 months. But median prices are simply a statistical analysis tool that can sometimes be very inaccurate. (We discussed this a couple of weeks ago). It is supply and demand that will be the true indications of where the market goes.
As good property continues to sell throughout 2010, prices will rise dramatically. I would estimate an annual rise greater than 10% next year. And this will be on average property as well as good properties. As usual, there will still be the bottom third of properties that will not sell well, but on the whole I believe we will see market indicators rising between 10% & 15% by September next year. How hard the last quarter of the year runs will be dependant on the level of stock at the time.
There may be a small amount of investors that go back to shares next year as the market begins its next cycle, but there will still be ample buyers to outweigh sellers throughout next year.
If you are considering property purchases within the next twelve months please feel free to call or make an appointment to drop in for a chat.
Ian James
So where will the market go next year. The historical averages going back to 1980 show us that according the Valuer General’s data, approximately a third of suburbs in Melbourne have had an average median price increase in excess of 10% per annum. In ‘layman’s terms’ property prices in Melbourne’s best performing suburbs have doubled every 7 years. The best 10 – 20 have doubled every six years.
We have had tremendous competition this year for property and it has pushed our median price up quite strongly. Anecdotally, most of that growth has occurred in the last 4 months. But median prices are simply a statistical analysis tool that can sometimes be very inaccurate. (We discussed this a couple of weeks ago). It is supply and demand that will be the true indications of where the market goes.
As good property continues to sell throughout 2010, prices will rise dramatically. I would estimate an annual rise greater than 10% next year. And this will be on average property as well as good properties. As usual, there will still be the bottom third of properties that will not sell well, but on the whole I believe we will see market indicators rising between 10% & 15% by September next year. How hard the last quarter of the year runs will be dependant on the level of stock at the time.
There may be a small amount of investors that go back to shares next year as the market begins its next cycle, but there will still be ample buyers to outweigh sellers throughout next year.
If you are considering property purchases within the next twelve months please feel free to call or make an appointment to drop in for a chat.
Ian James
Tuesday, November 10, 2009
Market Comment - Monday November 9th 2009
The Melbourne property market retained its resilience over the weekend. 81% clearance rate for auctions has been reported by the REIV with 600 private sales, giving us a reported total of over1000 properties sold last week.
For the third time in the last month I have seen allusions to property spruikers in the press. The Henry Kaye’s of this world that preyed on people many years ago. You do not have to pay thousands of dollars to attend seminars to make good money investing in direct property.
In simple terms, property makes the owner money in two ways; rental yield and capital growth. This is very similar to buying shares where you get a dividend if the company has performed well enough and you get capital growth if the share price goes up. As we have seen in the past 2 years this does not always happen with company shares but growth has occurred with residential property.
An average property investor needs about 26% deposit to get into a direct property investment. This is because the bank will lend 80% of the value of a property and the on-costs (stamp duty, solicitors fees, loan fees etc) add up to around 5.5% + 0.5% for contingencies. This does not have to be cash in the bank. In fact it is usually equity in their own home. Equity is the difference in the value of your home and what you currently owe the bank.
Let’s say you have a property worth $500,000 and you owe the bank $250,000. You have $250,000 worth of equity in your property. The bank will allow you to use up to 80% or $400,000. Therefore, you have access to $150,000 that the bank will loan you.
If we purchase a modern 2 bedroom flat in Elwood for $500,000 plus on costs of $30,000, the bank will lend us $400,000 against the actual flat and the other $130,000 against our existing home. We know the rental return on a modern flat in Elwood is about $20,000 p.a. The bank interest (interest only loan) will cost 31,800 ($530k x 6%), we have owners’ corp. fees, rates, minor maintenance and property management fees totalling about $5000. (1% of property value). This means we have approximately $36,800 outgoing and $20,000 in income. This is a difference of $16,800 each year. An average modern apartment in Elwood will have a depreciation tax deduction of approx $8,000 p.a. and then you will get a tax deduction on the last $8,800. An average wage earner will get about a 30% deduction. This means you will be out of pocket approximately $6200. And this is easily covered by the bank overdraft on your initial home. This is known as negative gearing of property. So to purchase and hold a $500,000 property it will cost you just over $6000 in the first year and less each year as the rent goes up.
If we look back over the last 30 years of valuer general data in Victoria, we can see the top third of suburbs have doubled in value about every seven years. If we look at the above example in seven years our property will be worth $1M and it will have cost us 7 x $6000 = $42,000 to hold assuming no rental increase in seven years. We then deduct what we owe to the bank ($530,000) and we are left with $1M - $530,000 - $42,000 = $428,000. You now have over $400,000 equity which you can use to borrow for another property as well as your growth of your own home (now worth $1M).
This is not "rocket science" nor is it "property spruiking." This is just simple smart investing and utilising unused equity in your own property.
We do not charge you $10,000 for this information, nor do sell you anything. Anyone interested in purchasing property in Melbourne can call us for a free no obligation meeting to discuss this or any other property matter.
Ian James
For the third time in the last month I have seen allusions to property spruikers in the press. The Henry Kaye’s of this world that preyed on people many years ago. You do not have to pay thousands of dollars to attend seminars to make good money investing in direct property.
In simple terms, property makes the owner money in two ways; rental yield and capital growth. This is very similar to buying shares where you get a dividend if the company has performed well enough and you get capital growth if the share price goes up. As we have seen in the past 2 years this does not always happen with company shares but growth has occurred with residential property.
An average property investor needs about 26% deposit to get into a direct property investment. This is because the bank will lend 80% of the value of a property and the on-costs (stamp duty, solicitors fees, loan fees etc) add up to around 5.5% + 0.5% for contingencies. This does not have to be cash in the bank. In fact it is usually equity in their own home. Equity is the difference in the value of your home and what you currently owe the bank.
Let’s say you have a property worth $500,000 and you owe the bank $250,000. You have $250,000 worth of equity in your property. The bank will allow you to use up to 80% or $400,000. Therefore, you have access to $150,000 that the bank will loan you.
If we purchase a modern 2 bedroom flat in Elwood for $500,000 plus on costs of $30,000, the bank will lend us $400,000 against the actual flat and the other $130,000 against our existing home. We know the rental return on a modern flat in Elwood is about $20,000 p.a. The bank interest (interest only loan) will cost 31,800 ($530k x 6%), we have owners’ corp. fees, rates, minor maintenance and property management fees totalling about $5000. (1% of property value). This means we have approximately $36,800 outgoing and $20,000 in income. This is a difference of $16,800 each year. An average modern apartment in Elwood will have a depreciation tax deduction of approx $8,000 p.a. and then you will get a tax deduction on the last $8,800. An average wage earner will get about a 30% deduction. This means you will be out of pocket approximately $6200. And this is easily covered by the bank overdraft on your initial home. This is known as negative gearing of property. So to purchase and hold a $500,000 property it will cost you just over $6000 in the first year and less each year as the rent goes up.
If we look back over the last 30 years of valuer general data in Victoria, we can see the top third of suburbs have doubled in value about every seven years. If we look at the above example in seven years our property will be worth $1M and it will have cost us 7 x $6000 = $42,000 to hold assuming no rental increase in seven years. We then deduct what we owe to the bank ($530,000) and we are left with $1M - $530,000 - $42,000 = $428,000. You now have over $400,000 equity which you can use to borrow for another property as well as your growth of your own home (now worth $1M).
This is not "rocket science" nor is it "property spruiking." This is just simple smart investing and utilising unused equity in your own property.
We do not charge you $10,000 for this information, nor do sell you anything. Anyone interested in purchasing property in Melbourne can call us for a free no obligation meeting to discuss this or any other property matter.
Ian James
Wednesday, November 4, 2009
Market Comment - Monday November 2nd 2009
Even the Spring carnival couldn’t slow the Melbourne property market. Although 100,000 people were at the races on Saturday and more will grace the lawns of Flemington tomorrow, we still saw 339 auctions clear at a rate exceeding 80% and there were over 700 private sales reported to the REIV last week.
There has been plenty of talk about the market fluctuations throughout 2008 and 2009. We have seen reported figures of dramatic changes to our median prices. First, in November last year clearance rates were down around 50% clearance rate and then throughout early 2009 we saw the clearance rates move through the 70% and by May had reached the 80% range and have stayed there ever since.
But what most people are not talking about was the number of private sales and the types of properties that were selling. If we look at the median price for Melbourne homes we can see that it has moved from $450k to $423k to $403k and back to $480k in the space of 12 months. Everyone needs to remember these are very broad based statistics.
If you have been living and breathing the property market in Melbourne, all of it, not just the top end, not just the South East suburbs or the 7km circle, but the whole market, it was easier to see what was happening, and it beared little or no resemblance to the statistical data.
When times were looking gloomy in mid 2008, when everyone thought we were running headlong into the worst recession of our lives, most people were trying to divest themselves of any ordinary or poor investments in order to build up their cash reserves. This meant that a lot of very average properties were put on the market and sold at “fire sale” prices. In a statistical model, when many of the lower value properties are put on the market and fewer higher value properties are, the median will move down sharply. This doesn’t really give a good indication of where the property market is.
Even during the depths of despair in 2008, some good property was still selling above the equivalent 2007 prices. And throughout 2009 we have seen median prices “surge” forward. This is the statistical anomaly we saw in 2008 in reverse. Property prices in Melbourne will continue their 30 year trends for the foreseeable future. The top third of suburbs have averaged a median growth in excess of 10% p.a. since 1980. This data is from the Valuer General.
Property prices in Melbourne will continue to rise, despite the winding back of the first home owners’ grants, despite interest rises and despite the global economic downturn. There simply is not enough supply to meet the demand.
If you are interested in purchasing a property in Melbourne please do not hesitate to call for a free no obligation meeting.
Ian James
There has been plenty of talk about the market fluctuations throughout 2008 and 2009. We have seen reported figures of dramatic changes to our median prices. First, in November last year clearance rates were down around 50% clearance rate and then throughout early 2009 we saw the clearance rates move through the 70% and by May had reached the 80% range and have stayed there ever since.
But what most people are not talking about was the number of private sales and the types of properties that were selling. If we look at the median price for Melbourne homes we can see that it has moved from $450k to $423k to $403k and back to $480k in the space of 12 months. Everyone needs to remember these are very broad based statistics.
If you have been living and breathing the property market in Melbourne, all of it, not just the top end, not just the South East suburbs or the 7km circle, but the whole market, it was easier to see what was happening, and it beared little or no resemblance to the statistical data.
When times were looking gloomy in mid 2008, when everyone thought we were running headlong into the worst recession of our lives, most people were trying to divest themselves of any ordinary or poor investments in order to build up their cash reserves. This meant that a lot of very average properties were put on the market and sold at “fire sale” prices. In a statistical model, when many of the lower value properties are put on the market and fewer higher value properties are, the median will move down sharply. This doesn’t really give a good indication of where the property market is.
Even during the depths of despair in 2008, some good property was still selling above the equivalent 2007 prices. And throughout 2009 we have seen median prices “surge” forward. This is the statistical anomaly we saw in 2008 in reverse. Property prices in Melbourne will continue their 30 year trends for the foreseeable future. The top third of suburbs have averaged a median growth in excess of 10% p.a. since 1980. This data is from the Valuer General.
Property prices in Melbourne will continue to rise, despite the winding back of the first home owners’ grants, despite interest rises and despite the global economic downturn. There simply is not enough supply to meet the demand.
If you are interested in purchasing a property in Melbourne please do not hesitate to call for a free no obligation meeting.
Ian James
Monday, October 26, 2009
Market Comment - Monday October 26th 2009
What A Huge Week.
The last week of October is renowned to be very busy & this year has been no different!
Sales this week were high not only in Auctions of which the REIV reported 882, of which 723 were sold and there were also 741 private sales. This makes last week the biggest for the year.
Our advocates were involved this week in 7 Private sales through out the week, & 9 auctions of which we successfully purchased 4 prior to Saturday!.
Buying a property prior to auction will always give a good negotiator a much better chance to secure the property than going to auction. There are less emotional offers before auction and therefore a skilful negotiator may be able to purchase the property for a lower amount.
If you have let the property go to auction the emotion on the day is huge, your partner or friends all push you along & the auctioneer doesn’t help you think clearly when you are listening to his jibes such as “ What is another $5000.00 going to do to you”....... WELL what it can do is make you feel very ill that you have over spent. It can make you wonder if the property was really worth those extra $$$$ that I spent. You will be hoping that the bank is going to value the property at that price you paid, otherwise they may not loan you the money you thought they would. (OOPS didn't think of that one) This can & does happen; we have had calls from a couple of people who went to an auction with little or no experience and apparently got caught up in the heat of the day & were the successful bidders on the day, THEN after the auction has settled they have realised they have over paid & there finance will not cover what they have done!
Unfortunately if you bid at auction you are bidding unconditionally & in the terms that the vendor wants, with the contract that has been on display prior to the auction....
If you are thinking of attending an auction do set a limit, & do be comfortable to walk away if you are unsuccessful...
Back to the current market.
This is still ruled at the moment by the demand vs. supply, we saw many properties being sold well above the agents quotes while understanding this was not underquoting, this is caused by buyer demand.
Each auction we attended had at least 4 bidders, moving the price well above the reserve..We do not see any change of this happening in the short term & even longer as supply is still very scarce.
The Real Estate Institute of Victoria released the September growth figures in the Herald Sun on Saturday for each Suburb. This is no shock as we have been saying for months that property in good location, with public transport nearby, shops & good schools close will perform well & continue to show excellent returns for capital growth.
The REIV has released its September Quarter Property Update which shows the median price of a house in Melbourne reached $480,000, an increase of 6.7 per cent since the June quarter.REIV CEO, Enzo Raimondo said that improved confidence in the Victorian economy combined with ongoing population increases has resulted in a new record quarterly median price. The improved confidence in the economy has revealed the underlying issue; a lack of supply, both for purchasers and renters. Unless there is a sustained increase in supply the REIV expects further pressure on prices.
REIV Melbourne Median Prices
REIV 1 August 2009
Sep Qtr 2009 % chg Jun-09 to Sep-09 Jun Qtr 2008
House Median $480,000 6.7% $450,000
Unit/Apartment Median $410,000 5.1% $390,000
Reports like this one above have been seen in every paper, magazine & news show, we have seen this coming since very early February this year, Even with the interest rates going up, the supply issue will continue to cause the prices to increase.
The old question - When is the right time to buy property?? The correct answer is yesterday, however if you did not buy yesterday & you have the ability to do so, then do it today!!!
History shows property is a good investment, when bought well.
The market closer to the CBD is always the strongest, followed by the 15 - 25 klm radius... As the government opens up the land further afar, they will need to ensure all the infrastructure to be built & up & running & fully developed before buyers will see little capital growth in these areas, so when buying further afar look to it as a longer term plan!!
Sam James
The last week of October is renowned to be very busy & this year has been no different!
Sales this week were high not only in Auctions of which the REIV reported 882, of which 723 were sold and there were also 741 private sales. This makes last week the biggest for the year.
Our advocates were involved this week in 7 Private sales through out the week, & 9 auctions of which we successfully purchased 4 prior to Saturday!.
Buying a property prior to auction will always give a good negotiator a much better chance to secure the property than going to auction. There are less emotional offers before auction and therefore a skilful negotiator may be able to purchase the property for a lower amount.
If you have let the property go to auction the emotion on the day is huge, your partner or friends all push you along & the auctioneer doesn’t help you think clearly when you are listening to his jibes such as “ What is another $5000.00 going to do to you”....... WELL what it can do is make you feel very ill that you have over spent. It can make you wonder if the property was really worth those extra $$$$ that I spent. You will be hoping that the bank is going to value the property at that price you paid, otherwise they may not loan you the money you thought they would. (OOPS didn't think of that one) This can & does happen; we have had calls from a couple of people who went to an auction with little or no experience and apparently got caught up in the heat of the day & were the successful bidders on the day, THEN after the auction has settled they have realised they have over paid & there finance will not cover what they have done!
Unfortunately if you bid at auction you are bidding unconditionally & in the terms that the vendor wants, with the contract that has been on display prior to the auction....
If you are thinking of attending an auction do set a limit, & do be comfortable to walk away if you are unsuccessful...
Back to the current market.
This is still ruled at the moment by the demand vs. supply, we saw many properties being sold well above the agents quotes while understanding this was not underquoting, this is caused by buyer demand.
Each auction we attended had at least 4 bidders, moving the price well above the reserve..We do not see any change of this happening in the short term & even longer as supply is still very scarce.
The Real Estate Institute of Victoria released the September growth figures in the Herald Sun on Saturday for each Suburb. This is no shock as we have been saying for months that property in good location, with public transport nearby, shops & good schools close will perform well & continue to show excellent returns for capital growth.
The REIV has released its September Quarter Property Update which shows the median price of a house in Melbourne reached $480,000, an increase of 6.7 per cent since the June quarter.REIV CEO, Enzo Raimondo said that improved confidence in the Victorian economy combined with ongoing population increases has resulted in a new record quarterly median price. The improved confidence in the economy has revealed the underlying issue; a lack of supply, both for purchasers and renters. Unless there is a sustained increase in supply the REIV expects further pressure on prices.
REIV Melbourne Median Prices
REIV 1 August 2009
Sep Qtr 2009 % chg Jun-09 to Sep-09 Jun Qtr 2008
House Median $480,000 6.7% $450,000
Unit/Apartment Median $410,000 5.1% $390,000
Reports like this one above have been seen in every paper, magazine & news show, we have seen this coming since very early February this year, Even with the interest rates going up, the supply issue will continue to cause the prices to increase.
The old question - When is the right time to buy property?? The correct answer is yesterday, however if you did not buy yesterday & you have the ability to do so, then do it today!!!
History shows property is a good investment, when bought well.
The market closer to the CBD is always the strongest, followed by the 15 - 25 klm radius... As the government opens up the land further afar, they will need to ensure all the infrastructure to be built & up & running & fully developed before buyers will see little capital growth in these areas, so when buying further afar look to it as a longer term plan!!
Sam James
Monday, October 19, 2009
Market Comment - Monday October 19th 2009
There were just over 600 auctions at the weekend and 4 out 5 sold. On top of this 734 properties sold by private sale according to the REIV. With over 1000 auctions scheduled for next weekend agents all over Melbourne are busy shutting down as many sales as possible.
Whilst selling agents enjoy the street theatre of an auction and the publicity amongst the neighbours (their next potential clients), they also know that with a finite pool of purchasers it can sometimes be better to shut down a sale rather than only have one or two bidders.
For purchasers the equation is similar. If you can secure a property at a fair and reasonable price before auction you should; especially this week. If you are lucky and most potential purchasers go to other auctions then you might pick up a bargain. But if you are looking at good property there may be a huge amount of potential bidders at your auction. There are always risks as to which way to go.
The next 6 weeks will be a frantic lesson for the uninitiated in real estate. With our interest rates going up due to the unbelievable performance of our economy, the only way for property prices to move seems up. I would assume we will see a massive jump in prices during February and March next year and this will be on everyone’s mind between now and Christmas. For those who can buy this year, they will be able to both relax from the hunt and also bask in the upward tilt of the market.
If you are in the market for a property to live in or as an investment, give us a call for a no obligation appointment.
Ian James
Whilst selling agents enjoy the street theatre of an auction and the publicity amongst the neighbours (their next potential clients), they also know that with a finite pool of purchasers it can sometimes be better to shut down a sale rather than only have one or two bidders.
For purchasers the equation is similar. If you can secure a property at a fair and reasonable price before auction you should; especially this week. If you are lucky and most potential purchasers go to other auctions then you might pick up a bargain. But if you are looking at good property there may be a huge amount of potential bidders at your auction. There are always risks as to which way to go.
The next 6 weeks will be a frantic lesson for the uninitiated in real estate. With our interest rates going up due to the unbelievable performance of our economy, the only way for property prices to move seems up. I would assume we will see a massive jump in prices during February and March next year and this will be on everyone’s mind between now and Christmas. For those who can buy this year, they will be able to both relax from the hunt and also bask in the upward tilt of the market.
If you are in the market for a property to live in or as an investment, give us a call for a no obligation appointment.
Ian James
Tuesday, October 13, 2009
Market Comment - Monday October 13th 2009
After another week of 1250 sales The market may seem a little repetitive. The interest rate rise this week did absolutely nothing to dampen enthusiasm at auctions or negotiations. In fact, it has more than likely solidified the belief that the economy in Australia has turned the corner. More than slowing the property market down, I believe the next couple of interest rate hikes will push prices even higher.
The stock market is recovering but is still largely dependent on global events. This is still making the smaller, average investor a little nervous. There is still plenty of bad news coming from the US and Europe, albeit not as bad as last year. However, the property market, especially in Melbourne is being driven by very local factors; people entering our shores and a very large majority of these heading for Melbourne. There seems to be no change to these characteristics on the market in the foreseeable future.
Supply and demand are the leading factors driving price and this will continue for a very long time. Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now.
Over the next ten years or so we will begin to see density patterns change. Although most local councils tend to make life difficult for developers even doing simple dual occupancy sites, I can see this changing in the future. The cost of perpetually expanding Melbourne will simply be too much to bear on those 50+ kilometres from the CBD. This means we will see colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD.
It will also mean that Geelong may see its largest price growth for a very long time. Some of the other larger regional centres may see some increased growth but it is unlikely to exceed that of the properties within 30km radius of the CBD.
Nobody can determine what will happen in the future, we can only look at historical trends as well as where we find ourselves now. The top third of suburbs in Melbourne have had median price movements of 10% per annum or more since 1980. I believe these will be higher over the next ten years.
But even if they remain at 10% then the average investor who has 20% equity in a current property or $100k cash deposit can have a property with equity (value of the property minus any loans) worth over $800k. For all you maths buffs out there, this is effectively over 20% per annum and about as safe as any investment can be. This assumption is made as a simple one off investment of one property, leasing it out at an average level and then having it valued with a rise in price of 10% per annum.
The above example is very simple; you can increase this exponentially when you begin to reinvest equity as soon as possible. If you wish to have a chat about any of the above please do not hesitate to call and make a no obligation appointment.
Ian James
The stock market is recovering but is still largely dependent on global events. This is still making the smaller, average investor a little nervous. There is still plenty of bad news coming from the US and Europe, albeit not as bad as last year. However, the property market, especially in Melbourne is being driven by very local factors; people entering our shores and a very large majority of these heading for Melbourne. There seems to be no change to these characteristics on the market in the foreseeable future.
Supply and demand are the leading factors driving price and this will continue for a very long time. Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now.
Over the next ten years or so we will begin to see density patterns change. Although most local councils tend to make life difficult for developers even doing simple dual occupancy sites, I can see this changing in the future. The cost of perpetually expanding Melbourne will simply be too much to bear on those 50+ kilometres from the CBD. This means we will see colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD.
It will also mean that Geelong may see its largest price growth for a very long time. Some of the other larger regional centres may see some increased growth but it is unlikely to exceed that of the properties within 30km radius of the CBD.
Nobody can determine what will happen in the future, we can only look at historical trends as well as where we find ourselves now. The top third of suburbs in Melbourne have had median price movements of 10% per annum or more since 1980. I believe these will be higher over the next ten years.
But even if they remain at 10% then the average investor who has 20% equity in a current property or $100k cash deposit can have a property with equity (value of the property minus any loans) worth over $800k. For all you maths buffs out there, this is effectively over 20% per annum and about as safe as any investment can be. This assumption is made as a simple one off investment of one property, leasing it out at an average level and then having it valued with a rise in price of 10% per annum.
The above example is very simple; you can increase this exponentially when you begin to reinvest equity as soon as possible. If you wish to have a chat about any of the above please do not hesitate to call and make a no obligation appointment.
Ian James
Monday, October 5, 2009
Market Comment - Monday October 5th 2009
Market Comment 5th October 2009
Thank you to all those who came to see us at the Home buyers Show in Melbourne over the weekend. Finally after so many months of indecision, there were almost no industry experts predicting a fall in property prices over the next 12 months. In fact almost all of the talks I listened to were talking about a dramatic increase in property prices throughout Melbourne.
We saw the results for the last weeks sales go back to over 1200 sales for the week, with the clearance rate on nearly 500 auctions remaining over 80%. Over the next 9 to 10 weeks there will be a frenzy of activity. We should see plenty of new stock, but with vastly greater numbers of purchasers the key strategy to success will continue to be “Pay a fair price for a good property not a good price for a fair property”
Many of the experts talking over the weekend were assuming rates would rise but slowly. We are still coming out of a slowing economy and although Australia did substantially better than every other country in the world, our economic growth is still slow and will take time to get back to normal. Our trading partners are also dealing with their own economic issues. And although the property market may seem over heated the Reserve Bank has many other factors to think about before pushing rates up substantially. Any rate increase would be extremely detrimental to our unemployment rate. And whilst this has remained in an excellent position, it is still poised delicately on a razor’s edge. Any slow down in domestic spending will adversely affect unemployment.
To all those who attended my talk over the weekend on negotiation, my notes are available as a PDF. We are sending them out to all those that left their email address with us at the stand, but if you weren’t able to you can send us an email at chris@jpp.com.au and request the notes.
Ian James
Thank you to all those who came to see us at the Home buyers Show in Melbourne over the weekend. Finally after so many months of indecision, there were almost no industry experts predicting a fall in property prices over the next 12 months. In fact almost all of the talks I listened to were talking about a dramatic increase in property prices throughout Melbourne.
We saw the results for the last weeks sales go back to over 1200 sales for the week, with the clearance rate on nearly 500 auctions remaining over 80%. Over the next 9 to 10 weeks there will be a frenzy of activity. We should see plenty of new stock, but with vastly greater numbers of purchasers the key strategy to success will continue to be “Pay a fair price for a good property not a good price for a fair property”
Many of the experts talking over the weekend were assuming rates would rise but slowly. We are still coming out of a slowing economy and although Australia did substantially better than every other country in the world, our economic growth is still slow and will take time to get back to normal. Our trading partners are also dealing with their own economic issues. And although the property market may seem over heated the Reserve Bank has many other factors to think about before pushing rates up substantially. Any rate increase would be extremely detrimental to our unemployment rate. And whilst this has remained in an excellent position, it is still poised delicately on a razor’s edge. Any slow down in domestic spending will adversely affect unemployment.
To all those who attended my talk over the weekend on negotiation, my notes are available as a PDF. We are sending them out to all those that left their email address with us at the stand, but if you weren’t able to you can send us an email at chris@jpp.com.au and request the notes.
Ian James
Monday, September 28, 2009
Market Comment - Monday September 28th 2009
Congratulations to the Geelong Football club and commiserations to both the St Kilda team and their fans. It was a fantastic game and I think both teams deserved to win. But only one can. The same goes for buying real estate. Each property can only be bought by one person; the rest can come back next week.
If you want to learn more about how to negotiate, see us at the Home Buyers Show at the Melbourne Convention and Exhibition Centre on Friday Saturday and Sunday this week. I am speaking each afternoon around 3.30 on the Home Buyers Stage.
Over the weekend there were 135 reported auctions. This was 5 times as many as last year with a better clearance rate. There were a total of 728 properties reportedly sold last week. This is the first drop under 1000 since the last long weekend in June.
We can expect to see at least the demand level remain high throughout the next two months. Do not expect the lowering of the first home owners grant to make any significant change to demand, except, maybe a slight drop in the outer “new purchasers’ estate market”. The key to the next two months in the Melbourne Real Estate Market will be supply.
Many of the agents I have spoken with have indicated, a healthy, albeit, not huge increase is expected. The vendors’ enquiries have increased but not in the normal huge numbers that are usually seen around this time of year.
We also saw the release of Australian Bureau of Statistics (ABS) population numbers for the quarter ending in March. Again Victoria had the largest population increase. Whilst Western Australia increased 3.1%, and this was the largest percentage increase, this equates to only about 69,000 people. Victoria, at 2.1% equates to an increase in excess of 110,000. And the unemployment figures reported in the Age this morning also give us an indication that we are unlikely even to reach 1,000,000 unemployed.
So where is the property market going?
• We have tremendous demand and limited supply.
• People in Victoria are feeling very secure in their employment.
• Interest rates are low and are going to remain there for a very long time. We may see a small increase next year if “big business” really takes off.
• People are flooding into Victoria at a greatly accelerated rate.
• Whilst the European and U.S. housing markets are floundering, those of the Asian communities are not. And this is where there is plenty of excess cash at the moment.
It is not hard to see why Melbourne property prices are going to keep increasing for a very long time.
We hope to see you at the Home Buyers Show over the weekend
Ian James
If you want to learn more about how to negotiate, see us at the Home Buyers Show at the Melbourne Convention and Exhibition Centre on Friday Saturday and Sunday this week. I am speaking each afternoon around 3.30 on the Home Buyers Stage.
Over the weekend there were 135 reported auctions. This was 5 times as many as last year with a better clearance rate. There were a total of 728 properties reportedly sold last week. This is the first drop under 1000 since the last long weekend in June.
We can expect to see at least the demand level remain high throughout the next two months. Do not expect the lowering of the first home owners grant to make any significant change to demand, except, maybe a slight drop in the outer “new purchasers’ estate market”. The key to the next two months in the Melbourne Real Estate Market will be supply.
Many of the agents I have spoken with have indicated, a healthy, albeit, not huge increase is expected. The vendors’ enquiries have increased but not in the normal huge numbers that are usually seen around this time of year.
We also saw the release of Australian Bureau of Statistics (ABS) population numbers for the quarter ending in March. Again Victoria had the largest population increase. Whilst Western Australia increased 3.1%, and this was the largest percentage increase, this equates to only about 69,000 people. Victoria, at 2.1% equates to an increase in excess of 110,000. And the unemployment figures reported in the Age this morning also give us an indication that we are unlikely even to reach 1,000,000 unemployed.
So where is the property market going?
• We have tremendous demand and limited supply.
• People in Victoria are feeling very secure in their employment.
• Interest rates are low and are going to remain there for a very long time. We may see a small increase next year if “big business” really takes off.
• People are flooding into Victoria at a greatly accelerated rate.
• Whilst the European and U.S. housing markets are floundering, those of the Asian communities are not. And this is where there is plenty of excess cash at the moment.
It is not hard to see why Melbourne property prices are going to keep increasing for a very long time.
We hope to see you at the Home Buyers Show over the weekend
Ian James
Monday, September 21, 2009
Market Comment - Monday September 21st 2009
After a huge weekend of auctions with the clearance rate remaining above 80%, there seems no end in sight to the upward migration of price in the Melbourne property market. The Age on Sunday reported that Residex have announced that Melbourne median house price has surpassed $500k. So we can assume the current flood of buyers are not necessarily all first home buyers.
Of the ten auctions our team attended on Saturday and two on Sunday all went within a few thousand dollars of our price recommendations. But there were no singularly outstanding results. To sum up the weekend results, all auctions went just about where we thought they would go. However there was one auction that stood out. And not because of the price it achieved.
We made a prior offer on a property well above the price quote. In fact it was nearly 20% above the lower end of the range. This offer was made more than a week prior to the auction on exactly the same terms and conditions we were allowed to bid at auction. The fact the offer was turned down was no shock to us but the surprise was the fact the agent didn’t change the price quote. When we questioned the Officer in effective control at the agency we were told they had no legal obligation to adjust the price quote as the reserve was within the quoted range ($380k - $420k). When asked at the auction after a bid of $430,000: “Are we on the market?” the response was “No!” The property was not announced on the market until $455,000 (slightly above our original offer).
During the auction when the auctioneer was trying to drum up another bid she remarked to a group of gentlemen: Have you driven all the way from Warrnambool not to even make a bid? (Or words to that effect). As I was leaving the auction one of those gentlemen made a remark to me and I stopped to talk to him. I asked if they had driven all the way from Warrnambool just to bid and they said yes. I asked them if they were told anything about the offer prior and they had no idea. Whilst the auctioneer thought this was a funny quip, I thought it simply one of the rudest and most despicable acts I had seen in Real Estate in a very long time.
And The Real Estate Industry wonders why it has such a low standing in the community as a whole. This is truly underquoting. This should be stamped out. Licensed, reputable agents should not stand up for the ridiculous antics of the few. If the REIV cannot stop its members doing this, then hopefully Consumer Affairs Victoria can. This goes way beyond getting the best deal for your vendor. There were plenty of potential purchasers that were going to bring the price up to high $400’s which is what it finally sold for. The comparable sales in the area showed the property would most likely go into the high $400’s – which it did. The agent had a written legally binding offer well in excess of their asking price that met every condition identical to that which we were allowed to bid on (in other words it was declined on price) more than a week out from the auction. If the agency can’t sell real estate without doing irreparable damage to our industry, then I think it is time they find a vocation they are more suited too. Real Estate Agents are one of the least trusted professions according to a stack of newspaper polls and it is operators like this that add to that standing.
On a lighter note: we may not have yet reached the highest point in the unemployment cycle and big business still has some consolidating to do so this does not make it an obvious choice for the reserve bank to raise interest rates anytime soon. Yet many people are feeling fairly confident about starting to spend and invest money again and there are many more spending it on property investment than before. There are a lot of people who are still a little "gun-shy" about jumping back into the stock market, and therefore direct property investment seems a good option. There are also many more "fee for service" financial planners recommending direct property as part of a balanced investment strategy. Previously many financial planners did not recommend direct property investments because they received no commission for doing so (and this was how they earned their living). Another factor that came up last week is population growth. Each year demographers say it is slowing down or give estimates that are wildly out of date within 12 months. Our population is growing and we have to house everyone. Supply is not keeping pace with demand; therefore we can assume this will also put upward pressure on property.
Next weekend being AFL Grand Final weekend, and the middle of the school holidays, we will probably see fewer new property listings. However, the following week is usually one of the largest weeks of the year for new listings. It will certainly give us an indication of how the spring season will shape up.
If you are interested in buying a property and want some professional advice, do not hesitate to give us a call for a free no obligation meeting.
Of the ten auctions our team attended on Saturday and two on Sunday all went within a few thousand dollars of our price recommendations. But there were no singularly outstanding results. To sum up the weekend results, all auctions went just about where we thought they would go. However there was one auction that stood out. And not because of the price it achieved.
We made a prior offer on a property well above the price quote. In fact it was nearly 20% above the lower end of the range. This offer was made more than a week prior to the auction on exactly the same terms and conditions we were allowed to bid at auction. The fact the offer was turned down was no shock to us but the surprise was the fact the agent didn’t change the price quote. When we questioned the Officer in effective control at the agency we were told they had no legal obligation to adjust the price quote as the reserve was within the quoted range ($380k - $420k). When asked at the auction after a bid of $430,000: “Are we on the market?” the response was “No!” The property was not announced on the market until $455,000 (slightly above our original offer).
During the auction when the auctioneer was trying to drum up another bid she remarked to a group of gentlemen: Have you driven all the way from Warrnambool not to even make a bid? (Or words to that effect). As I was leaving the auction one of those gentlemen made a remark to me and I stopped to talk to him. I asked if they had driven all the way from Warrnambool just to bid and they said yes. I asked them if they were told anything about the offer prior and they had no idea. Whilst the auctioneer thought this was a funny quip, I thought it simply one of the rudest and most despicable acts I had seen in Real Estate in a very long time.
And The Real Estate Industry wonders why it has such a low standing in the community as a whole. This is truly underquoting. This should be stamped out. Licensed, reputable agents should not stand up for the ridiculous antics of the few. If the REIV cannot stop its members doing this, then hopefully Consumer Affairs Victoria can. This goes way beyond getting the best deal for your vendor. There were plenty of potential purchasers that were going to bring the price up to high $400’s which is what it finally sold for. The comparable sales in the area showed the property would most likely go into the high $400’s – which it did. The agent had a written legally binding offer well in excess of their asking price that met every condition identical to that which we were allowed to bid on (in other words it was declined on price) more than a week out from the auction. If the agency can’t sell real estate without doing irreparable damage to our industry, then I think it is time they find a vocation they are more suited too. Real Estate Agents are one of the least trusted professions according to a stack of newspaper polls and it is operators like this that add to that standing.
On a lighter note: we may not have yet reached the highest point in the unemployment cycle and big business still has some consolidating to do so this does not make it an obvious choice for the reserve bank to raise interest rates anytime soon. Yet many people are feeling fairly confident about starting to spend and invest money again and there are many more spending it on property investment than before. There are a lot of people who are still a little "gun-shy" about jumping back into the stock market, and therefore direct property investment seems a good option. There are also many more "fee for service" financial planners recommending direct property as part of a balanced investment strategy. Previously many financial planners did not recommend direct property investments because they received no commission for doing so (and this was how they earned their living). Another factor that came up last week is population growth. Each year demographers say it is slowing down or give estimates that are wildly out of date within 12 months. Our population is growing and we have to house everyone. Supply is not keeping pace with demand; therefore we can assume this will also put upward pressure on property.
Next weekend being AFL Grand Final weekend, and the middle of the school holidays, we will probably see fewer new property listings. However, the following week is usually one of the largest weeks of the year for new listings. It will certainly give us an indication of how the spring season will shape up.
If you are interested in buying a property and want some professional advice, do not hesitate to give us a call for a free no obligation meeting.
Tuesday, September 15, 2009
Market Comment - Monday September 14th 2009
1328 properties sold last week. 674 auctions reported with an 83% clearance rate. This weekend there could be as many as 900 auctions. Whilst this spike may be caused by the AFL Grand Final, anybody thinking the market is going to slow down need only look at the figures. There is nowhere near enough stock to placate the demand.
Buying property is not as easy as putting up your hand at an auction. Although knowing how much to pay, as well as when to make an offer, is paramount in securing the property, there are many other things to check prior to “signing on the dotted line”
The vendors’ statement is only part of the documentation that you will need to have checked by a solicitor. This document, commonly called a “section 32” as it involves section 32 of the Sale of Land Act. It summarises 8 key points about the property for sale and is the minimum piece of information that is required by law to be given to the prospective purchaser.
The main items in a vendor’s statement are:
• title details
• any restrictions including covenants and easements
• Planning and road access details
• Building approvals and owner building insurance
• Services
• Outgoings and Statutory charges
• Owners Corporation details
• Notices
Many solicitors will put proof of this summary in the form of certificates but they do not have to.
The second and sometimes more important document is the contract that, with the vendors statement, forms the Contract of Sale. Sometimes this will be a standard law institute or REIV contract. These both use very standard clauses that most solicitors think are adequate for the job.
The contract will have a place for both parties to sign, a particulars page specifying names, amounts, settlement dates, solicitors’ details, goods to pass with the property, terms, encumbrances and few other details.
However, some solicitors will present many special conditions. These can be simple, onerous to the prospective purchaser or ridiculously one sided in favour of the vendor. To not get these checked and get a “legal opinion” would be absolutely flirting with disaster. There have been clauses that have stated that if the purchaser has not paid the deposit within ten minutes of the fall of the hammer, the vendor has the right to sell the property anytime, to anyone up to settlement without compensating the purchaser. I don’t think I have ever been to an auction that we have signed the docs and paid the deposit within ten minutes of the fall of the hammer. Whilst the reason for the clause is simple, the winning purchaser must “immediately” sign the docs and pay the deposit, not wander off for a couple of hours and this is fair, the way the clause is written, it would be ludicrous for a purchaser to sign the document.
This is just one example and there are plenty. Most contracts are written to be so one sided in favour of the vendor that they should be deemed unconscionable. Unfortunately not enough prospective purchasers complain and therefore nothing is usually done.
This is just one very small part of purchasing a property. If you are purchasing yourself, make sure you have the docs checked by a solicitor or a licensed conveyancer.
Ian James
Buying property is not as easy as putting up your hand at an auction. Although knowing how much to pay, as well as when to make an offer, is paramount in securing the property, there are many other things to check prior to “signing on the dotted line”
The vendors’ statement is only part of the documentation that you will need to have checked by a solicitor. This document, commonly called a “section 32” as it involves section 32 of the Sale of Land Act. It summarises 8 key points about the property for sale and is the minimum piece of information that is required by law to be given to the prospective purchaser.
The main items in a vendor’s statement are:
• title details
• any restrictions including covenants and easements
• Planning and road access details
• Building approvals and owner building insurance
• Services
• Outgoings and Statutory charges
• Owners Corporation details
• Notices
Many solicitors will put proof of this summary in the form of certificates but they do not have to.
The second and sometimes more important document is the contract that, with the vendors statement, forms the Contract of Sale. Sometimes this will be a standard law institute or REIV contract. These both use very standard clauses that most solicitors think are adequate for the job.
The contract will have a place for both parties to sign, a particulars page specifying names, amounts, settlement dates, solicitors’ details, goods to pass with the property, terms, encumbrances and few other details.
However, some solicitors will present many special conditions. These can be simple, onerous to the prospective purchaser or ridiculously one sided in favour of the vendor. To not get these checked and get a “legal opinion” would be absolutely flirting with disaster. There have been clauses that have stated that if the purchaser has not paid the deposit within ten minutes of the fall of the hammer, the vendor has the right to sell the property anytime, to anyone up to settlement without compensating the purchaser. I don’t think I have ever been to an auction that we have signed the docs and paid the deposit within ten minutes of the fall of the hammer. Whilst the reason for the clause is simple, the winning purchaser must “immediately” sign the docs and pay the deposit, not wander off for a couple of hours and this is fair, the way the clause is written, it would be ludicrous for a purchaser to sign the document.
This is just one example and there are plenty. Most contracts are written to be so one sided in favour of the vendor that they should be deemed unconscionable. Unfortunately not enough prospective purchasers complain and therefore nothing is usually done.
This is just one very small part of purchasing a property. If you are purchasing yourself, make sure you have the docs checked by a solicitor or a licensed conveyancer.
Ian James
Monday, September 7, 2009
Market Comment - Monday September 7th 2009
Melbourne’s property market keeps surging through week after week. Another 80%+ clearance rate after 567 Auctions reported to the REIV, with the usual 700 odd private sales as well
After securing 4 from 6 last week, noting that all 4 successful purchases were prior to auction, we can see the last quarter of this year building in a similar fashion to the December quarter of 2007. The REIV reported a 12.8% rise in the median price of Melbourne property in that quarter. This was on the back of interest rate rises in both August and November which had the RBA rate 3.75 percentage points above where it is now.
We have low interest rates, we have solid demand due to population growth, and we have low unemployment and an outlook that looks like we will go back to a labour shortage not an unemployment problem. We do not have enough homes and those who own property are not in any rush to sell. Property prices in Melbourne have nowhere to go but up.
Looking for bargains in Melbourne does not mean looking for the cheapest purchase. The media simply look for cheap property not good long term investment. Carlton units are very affordable with a median of $225K but if we look at the Value General median movement of units between 2003 and last year, the average growth was negative. In 2003 the unit median for Carlton was $282,000 and last year was only $233,125. On average the property dropped about 3.5% pa. Even with the colossal growth we have seen this year in prices RP Data’s median of $225k (not the same data source as Valuer General) is down again. This is university student living areas. You will always get a very good yield but always very limited growth. If we look back to 1980 we can see there has been an average growth of about 6%pa. We target areas that have achieved 10% or higher or have had major infrastructure changes and therefore may increase ahead of historical values.
Don’t buy property because it is cheap. Make a plan, look at historical growth or a change in infrastructure that can bring about change to the historical values such as a freeway extension or investment in the area.
If you do not have time to do the research call someone that has already done it. We would be happy to sit down and have a chat without obligation.
Ian James
After securing 4 from 6 last week, noting that all 4 successful purchases were prior to auction, we can see the last quarter of this year building in a similar fashion to the December quarter of 2007. The REIV reported a 12.8% rise in the median price of Melbourne property in that quarter. This was on the back of interest rate rises in both August and November which had the RBA rate 3.75 percentage points above where it is now.
We have low interest rates, we have solid demand due to population growth, and we have low unemployment and an outlook that looks like we will go back to a labour shortage not an unemployment problem. We do not have enough homes and those who own property are not in any rush to sell. Property prices in Melbourne have nowhere to go but up.
Looking for bargains in Melbourne does not mean looking for the cheapest purchase. The media simply look for cheap property not good long term investment. Carlton units are very affordable with a median of $225K but if we look at the Value General median movement of units between 2003 and last year, the average growth was negative. In 2003 the unit median for Carlton was $282,000 and last year was only $233,125. On average the property dropped about 3.5% pa. Even with the colossal growth we have seen this year in prices RP Data’s median of $225k (not the same data source as Valuer General) is down again. This is university student living areas. You will always get a very good yield but always very limited growth. If we look back to 1980 we can see there has been an average growth of about 6%pa. We target areas that have achieved 10% or higher or have had major infrastructure changes and therefore may increase ahead of historical values.
Don’t buy property because it is cheap. Make a plan, look at historical growth or a change in infrastructure that can bring about change to the historical values such as a freeway extension or investment in the area.
If you do not have time to do the research call someone that has already done it. We would be happy to sit down and have a chat without obligation.
Ian James
Monday, August 31, 2009
Market Comment - Monday August 31th 2009
The number of properties on the market is rapidly increasing. But so is the number of buyers. Of the 7 auctions we were bidding at on Saturday only one passed in after genuine bidding. All these have sold at or above market expectation.
1 St George Grove Parkville was an extremely unusual property which was custom built in the 1930’s to have a tenantable unit downstairs and a residence for the owner upstairs. Its location was unique and the opportunities were varied as to what to do with the property. It could have been tenanted out to multiple tenants, turned into an executive residence or bought by an owner occupier. With few comparables in the area, the agent struggled to really put an accurate price on the property. Under competition the property sold for $1.320M which was a little over our estimate.
We have the highest recorded stock levels for this period since 2003, according to The Age newspaper yesterday. The REIV have reported there are 600 auctions scheduled for next weekend and then 775 the week after. Although we had an increase this week of 36% in the number of reported auctions to the REIV, the clearance rate still climbed 3 % to 85%. What happens over the next couple of weeks will certainly set the stage for the spring selling season due to start in 5 weeks.
The increase in stock will hopefully continue through October because the increase in potential purchasers is huge. If we analyse the current price increases vs comparable sales over the last three months, the numbers of people bidding at auction, the clearance rates, and most importantly the total number of private sales, we can see that without the continual stock increases through spring, prices will rise very sharply. There are more potential buyers than sellers and simplistic economics tells us this will relate to a price increase.
This may well be different in new estates where developers and builders are reaping huge rewards servicing the first home buyers. Once the grants taper off, we should see a relaxing of price in these new estates. If the interest rates do rise significantly early next year, this may also scare the first home buyers off a little.
With a slow down of first home buyers, we should also see the continuing resurrection of the property investor. A property in Reservoir over the weekend had eight people bidding for a very average house on excellent developable land. Most of these people were apparently investors. Rental returns are still very good, historic capital growths now look better than stock market returns over a long period of time and interest rates are still at historic lows.
All in all we are in for a sensational spring season. At this stage the only segment of the market place that may ease off is the brand new estates in about March next year. All the well serviced, established areas of Melbourne look set to continue with their price strengthening in the foreseeable future. Interest rates will have to jump three or four times (25 basis points each) before I think it will significantly affect the established market Just remember 2007 when the rates were 3% higher than now and the market prices were still increasing. And even during a Global Economic melt down our property prices in Melbourne simply levelled out.
If you are thinking about buying property this year please feel free to give us a call to make a no obligation appointment at our office.
Ian James
1 St George Grove Parkville was an extremely unusual property which was custom built in the 1930’s to have a tenantable unit downstairs and a residence for the owner upstairs. Its location was unique and the opportunities were varied as to what to do with the property. It could have been tenanted out to multiple tenants, turned into an executive residence or bought by an owner occupier. With few comparables in the area, the agent struggled to really put an accurate price on the property. Under competition the property sold for $1.320M which was a little over our estimate.
We have the highest recorded stock levels for this period since 2003, according to The Age newspaper yesterday. The REIV have reported there are 600 auctions scheduled for next weekend and then 775 the week after. Although we had an increase this week of 36% in the number of reported auctions to the REIV, the clearance rate still climbed 3 % to 85%. What happens over the next couple of weeks will certainly set the stage for the spring selling season due to start in 5 weeks.
The increase in stock will hopefully continue through October because the increase in potential purchasers is huge. If we analyse the current price increases vs comparable sales over the last three months, the numbers of people bidding at auction, the clearance rates, and most importantly the total number of private sales, we can see that without the continual stock increases through spring, prices will rise very sharply. There are more potential buyers than sellers and simplistic economics tells us this will relate to a price increase.
This may well be different in new estates where developers and builders are reaping huge rewards servicing the first home buyers. Once the grants taper off, we should see a relaxing of price in these new estates. If the interest rates do rise significantly early next year, this may also scare the first home buyers off a little.
With a slow down of first home buyers, we should also see the continuing resurrection of the property investor. A property in Reservoir over the weekend had eight people bidding for a very average house on excellent developable land. Most of these people were apparently investors. Rental returns are still very good, historic capital growths now look better than stock market returns over a long period of time and interest rates are still at historic lows.
All in all we are in for a sensational spring season. At this stage the only segment of the market place that may ease off is the brand new estates in about March next year. All the well serviced, established areas of Melbourne look set to continue with their price strengthening in the foreseeable future. Interest rates will have to jump three or four times (25 basis points each) before I think it will significantly affect the established market Just remember 2007 when the rates were 3% higher than now and the market prices were still increasing. And even during a Global Economic melt down our property prices in Melbourne simply levelled out.
If you are thinking about buying property this year please feel free to give us a call to make a no obligation appointment at our office.
Ian James
Tuesday, August 25, 2009
Market Comment - Monday August 24th 2009
It has been a couple of weeks since my last market comment and not too much has changed in the market. The media is still worried about underquoting, there is still some talk in a couple of papers about the “property bubble” bursting yet the stock market is still going up very strongly.
Clearance rates are remaining over 80% even with numbers of auctions climbing and private sales are still strong; over 1200 sales of property in Melbourne last week. The talk from the agents is also quite upbeat about numbers of properties coming on the market in spring. But this will only have an effect on price if the demand slows and I doubt it will. If anything I think we will see an increase in demand and this will all but mitigate any increase in supply.
No matter whether agents underquote, or the government legislates to attempt to stop them; No matter whether a lot of property comes on the market or only a little does; the key to buying well starts with accurate property assessment.
If you want to buy a property in the current Melbourne market, spend the time going around to as many properties as you can. Take copious notes and remember as much about them as you can. You must note all their pros and cons. Then attend the auction and note the number of bidders and the final price. If you do this enough and gather enough data, you can begin to get an idea of what properties in the area are worth.
You need to take into account, land size, location relative to transport, shops, parks and gardens. You need to take into account age of the original house, style and size of the house. When the renovations were done, how much work still needs to be done to bring it up to spec.
Then you need to analyse how many people were bidding, when the property went on the market and how many bidders there were after it got to the reserve. Once you have done this consistently for about three months in all the areas you are looking, then you will start to get an idea of what the vendor will want regardless of the quote offered by the vendors agent.
It is no use spending your time preparing for an auction which you have no chance of succeeding at. Doing pest inspections, building inspections and legal checks only to find out the bidding is starting just above your limit for the property is no fun. It can also be quite expensive.
If you cannot accurately appraise a property on your own, it does not matter how good a negotiator you are. You will not know whether you have done a good deal or not. This is the key to avoiding “Buyers Remorse”
If you do not have the time or the inclination to do all this research perhaps you should think about having a chat to a Buyer’s Advocate. Feel free to give us a call and set up a no obligation first meeting.
Ian James
Clearance rates are remaining over 80% even with numbers of auctions climbing and private sales are still strong; over 1200 sales of property in Melbourne last week. The talk from the agents is also quite upbeat about numbers of properties coming on the market in spring. But this will only have an effect on price if the demand slows and I doubt it will. If anything I think we will see an increase in demand and this will all but mitigate any increase in supply.
No matter whether agents underquote, or the government legislates to attempt to stop them; No matter whether a lot of property comes on the market or only a little does; the key to buying well starts with accurate property assessment.
If you want to buy a property in the current Melbourne market, spend the time going around to as many properties as you can. Take copious notes and remember as much about them as you can. You must note all their pros and cons. Then attend the auction and note the number of bidders and the final price. If you do this enough and gather enough data, you can begin to get an idea of what properties in the area are worth.
You need to take into account, land size, location relative to transport, shops, parks and gardens. You need to take into account age of the original house, style and size of the house. When the renovations were done, how much work still needs to be done to bring it up to spec.
Then you need to analyse how many people were bidding, when the property went on the market and how many bidders there were after it got to the reserve. Once you have done this consistently for about three months in all the areas you are looking, then you will start to get an idea of what the vendor will want regardless of the quote offered by the vendors agent.
It is no use spending your time preparing for an auction which you have no chance of succeeding at. Doing pest inspections, building inspections and legal checks only to find out the bidding is starting just above your limit for the property is no fun. It can also be quite expensive.
If you cannot accurately appraise a property on your own, it does not matter how good a negotiator you are. You will not know whether you have done a good deal or not. This is the key to avoiding “Buyers Remorse”
If you do not have the time or the inclination to do all this research perhaps you should think about having a chat to a Buyer’s Advocate. Feel free to give us a call and set up a no obligation first meeting.
Ian James
Monday, August 10, 2009
Market Comment - Monday August 10th 2009
The clearance rates, interest rates, stock levels, underquoting, Vendor Advocates, the list goes on and on putting difficulties in the way of prospective purchasers.
The Reserve Bank has decided to give an unprecedented “crystal ball” style thought on interest rates. They are assuming over the next couple of years to see the cash rate climb slowly but steadily by about 2%. This will match our slow and steady economical capital growth. Whilst this may well help the share market to recoup some of it’s losses over the last 18 months, it will push property prices to new heights. As our economy strengthens so will our property prices.
We have seen the latest results from the government regarding unemployment figures. I think it is now fairly well recognised that we are not going to reach double digit unemployment anytime soon.
And this leads us again to touch on underquoting! The market price is increasing rapidly. Figures out this week show us that any losses over the past 18 months have well and truly been surpassed and that prices are quickly climbing again.
The market is moving profoundly. What might be a foreseeable price at the start of a campaign may not be accurate 6 weeks later. If a large volume of similar property came onto the market all at once then the price the agent set six weeks before auction maybe too high. If all similar properties have sold well within a few weeks the price for a particular property may go up substantially.
Selling agents are there to do everything legally in their power to maximise the sale for the vendor. That’s who is paying them. The government will never be able to legislate anything that will force the selling agent into a position that assists the prospective purchaser to do a better deal. THIS WOULD FORCE THE SELLING AGENT TO BREAK THEIR CONTRACTURAL OBLIGATION TO THE VENDOR.
If you are a prospective purchaser you need professional advice in order to save yourself time and money.
THE FACTS ARE: Selling agents work for the vendor and professional buying agents work for the purchasers. Can anyone remember the last time you were told “Don’t take a solicitor to court to represent you – SAVE SOME MONEY – DO IT YOURSELF!!!!!” There's an old courthouse adage: A person who represents himself has a fool for a client. Nothing could be more accurate in purchasing Real Estate.
We do not waste time complaining about selling agents tactics. We do not waste our time reporting on specific property transactions, unless they set precedence. Our advocates only attend auctions when we have a client to represent. We do not worry about an agents’ quote, we make our own determinations because we are professional Buying agents. We always listen to what an agent has to say, and sometimes we have to translate this from “Agent’s Speak” to English for our client, but in the most part, Selling Agents do their job and Our Advocates do ours.
If you are considering purchasing property and don’t want to throw away money and effort. If you want to make a good long term purchase and feel good about the process come in and have a chat to JPP Buyer Advocates. We don’t sell any property, nor do we do any vendor advocacy (Selling property). All we do is look after people who are purchasing property. We are the experts. It is what we do!!!!
Give JPP Buyer Advocates a call and set up a no obligation appointment with one of our professional buyer advocates.
Ian James
The Reserve Bank has decided to give an unprecedented “crystal ball” style thought on interest rates. They are assuming over the next couple of years to see the cash rate climb slowly but steadily by about 2%. This will match our slow and steady economical capital growth. Whilst this may well help the share market to recoup some of it’s losses over the last 18 months, it will push property prices to new heights. As our economy strengthens so will our property prices.
We have seen the latest results from the government regarding unemployment figures. I think it is now fairly well recognised that we are not going to reach double digit unemployment anytime soon.
And this leads us again to touch on underquoting! The market price is increasing rapidly. Figures out this week show us that any losses over the past 18 months have well and truly been surpassed and that prices are quickly climbing again.
The market is moving profoundly. What might be a foreseeable price at the start of a campaign may not be accurate 6 weeks later. If a large volume of similar property came onto the market all at once then the price the agent set six weeks before auction maybe too high. If all similar properties have sold well within a few weeks the price for a particular property may go up substantially.
Selling agents are there to do everything legally in their power to maximise the sale for the vendor. That’s who is paying them. The government will never be able to legislate anything that will force the selling agent into a position that assists the prospective purchaser to do a better deal. THIS WOULD FORCE THE SELLING AGENT TO BREAK THEIR CONTRACTURAL OBLIGATION TO THE VENDOR.
If you are a prospective purchaser you need professional advice in order to save yourself time and money.
THE FACTS ARE: Selling agents work for the vendor and professional buying agents work for the purchasers. Can anyone remember the last time you were told “Don’t take a solicitor to court to represent you – SAVE SOME MONEY – DO IT YOURSELF!!!!!” There's an old courthouse adage: A person who represents himself has a fool for a client. Nothing could be more accurate in purchasing Real Estate.
We do not waste time complaining about selling agents tactics. We do not waste our time reporting on specific property transactions, unless they set precedence. Our advocates only attend auctions when we have a client to represent. We do not worry about an agents’ quote, we make our own determinations because we are professional Buying agents. We always listen to what an agent has to say, and sometimes we have to translate this from “Agent’s Speak” to English for our client, but in the most part, Selling Agents do their job and Our Advocates do ours.
If you are considering purchasing property and don’t want to throw away money and effort. If you want to make a good long term purchase and feel good about the process come in and have a chat to JPP Buyer Advocates. We don’t sell any property, nor do we do any vendor advocacy (Selling property). All we do is look after people who are purchasing property. We are the experts. It is what we do!!!!
Give JPP Buyer Advocates a call and set up a no obligation appointment with one of our professional buyer advocates.
Ian James
Monday, August 3, 2009
Market Comment - Monday August 3rd 2009
Two weeks ago we were asked to give a comment for the Neil Mitchell radio show. We were then asked about three properties. One sold prior to auction and with an undisclosed price. The other two sold on the weekend.
Manningtree Road: Sold $1.92
We estimated between $1.9M - $2M and would have refined this after property inspection
2/156 Dean Street Moonee Ponds: Passed in VB $580K reserve $600k
We assumed this was worth mid $500’s maybe a little higher, but as the location was poor we assumed a good chance of a pass in.
Without even visiting the properties it is not difficult to know what is likely to occur.
The issues here are did the agents do the wrong thing. The answer is simple: They had no choice but to do exactly what they did.
Had Jellis Craig marketed Manningtree Road at $1.9M - $2.0M they would not have got anywhere near as many people to the auction. The bidding would not have been as strong. If the bidding had stopped the vendor would have sold at $1.48M (On the market).
How else could the agents have quoted this property? Should they have been telling people that $1.48M will buy it but we expect it to go to $1.9M?????????????.
If buyers genuinely want to be at the right auction at the right time then they should be hiring a buyers advocate. We would have told our clients, Dean Street is a very ordinary property due to its location and that its right price would be around mid to high $500's. We would have counseled to wait for the auction and hope it passes in.
Manningtree Road - We would have counseled any client to offer strongly - somewhere in high $1.8's on the Wednesday or Thursday last week. This may or may not have been accepted, but at least we would have forced Jellis Craig to adjust their quote to above our offer and hopefully, for our buyers’ sake, scared off some of the competition. Remember it is our job to work for the buyer!!
At the moment the media and the government, as well as a few agents are saying they wish to control how an agent deals with purchasers. There are already guidelines in place for this.
Would you suggest to someone to go to court without a solicitor on their side so they can save some money?????????????? Especially when they are going to be going up against a "Queens Counsel"
You will never be able to legislate that the vendor’s agent is to assist the purchaser in any way shape or form. They have a contractual duty to their vendor and the vendor is shelling out a considerable amount of money for the agents’ expertise. It's not feasible and it's not fair to the vendor.
This is an issue I believe very strongly about. In my opinion, selling agents are hired by vendors to assist them to get the best possible outcome for their property sale. A purchaser, who is going to make the biggest financial decision of their life, who doesn’t get independent professional advice, has absolutely no reason to blame anyone but themselves if they continually miss out on the good properties.
To get a loan, most people will ask a mortgage broker, their accountant, their financial planner or at least go to a bank branch and ask for some help. When a property is purchased most people will seek assistance from a solicitor for their conveyance. If the building they are buying is old many will spend money on a building inspection, but the quintessential piece of information and the most difficult questions of all: “What is this property worth and how will I secure it against all the competition” is left to asking the counsel for the seller to answer.
How can our government continue to stick its head in the sand? The REIV is a peak industry body that exists to help the well being of selling agents. The media seems to think if under-quoting becomes a legislative issue then it will be fixed.
If you wish to purchase good property, and pay a good price in a reasonable time frame then hire a professional buyer’s agent (Buyers Advocate). They will make sure you know where all the available properties in your search area are, they will be able to appraise a property with a great degree of accuracy and also be able to professionally negotiate on your behalf. Be careful that your advocate is a licensed professional, who specializes in purchasing property and doesn’t work for any vendors and that they give you a professional report showing comparable sales and their reasons for recommending a price on a given property.
Come in and have a chat or give us a call. If you are thinking of buying property it will do no harm to talk to a professional buyer of property
Ian James
Manningtree Road: Sold $1.92
We estimated between $1.9M - $2M and would have refined this after property inspection
2/156 Dean Street Moonee Ponds: Passed in VB $580K reserve $600k
We assumed this was worth mid $500’s maybe a little higher, but as the location was poor we assumed a good chance of a pass in.
Without even visiting the properties it is not difficult to know what is likely to occur.
The issues here are did the agents do the wrong thing. The answer is simple: They had no choice but to do exactly what they did.
Had Jellis Craig marketed Manningtree Road at $1.9M - $2.0M they would not have got anywhere near as many people to the auction. The bidding would not have been as strong. If the bidding had stopped the vendor would have sold at $1.48M (On the market).
How else could the agents have quoted this property? Should they have been telling people that $1.48M will buy it but we expect it to go to $1.9M?????????????.
If buyers genuinely want to be at the right auction at the right time then they should be hiring a buyers advocate. We would have told our clients, Dean Street is a very ordinary property due to its location and that its right price would be around mid to high $500's. We would have counseled to wait for the auction and hope it passes in.
Manningtree Road - We would have counseled any client to offer strongly - somewhere in high $1.8's on the Wednesday or Thursday last week. This may or may not have been accepted, but at least we would have forced Jellis Craig to adjust their quote to above our offer and hopefully, for our buyers’ sake, scared off some of the competition. Remember it is our job to work for the buyer!!
At the moment the media and the government, as well as a few agents are saying they wish to control how an agent deals with purchasers. There are already guidelines in place for this.
Would you suggest to someone to go to court without a solicitor on their side so they can save some money?????????????? Especially when they are going to be going up against a "Queens Counsel"
You will never be able to legislate that the vendor’s agent is to assist the purchaser in any way shape or form. They have a contractual duty to their vendor and the vendor is shelling out a considerable amount of money for the agents’ expertise. It's not feasible and it's not fair to the vendor.
This is an issue I believe very strongly about. In my opinion, selling agents are hired by vendors to assist them to get the best possible outcome for their property sale. A purchaser, who is going to make the biggest financial decision of their life, who doesn’t get independent professional advice, has absolutely no reason to blame anyone but themselves if they continually miss out on the good properties.
To get a loan, most people will ask a mortgage broker, their accountant, their financial planner or at least go to a bank branch and ask for some help. When a property is purchased most people will seek assistance from a solicitor for their conveyance. If the building they are buying is old many will spend money on a building inspection, but the quintessential piece of information and the most difficult questions of all: “What is this property worth and how will I secure it against all the competition” is left to asking the counsel for the seller to answer.
How can our government continue to stick its head in the sand? The REIV is a peak industry body that exists to help the well being of selling agents. The media seems to think if under-quoting becomes a legislative issue then it will be fixed.
If you wish to purchase good property, and pay a good price in a reasonable time frame then hire a professional buyer’s agent (Buyers Advocate). They will make sure you know where all the available properties in your search area are, they will be able to appraise a property with a great degree of accuracy and also be able to professionally negotiate on your behalf. Be careful that your advocate is a licensed professional, who specializes in purchasing property and doesn’t work for any vendors and that they give you a professional report showing comparable sales and their reasons for recommending a price on a given property.
Come in and have a chat or give us a call. If you are thinking of buying property it will do no harm to talk to a professional buyer of property
Ian James
Tuesday, July 28, 2009
Market Comment - Monday July 27th 2009
Whilst another week goes by, another 1000+ properties were reported to the REIV. The auction clearance rate across the weekend remained at 86% on 383 reported auctions. The number of private sales this year to date has now exceeded both 2008 and 2007 year to date figures. In December and January we predicted a big year and we also predicted it would be without the huge auction numbers.
As we said last week, we need to talk about the “price bubble” and we will. But first, a quick note to finish off from last week about under quoting. Over the weekend, our advocates visited about thirty properties and three auctions. The variety of responses from the agents when asked “what’s it worth” was almost farcical. Some agents went to great lengths to explain they didn’t give out quotes anymore. Others explained that we needed to make our own determination based on the comparables given. And still others didn’t know what all the fuss was about and continued to underquote by about 20%.
This is the merry go round that won’t stop anytime soon. Agents have a fundamental duty to get the best possible price for their client, THE VENDOR. If the agent is not breaking the law he or she is required to do everything in their power to maximise the result for THE VENDOR. If the government legislates as it did about 6 years ago to fix the under quoting, it will probably take the same amount of time to “get around” these changes as it did last time. ONE DAY!!!!
The new authorities introduced an appraisal range and then retained a field for vendor’s amount which most of the time is “TBA” or to be advised. This allows agents to quote at their appraised numbers as they can make claim that the vendor will decide on a reserve when offers or an auction takes place.
I actually agree with this. It is always good to get some buyer feedback before making the final decision on a reserve. If agents are forced to set a reserve at the start of a sales campaign, the vendor will probably be asking themselves, “Will the agent work as hard after he has achieved this figure, Will he continue to strive for the best price or simply think he has done his job when they reach the reserve?”
Again, all this is a moot point if a purchaser simply hires someone to act on their behalf. The REIV would cease to be the butt of jokes from the media and its own members, the ACCC wouldn’t need to be worried about any potential purchasers being misinformed and CAV could amend its website and guidelines for potential purchasers, simply by recommending anyone representing themselves in a property negotiation should understand they are covered under “CAVEAT EMPTOR” (Buyer Beware) and if they wish to be on a level playing field with the vendor they should hire the services of a professional buyer advocate.
All this would render, underquoting, potential dummy bidding, some dubious tactics some agents use, and any other complaints that are floating around as moot.
PRICE BUBBLE
The “price bubble” assumes that property prices will drop at the same speed that they have risen. In other words the price growth will “BURST”. Whilst this may have some merit in the new estates where builders may be taking advantage of the very large First Home Owner Grants for those who are building, in the established areas closer to the CBD, I believe investors will take over as the First Home Owners diminish.
As the interest rates remain on a par with rental returns many people are simply buying their next home and not selling their existing one. Instead of selling your existing home, keep it, borrow the deposit for your new home from the equity of the first and then the tenant pays for your first mortgage and you pay for the second one. Most properties in good suburbs of Melbourne, where you have a mortgage of only 80% of the property value, will be revenue neutral thanks to the rental income.
We are about to see a fundamental change in property ownership over the next generation. I believe we will see people who have property, increase their holdings, and people who never have the opportunity to get into the market. We will begin to see long term leases on residential property. Some of these will become 10 and 15 years and will be traded similar to property ownership.
If interest rates rise again quickly, I believe it will be a long time before property ownership could be accessible to this many people. If you would like to get started on your next property purchase, please give us a call
Ian James.
As we said last week, we need to talk about the “price bubble” and we will. But first, a quick note to finish off from last week about under quoting. Over the weekend, our advocates visited about thirty properties and three auctions. The variety of responses from the agents when asked “what’s it worth” was almost farcical. Some agents went to great lengths to explain they didn’t give out quotes anymore. Others explained that we needed to make our own determination based on the comparables given. And still others didn’t know what all the fuss was about and continued to underquote by about 20%.
This is the merry go round that won’t stop anytime soon. Agents have a fundamental duty to get the best possible price for their client, THE VENDOR. If the agent is not breaking the law he or she is required to do everything in their power to maximise the result for THE VENDOR. If the government legislates as it did about 6 years ago to fix the under quoting, it will probably take the same amount of time to “get around” these changes as it did last time. ONE DAY!!!!
The new authorities introduced an appraisal range and then retained a field for vendor’s amount which most of the time is “TBA” or to be advised. This allows agents to quote at their appraised numbers as they can make claim that the vendor will decide on a reserve when offers or an auction takes place.
I actually agree with this. It is always good to get some buyer feedback before making the final decision on a reserve. If agents are forced to set a reserve at the start of a sales campaign, the vendor will probably be asking themselves, “Will the agent work as hard after he has achieved this figure, Will he continue to strive for the best price or simply think he has done his job when they reach the reserve?”
Again, all this is a moot point if a purchaser simply hires someone to act on their behalf. The REIV would cease to be the butt of jokes from the media and its own members, the ACCC wouldn’t need to be worried about any potential purchasers being misinformed and CAV could amend its website and guidelines for potential purchasers, simply by recommending anyone representing themselves in a property negotiation should understand they are covered under “CAVEAT EMPTOR” (Buyer Beware) and if they wish to be on a level playing field with the vendor they should hire the services of a professional buyer advocate.
All this would render, underquoting, potential dummy bidding, some dubious tactics some agents use, and any other complaints that are floating around as moot.
PRICE BUBBLE
The “price bubble” assumes that property prices will drop at the same speed that they have risen. In other words the price growth will “BURST”. Whilst this may have some merit in the new estates where builders may be taking advantage of the very large First Home Owner Grants for those who are building, in the established areas closer to the CBD, I believe investors will take over as the First Home Owners diminish.
As the interest rates remain on a par with rental returns many people are simply buying their next home and not selling their existing one. Instead of selling your existing home, keep it, borrow the deposit for your new home from the equity of the first and then the tenant pays for your first mortgage and you pay for the second one. Most properties in good suburbs of Melbourne, where you have a mortgage of only 80% of the property value, will be revenue neutral thanks to the rental income.
We are about to see a fundamental change in property ownership over the next generation. I believe we will see people who have property, increase their holdings, and people who never have the opportunity to get into the market. We will begin to see long term leases on residential property. Some of these will become 10 and 15 years and will be traded similar to property ownership.
If interest rates rise again quickly, I believe it will be a long time before property ownership could be accessible to this many people. If you would like to get started on your next property purchase, please give us a call
Ian James.
Monday, July 20, 2009
Market Comment - Monday July 20th 2009
I think everyone has got the idea that the property market in Melbourne is going “Gang Busters”. Another 86% clearance rate and another week of more than 1000+ sales within the metropolitan area have been reported to the REIV. There were two issues doing the rounds of the media over the last couple of days. Is this a property price bubble and should agents and vendors be fined for underquoting. We will deal with the “bubble” principle next week.
As far as underquoting is concerned: by law the agent cannot advertise a property for sale (or auction) with a number that is below the vendors WRITTEN RESERVE. Nor can the agent advertise below their own appraisal. Where the vendor does not give the agent a reserve (probably 90% of the time) then the agents’ appraisal is used as the basis of the quote price or range.
If we assume the vendor is paying the agent to get the best possible price then we can also assume the agent will market the property to the best of his or her ability within the limits of the law. This being the case, the government will have a very difficult time legislating anything different to the current rules.
If Graeme Samuels (ACCC) or Tony Robinson (Minister for Consumer Affairs) believe one advocate paid by one party should assist both Buyer and Vendor, then I have no doubt there next mission should be to overhaul our legal system. Why would each side need their own legal representative? “I don’t need a lawyer; if I don’t understand the law; I’ll just ask the other sides’ Queens Counsel to help me out”
When one party is paying for advice and counsel, why should the other side of the contest expect any assistance whatsoever? We are talking about hundreds of thousands of dollars. A good selling agent can make the difference in getting a good sale, not selling or getting a record price. Conversely, a Buyer’s Agent can make the same difference for the purchaser.
Any potential purchasers looking to the REIV to solve the dilemmas of unhappy potential purchasers should seek other advice. Enzo Raimondo’s comment (Herald Sun July 20 2009 page 2) about being the fault of a few Buyer Advocates must have been taken out of context. Nobody could possibly be that stupid. The REIV are the Estate Agent’s peak industry body and to think there CEO would disparage its own members would be thoughtless. Mr Raimondo made himself clear over the weekend when he was quoted in the Herald Sun, “Consumer Affairs Victoria needed to take action against agents who were breaking the law.” The REIV exists to assist the Real Estate Agents not do the job of Consumer Affairs.
Purchasers seem to be complaining that they are wasting huge sums of time, money and effort. And this is specifically the selling agents fault. There is a simple solution: Hire a Buyer Advocate!!
A reputable buyer’s advocate will be a licensed estate agent. You can check this at the Business licensing authority website: justice.vic.gov.au
A good Buyer Advocate will not sell any property. They will not assist any vendors. They will not do any Vendor Advocacy. A reputable Buyer’s Advocate will assist buyers to purchase a property.
This past weekend we successfully purchased 2 properties at auctions for the price we had expected the properties to be sold for. On both occasions our clients had all the correct preparation done for them by JPP Buyer Advocates, understanding the current market, with little of no stress..... one overseas client & one local client. Different suburbs, different price ranges.
As a Buyer’s Advocate, we do not need to worry about the “quote price”. A good buyer advocate will assist you in property selection, property sourcing, property assessment and the negotiation. You should be charged a fee by the advocate. If you are not it means your advocate is being paid by someone else (usually the vendor or developer).
Call us for a free no obligation meeting and we can help you save time effort and MONEY.
Ian James
As far as underquoting is concerned: by law the agent cannot advertise a property for sale (or auction) with a number that is below the vendors WRITTEN RESERVE. Nor can the agent advertise below their own appraisal. Where the vendor does not give the agent a reserve (probably 90% of the time) then the agents’ appraisal is used as the basis of the quote price or range.
If we assume the vendor is paying the agent to get the best possible price then we can also assume the agent will market the property to the best of his or her ability within the limits of the law. This being the case, the government will have a very difficult time legislating anything different to the current rules.
If Graeme Samuels (ACCC) or Tony Robinson (Minister for Consumer Affairs) believe one advocate paid by one party should assist both Buyer and Vendor, then I have no doubt there next mission should be to overhaul our legal system. Why would each side need their own legal representative? “I don’t need a lawyer; if I don’t understand the law; I’ll just ask the other sides’ Queens Counsel to help me out”
When one party is paying for advice and counsel, why should the other side of the contest expect any assistance whatsoever? We are talking about hundreds of thousands of dollars. A good selling agent can make the difference in getting a good sale, not selling or getting a record price. Conversely, a Buyer’s Agent can make the same difference for the purchaser.
Any potential purchasers looking to the REIV to solve the dilemmas of unhappy potential purchasers should seek other advice. Enzo Raimondo’s comment (Herald Sun July 20 2009 page 2) about being the fault of a few Buyer Advocates must have been taken out of context. Nobody could possibly be that stupid. The REIV are the Estate Agent’s peak industry body and to think there CEO would disparage its own members would be thoughtless. Mr Raimondo made himself clear over the weekend when he was quoted in the Herald Sun, “Consumer Affairs Victoria needed to take action against agents who were breaking the law.” The REIV exists to assist the Real Estate Agents not do the job of Consumer Affairs.
Purchasers seem to be complaining that they are wasting huge sums of time, money and effort. And this is specifically the selling agents fault. There is a simple solution: Hire a Buyer Advocate!!
A reputable buyer’s advocate will be a licensed estate agent. You can check this at the Business licensing authority website: justice.vic.gov.au
A good Buyer Advocate will not sell any property. They will not assist any vendors. They will not do any Vendor Advocacy. A reputable Buyer’s Advocate will assist buyers to purchase a property.
This past weekend we successfully purchased 2 properties at auctions for the price we had expected the properties to be sold for. On both occasions our clients had all the correct preparation done for them by JPP Buyer Advocates, understanding the current market, with little of no stress..... one overseas client & one local client. Different suburbs, different price ranges.
As a Buyer’s Advocate, we do not need to worry about the “quote price”. A good buyer advocate will assist you in property selection, property sourcing, property assessment and the negotiation. You should be charged a fee by the advocate. If you are not it means your advocate is being paid by someone else (usually the vendor or developer).
Call us for a free no obligation meeting and we can help you save time effort and MONEY.
Ian James
Tuesday, July 14, 2009
Market Comment - Monday July 13th 2009
The sales data in Melbourne continues to prove beyond doubt that the property prices in Melbourne are not a “bubble.” Since the week ending February 23 this year the only time there have not been over 1000 sales reported to the REIV each week, have been holiday weekends. 5 months of data showing 1000 sales per week is not an anomaly or a bubble it is a trend.
“Too cheap – and you can quote me” Herald Sun Saturday July 11
“Can I quote you” Herald Sun Sunday July 12
“Price discrepancies anger home buyers” Herald Sun Monday July 13
There have been several articles and comments in the Age newspaper as well.
Underquoting seems to be the catch cry of many media and professional commentators. I attended an auction two weeks ago that was quoted as “over $830k”. This beautiful property was on excellent land, was soundly built and had everything you would want from a home in the area. As I walked from the open for inspection 3 weeks prior I had said to the agent I would give him $1M right now for the property. He explained to me that his vendors wanted to go to auction. He didn’t think he would get that figure. The property sold for $1.260M. I did not think it was worth that the evident comparables put good buying around $1M - $1.1M easily, but two people fought out the auction to the final figure. Most other purchasers fell away between $1M & $1.1M
Was this property underquoted? Would the vendor have taken something close to $830k on the day? Had they quoted $830 - $900k I would have thought the quote a little low but not enough to warrant even a comment. The property was on the market in the low $900’s. So if nobody bid over $950k then the property would have been sold for that amount. And it may have sold cheaper than this if the bidding had not reached $950k.
If competition takes a property well above the asking price, this is due to the good work of the selling agent. The selling agent is working for the vendor not the purchaser. If a purchaser wants to save money on needless inspections for properties they have absolutely no chance on, if they want to know what is likely to purchase a property then they should hire an expert to work for them. A good buyer’s advocate who is constantly buying property all the time will know what is likely to happen to any given property they are looking at.
I do think if an agent has received an unconditional offer above their advertised price they should change their quote if they don’t accept. This happen everyday and I think this is unfair. I am also not sure that a 20% margin is an expected amount for the quote to be below the reserve. But it is extremely rare for a property to sell more than 10% away from the expected price of a professional analysing the market; whether that be a selling or a buying agent’s appraisal.
Just because you see one result, this does not mean you understand the market. There was a very strong result at an auction I attended in Sandringham on Saturday. Approximately 2600sqm of land with a derelict house sold for $3.350M. This would make people think the land value in the area was worth about $1290 per sqm. It is only on further investigation you would find out there was a covenant on the land limiting the property to only 2 house sites and therefore substantially lessening the value per sqm. Sandringham property sells for $1400 - $1500 per sqm for large house sites of approximately 1000sqm.
There are also plenty of agents out in the market at the moment that genuinely do not have the experience to know what the property will sell for. There are some properties that are difficult to estimate, such as the example above. Other properties are difficult because the agents do not realise that they may have the only property of its type in a much broader area than they are used to dealing in. For example, if there were a distinct lack of single fronted period homes in Northcote, an agent may realise he has a good property and has the only one in Northcote and Thornbury, but he may not realise he has the best single fronted home in Northcote, Thornbury, Preston, Fitzroy north, Carlton North, Fairfield and Alphington. He may not deal in these areas, but a good buyer advocate will take all this into account.
Unfortunately, there are plenty of selling agents who will put a bait price out to the market simply to gather names for further marketing, either to on sell them or to use in their own future campaigns. These are the unscrupulous agents that should be stopped by Consumer Affairs Victoria. Any selling agent that is breaking the law, or doing anything that simply benefits the agent to the detriment of both the vendor and other purchasers should be stopped.
You must remember selling agents work for the vendor. It is a bit unrealistic to expect a professional negotiator, who is being paid by the vendor, to do anything to assist the purchaser. If purchasers want to save money, be successful at auctions and in private sale negotiations, find properties that are not yet advertised on the open market, or simply want to save time, they should engage a buyer’s advocate.
Any good negotiator in any sales field anywhere in the world will tell you: “Never let the salesman deal directly with the decision maker.” If you do not know what this means you really do need an advocate working for you. If you do know what it means call us for a free no obligation meeting and we can help you purchase your new home.
“Too cheap – and you can quote me” Herald Sun Saturday July 11
“Can I quote you” Herald Sun Sunday July 12
“Price discrepancies anger home buyers” Herald Sun Monday July 13
There have been several articles and comments in the Age newspaper as well.
Underquoting seems to be the catch cry of many media and professional commentators. I attended an auction two weeks ago that was quoted as “over $830k”. This beautiful property was on excellent land, was soundly built and had everything you would want from a home in the area. As I walked from the open for inspection 3 weeks prior I had said to the agent I would give him $1M right now for the property. He explained to me that his vendors wanted to go to auction. He didn’t think he would get that figure. The property sold for $1.260M. I did not think it was worth that the evident comparables put good buying around $1M - $1.1M easily, but two people fought out the auction to the final figure. Most other purchasers fell away between $1M & $1.1M
Was this property underquoted? Would the vendor have taken something close to $830k on the day? Had they quoted $830 - $900k I would have thought the quote a little low but not enough to warrant even a comment. The property was on the market in the low $900’s. So if nobody bid over $950k then the property would have been sold for that amount. And it may have sold cheaper than this if the bidding had not reached $950k.
If competition takes a property well above the asking price, this is due to the good work of the selling agent. The selling agent is working for the vendor not the purchaser. If a purchaser wants to save money on needless inspections for properties they have absolutely no chance on, if they want to know what is likely to purchase a property then they should hire an expert to work for them. A good buyer’s advocate who is constantly buying property all the time will know what is likely to happen to any given property they are looking at.
I do think if an agent has received an unconditional offer above their advertised price they should change their quote if they don’t accept. This happen everyday and I think this is unfair. I am also not sure that a 20% margin is an expected amount for the quote to be below the reserve. But it is extremely rare for a property to sell more than 10% away from the expected price of a professional analysing the market; whether that be a selling or a buying agent’s appraisal.
Just because you see one result, this does not mean you understand the market. There was a very strong result at an auction I attended in Sandringham on Saturday. Approximately 2600sqm of land with a derelict house sold for $3.350M. This would make people think the land value in the area was worth about $1290 per sqm. It is only on further investigation you would find out there was a covenant on the land limiting the property to only 2 house sites and therefore substantially lessening the value per sqm. Sandringham property sells for $1400 - $1500 per sqm for large house sites of approximately 1000sqm.
There are also plenty of agents out in the market at the moment that genuinely do not have the experience to know what the property will sell for. There are some properties that are difficult to estimate, such as the example above. Other properties are difficult because the agents do not realise that they may have the only property of its type in a much broader area than they are used to dealing in. For example, if there were a distinct lack of single fronted period homes in Northcote, an agent may realise he has a good property and has the only one in Northcote and Thornbury, but he may not realise he has the best single fronted home in Northcote, Thornbury, Preston, Fitzroy north, Carlton North, Fairfield and Alphington. He may not deal in these areas, but a good buyer advocate will take all this into account.
Unfortunately, there are plenty of selling agents who will put a bait price out to the market simply to gather names for further marketing, either to on sell them or to use in their own future campaigns. These are the unscrupulous agents that should be stopped by Consumer Affairs Victoria. Any selling agent that is breaking the law, or doing anything that simply benefits the agent to the detriment of both the vendor and other purchasers should be stopped.
You must remember selling agents work for the vendor. It is a bit unrealistic to expect a professional negotiator, who is being paid by the vendor, to do anything to assist the purchaser. If purchasers want to save money, be successful at auctions and in private sale negotiations, find properties that are not yet advertised on the open market, or simply want to save time, they should engage a buyer’s advocate.
Any good negotiator in any sales field anywhere in the world will tell you: “Never let the salesman deal directly with the decision maker.” If you do not know what this means you really do need an advocate working for you. If you do know what it means call us for a free no obligation meeting and we can help you purchase your new home.
Tuesday, July 7, 2009
Market Comment - Monday July 6th 2009
The clearance rates have firmly entrenched themselves above 80%. The market is moving relentlessly upward. Whilst the first home buyers, who are building new dwellings, may be eligible for up to $35,000, the smart purchasers are looking for good long term growth investments.
These will not be found in new estates. These will be found in good pockets of firmly established suburbs with good amenities. All the papers this week are talking about “unfathomable” results. They are talking about how the new estates are leading the way forward with growth. This will last only as long as the grants do. Most of the commentators go on to say this was inconceivable to think our property market would move the way it has.
This is almost comical. It was so obvious what was happening in our Melbourne’s property market late last year and certainly January and February this year. In December last year we wrote in this column – December 15th 2008
“All in all, properties that are in good locations that show a history of good capital growth, have an improving yield and are under $500,000 will be the hottest property for the first six months of next year. In the later half of the year, depending on the economic outlook and what consumer sentiment brings, properties between $500,000 and $1M will be the next bracket to move. Once the economy begins to recover, properties above $1M will rebound extremely well. If you are in the market for this type of property, spring 2009 may well be the last time to buy at reduced prices before a recovery in early 2010.”
The only change to exactly what has happened is it was a little quicker than anticipated. Anyone wanted to be in the Melbourne property market in the next few years needs to think about purchasing NOW!!!!
Supply and demand are the two elements of price movement. All contributing factors have a bearing on either supply or demand. If people decide not to purchase now for any reason that will affect demand. Conversely, if people decide not to sell property or sell because they are forced to, then this affects supply.
We currently are tens of thousands of dwellings short of what we need in Melbourne now. It does not matter whether buying or renting you still need a place to live and we do not have enough dwellings. Even if people become unemployed in droves – even if it reaches 10% and people start selling their houses. The extra supply will not exceed demand. And all of the people who are selling will still need to rent. This will push up rental returns and therefore bring more investors to the market increasing demand.
The only thing that will slow price growth in the Melbourne property market is interest rate increases. If the interest rate rises faster than rental returns, which is not in our foreseeable future, this would slow the investors and all but stop the first home buyers. If this occurred it would also strangle businesses and plunge us very sharply into the recession the rest of the world is currently experiencing. The Reserve Bank is highly unlikely to do this.
Short of massively rising interest rates or Armageddon, I can’t see property prices falling anytime soon. In fact property prices will increase more rapidly over the next decade than they did over the last. People with lower budgets have to buy much further from Melbourne CBD. This will have an impact on everything from government infrastructure planning to the effect on the environment.
If you want to secure good long term wealth creation you should think about direct property investment. Call us now and we can assist you with your next purchase.
Ian James
These will not be found in new estates. These will be found in good pockets of firmly established suburbs with good amenities. All the papers this week are talking about “unfathomable” results. They are talking about how the new estates are leading the way forward with growth. This will last only as long as the grants do. Most of the commentators go on to say this was inconceivable to think our property market would move the way it has.
This is almost comical. It was so obvious what was happening in our Melbourne’s property market late last year and certainly January and February this year. In December last year we wrote in this column – December 15th 2008
“All in all, properties that are in good locations that show a history of good capital growth, have an improving yield and are under $500,000 will be the hottest property for the first six months of next year. In the later half of the year, depending on the economic outlook and what consumer sentiment brings, properties between $500,000 and $1M will be the next bracket to move. Once the economy begins to recover, properties above $1M will rebound extremely well. If you are in the market for this type of property, spring 2009 may well be the last time to buy at reduced prices before a recovery in early 2010.”
The only change to exactly what has happened is it was a little quicker than anticipated. Anyone wanted to be in the Melbourne property market in the next few years needs to think about purchasing NOW!!!!
Supply and demand are the two elements of price movement. All contributing factors have a bearing on either supply or demand. If people decide not to purchase now for any reason that will affect demand. Conversely, if people decide not to sell property or sell because they are forced to, then this affects supply.
We currently are tens of thousands of dwellings short of what we need in Melbourne now. It does not matter whether buying or renting you still need a place to live and we do not have enough dwellings. Even if people become unemployed in droves – even if it reaches 10% and people start selling their houses. The extra supply will not exceed demand. And all of the people who are selling will still need to rent. This will push up rental returns and therefore bring more investors to the market increasing demand.
The only thing that will slow price growth in the Melbourne property market is interest rate increases. If the interest rate rises faster than rental returns, which is not in our foreseeable future, this would slow the investors and all but stop the first home buyers. If this occurred it would also strangle businesses and plunge us very sharply into the recession the rest of the world is currently experiencing. The Reserve Bank is highly unlikely to do this.
Short of massively rising interest rates or Armageddon, I can’t see property prices falling anytime soon. In fact property prices will increase more rapidly over the next decade than they did over the last. People with lower budgets have to buy much further from Melbourne CBD. This will have an impact on everything from government infrastructure planning to the effect on the environment.
If you want to secure good long term wealth creation you should think about direct property investment. Call us now and we can assist you with your next purchase.
Ian James
Tuesday, June 30, 2009
Market Comment - Monday June 29th 2009
With a clearance rate of 87% on 450 reported auctions and a further 675 properties sold by private treaty negotiations, the market is simply moving from strength to strength. It is not simply first home buyers fuelling this market. Unfortunately the people reporting the property news are not necessarily the ones working in the day to day negotiations of property.
We all remember the article from The Age 10/6/2009 “Global crisis hits Toorak property”
This article explained how property prices in Toorak have plummeted by $205,000 and the “Bargain Hunters” were “circling at a mortgagee’s auction” in Hopetoun Road. The article also went on to say financiers were hoping to cover losses if the property fetched about $6.5M.
Most people who actually know anything about the property market in Melbourne would tell you there is a distinct shortage of stock especially in the range of $800k - $1M and the range well over $2M. The above property sold for $7.075M. There were 5 bidders in all. There are 4 other people out there with money in this level to spend.
The majority of our clients above $2M are not selling their existing homes. They are keeping them as investments. This will have an enormous impact on the future of property prices. With supply getting tighter and tighter, we know that as demand increases, property prices will go up. Our enquiry levels for buying services are now far stronger than anytime in 2007.
I noted a comment from a leading Melbourne real estate agent on Saturday afternoon. He thought it was generally accepted that a quote range being 20% under reserve (what the vendors are hoping for) would be seen as normal in the market place now.
The market at the sub $600k level has maintained its current upward movement as well. Whilst most commentators are talking about First Home Buyers being the only reason this market segment is moving; they are forgetting the “Mum & Dad” investor. Most conservative people are not ready to dive back into the stock market just yet. Therefore, direct property investment is seen as a strong alternative for investment.
The only market segment I see not sky rocketing forward over the next two years is in that of new homes. With the government offering $32k within the metro area until October and then dropping $7k until the end of the year, I think this market will be artificially increased. And in February next year prices may fall a lot more than the drop in the government grants.
When Adrian Jones, president of the REIV, was reported to have said “it may be more sensible and less trouble to rent than buy” He qualified this by saying buying might be better for regular snow bunnies. This was reported in Saturday’s Herald Sun. This was a quote in response to the question “is now a good time to buy” I can only suggest the market that Mr Jones was talking about was the new home market. Otherwise he may have been misquoted or he may be a little out of touch.
Good property is scarce. There is a huge demand which is growing daily. If you are in the market for property you should seek professional advice. JPP Buyer Advocates are the market leaders in this field. Call now for a free, no obligation meeting to discuss your needs for your next property purchase.
Ian James
We all remember the article from The Age 10/6/2009 “Global crisis hits Toorak property”
This article explained how property prices in Toorak have plummeted by $205,000 and the “Bargain Hunters” were “circling at a mortgagee’s auction” in Hopetoun Road. The article also went on to say financiers were hoping to cover losses if the property fetched about $6.5M.
Most people who actually know anything about the property market in Melbourne would tell you there is a distinct shortage of stock especially in the range of $800k - $1M and the range well over $2M. The above property sold for $7.075M. There were 5 bidders in all. There are 4 other people out there with money in this level to spend.
The majority of our clients above $2M are not selling their existing homes. They are keeping them as investments. This will have an enormous impact on the future of property prices. With supply getting tighter and tighter, we know that as demand increases, property prices will go up. Our enquiry levels for buying services are now far stronger than anytime in 2007.
I noted a comment from a leading Melbourne real estate agent on Saturday afternoon. He thought it was generally accepted that a quote range being 20% under reserve (what the vendors are hoping for) would be seen as normal in the market place now.
The market at the sub $600k level has maintained its current upward movement as well. Whilst most commentators are talking about First Home Buyers being the only reason this market segment is moving; they are forgetting the “Mum & Dad” investor. Most conservative people are not ready to dive back into the stock market just yet. Therefore, direct property investment is seen as a strong alternative for investment.
The only market segment I see not sky rocketing forward over the next two years is in that of new homes. With the government offering $32k within the metro area until October and then dropping $7k until the end of the year, I think this market will be artificially increased. And in February next year prices may fall a lot more than the drop in the government grants.
When Adrian Jones, president of the REIV, was reported to have said “it may be more sensible and less trouble to rent than buy” He qualified this by saying buying might be better for regular snow bunnies. This was reported in Saturday’s Herald Sun. This was a quote in response to the question “is now a good time to buy” I can only suggest the market that Mr Jones was talking about was the new home market. Otherwise he may have been misquoted or he may be a little out of touch.
Good property is scarce. There is a huge demand which is growing daily. If you are in the market for property you should seek professional advice. JPP Buyer Advocates are the market leaders in this field. Call now for a free, no obligation meeting to discuss your needs for your next property purchase.
Ian James
Tuesday, June 23, 2009
Market Comment - Monday June 22nd 2009
Finally, even the media has acknowledged we are in a strong upward movement in the Melbourne Property market. Since the third week in February, there have been more than 1000 reported sales to the REIV every week. This week was no exception, with 1249 sales, 426 sold under the auction system.
The biggest difference of the last 4 weeks is the sales data from properties over $1M. Properties that have been on the market for a very long time, properties that have failed in 2008 to sell and properties that were priced too high have now begun to gather interest. Anything with prime land content is now being looked at for development and long term holdings.
The market above $1M is now gaining momentum. Good properties are attracting 3 and 4 bidders. A property which we bought in Collingwood over $1M last Saturday had 9 people bidding. Throughout Bentleigh, McKinnon, Hampton and Sandringham, family homes just under $1M have all but disappeared. There is a greater amount of “off market” transactions in this level as well.
There are plenty of vendors “thinking” about selling, or just haven’t quite made up their minds to put something on the market. If you know who to ask there may be other options out there apart from what is being advertised.
If you are looking for property please feel free to call us and have a chat.
Ian James
The biggest difference of the last 4 weeks is the sales data from properties over $1M. Properties that have been on the market for a very long time, properties that have failed in 2008 to sell and properties that were priced too high have now begun to gather interest. Anything with prime land content is now being looked at for development and long term holdings.
The market above $1M is now gaining momentum. Good properties are attracting 3 and 4 bidders. A property which we bought in Collingwood over $1M last Saturday had 9 people bidding. Throughout Bentleigh, McKinnon, Hampton and Sandringham, family homes just under $1M have all but disappeared. There is a greater amount of “off market” transactions in this level as well.
There are plenty of vendors “thinking” about selling, or just haven’t quite made up their minds to put something on the market. If you know who to ask there may be other options out there apart from what is being advertised.
If you are looking for property please feel free to call us and have a chat.
Ian James
Monday, June 15, 2009
Market Comment - Monday June 15th 2009
Another week of over 1000 sales with a clearance rate over 80% again. 1109 total sales, 447 sold under auction and 662 private sales according to the REIV. This is up about 20% on the same weekend last year.
After last Thursday’s Age article talking about gloom and doom in the Toorak market and then this mornings, article on www.news.com.au about property prices rising across Australia, it is not difficult to understand why the average potential buyer is confused.
Unemployment nowhere near the levels that were being forecast this time last year, retail sales did not slump over the last six to eight months, interest rates have not continued in free fall, in fact the Commonwealth has just raised their rate, and even the share market is showing a very good indication of resilience. We have not been in a recession, like most of the other countries in the world and we do not have the same issues that many other countries have, relating to some of the above indicators.
Property prices have also remained incredibly resilient throughout the Global Financial Crisis (GFC). Many properties in all levels of the market have actually sold at a higher price than in 2007. Victoria Street in Williamstown was bought in 2007 for $1.775M and was snapped up as soon as it went on the market last month for $1.97M. according to the REIV.
The majority of properties offered to the market this year have been of a lower quality than those offered during the 2007 peak market. So, whilst we can compare specific properties, it is far harder to look at general statistics. Median prices statistics are made up of the properties that have been sold during the period under investigation. It is the change in these prices that some very uninformed commentators will say prove a market that has serious problems. For instance, the Williamstown median price in September 2007 was $795K and the March quarter this year showed us $780K. Therefore with this limited data I could say that property prices in Williamstown have dropped 1.8% in value. But we know good property has not!!
The issues that face purchasers today are simple. There are many properties on the market that are OK. These will and should sell at OK prices. There are a few properties that are good to excellent. It is these properties that are reaching exceptional prices in the market place. There are two reasons for this. Firstly, and very obviously, they are good properties. They are well located, well presented and well marketed. Secondly, and far more importantly, they are scarce. Banks are not forcing that many people to “fire sale” their properties. This would actually be detrimental to the banks. Over supply will bring property prices down and not assist to pay out bank loans.
Supply and demand are the factors that decide price. It is the forces on each of these factors that decide what the balance will be. We have had a substantial increase in turnover from 2008 and although the number of auctions is lower the total sales has easily exceeded the levels of last year. The choice that potential purchasers make when buying this year will be far more crucial than the final price they pay.
We can also see the lack of good stock mirrored by the way some Real Estate Agents are handling themselves. We have heard the rumours, just like everyone else that many agencies are battling to keep their doors open. It is these difficult times that we can see unlicensed, unscrupulous and or unethical people make things difficult for uninformed purchasers. People can make very poor decisions when faced with dilemmas they know little or nothing about.
I believe it is high time the government step in and push for better representation for both buyer and seller. When only one party has someone acting for them and may be purporting to be acting for both then there will always be issues. In the legal system everyone is warned to get representation on both sides, whether it is criminal or civil. I believe the same should be done within the Real Estate Industry. In most cases the purchase of a property is the largest single financial decision a person makes in their life. If you are buying property you should have someone on your side (exclusively).
Call us for a free no obligation meeting to discuss your next property purchase.
After last Thursday’s Age article talking about gloom and doom in the Toorak market and then this mornings, article on www.news.com.au about property prices rising across Australia, it is not difficult to understand why the average potential buyer is confused.
Unemployment nowhere near the levels that were being forecast this time last year, retail sales did not slump over the last six to eight months, interest rates have not continued in free fall, in fact the Commonwealth has just raised their rate, and even the share market is showing a very good indication of resilience. We have not been in a recession, like most of the other countries in the world and we do not have the same issues that many other countries have, relating to some of the above indicators.
Property prices have also remained incredibly resilient throughout the Global Financial Crisis (GFC). Many properties in all levels of the market have actually sold at a higher price than in 2007. Victoria Street in Williamstown was bought in 2007 for $1.775M and was snapped up as soon as it went on the market last month for $1.97M. according to the REIV.
The majority of properties offered to the market this year have been of a lower quality than those offered during the 2007 peak market. So, whilst we can compare specific properties, it is far harder to look at general statistics. Median prices statistics are made up of the properties that have been sold during the period under investigation. It is the change in these prices that some very uninformed commentators will say prove a market that has serious problems. For instance, the Williamstown median price in September 2007 was $795K and the March quarter this year showed us $780K. Therefore with this limited data I could say that property prices in Williamstown have dropped 1.8% in value. But we know good property has not!!
The issues that face purchasers today are simple. There are many properties on the market that are OK. These will and should sell at OK prices. There are a few properties that are good to excellent. It is these properties that are reaching exceptional prices in the market place. There are two reasons for this. Firstly, and very obviously, they are good properties. They are well located, well presented and well marketed. Secondly, and far more importantly, they are scarce. Banks are not forcing that many people to “fire sale” their properties. This would actually be detrimental to the banks. Over supply will bring property prices down and not assist to pay out bank loans.
Supply and demand are the factors that decide price. It is the forces on each of these factors that decide what the balance will be. We have had a substantial increase in turnover from 2008 and although the number of auctions is lower the total sales has easily exceeded the levels of last year. The choice that potential purchasers make when buying this year will be far more crucial than the final price they pay.
We can also see the lack of good stock mirrored by the way some Real Estate Agents are handling themselves. We have heard the rumours, just like everyone else that many agencies are battling to keep their doors open. It is these difficult times that we can see unlicensed, unscrupulous and or unethical people make things difficult for uninformed purchasers. People can make very poor decisions when faced with dilemmas they know little or nothing about.
I believe it is high time the government step in and push for better representation for both buyer and seller. When only one party has someone acting for them and may be purporting to be acting for both then there will always be issues. In the legal system everyone is warned to get representation on both sides, whether it is criminal or civil. I believe the same should be done within the Real Estate Industry. In most cases the purchase of a property is the largest single financial decision a person makes in their life. If you are buying property you should have someone on your side (exclusively).
Call us for a free no obligation meeting to discuss your next property purchase.
Tuesday, June 9, 2009
Market Comment - Monday June 8th 2009
928 reported sales to the REIV this Queens Birthday holiday weekend is up just under 50% on last years reported numbers. This typifies the overall trend for the year to date. There has been a rise of well over 15% in turnover numbers this year to date according to the published REIV figures.
If we then listen to most of the real estate agents in Melbourne and Geelong, we find that there is also a dramatic increase in buyer demand. Fuelled by the First Home Owners Grant, Bonus and Boost which, thanks to the Victorian State Government, will be around a lot longer than anyone imagined, as well as our escape from the ‘technical’ recession, demand for property is going through the roof.
The stock markets have had a long sustained rally, and this may been seen as the turning point for the Australian economy. If so, more and more people will want to get their money out of bank guarantees and back into earning better returns. There has already been an upsurgeance of investors into the property market in the lower end around the $300k – $500k range. When you add this to the first home buyers in this range, it has pushed prices up in the vicinity of 5%- 10% this year already.
With the resurgence of the stock market we also expect to see a further push back to the mid range market $800k - $1.5M. Families that have sold their homes in the $500k range, and who are feeling quite secure in their employment future are flooding into this mid range family market. With little exception, throughout Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside there have been very few times in the last 3 months that multiple family homes have been on the market at any one time in this range. When these individual properties do hit the market, competition is fierce and prices are being driven up dramatically.
Even the market over $2M has come back strongly over the past 3 months. Each property we have gone after that has stacked up as a good property, on good land, in a good location has seen three four and five people vying for the purchase. If we look back twelve months, selling agents were ringing us weekly with properties to sell as they had no enquiry from prospective purchasers.
So where to from here!
We assume there will still be plenty of fallout from the Global Economic Crisis later this year. We assume unemployment will rise above its present level. And we assume people are still nervous about jumping back into the stock market at the moment. That leaves direct property investment still on top of most people’s “safe investment” lists. The FHOG might continue to elevate the new estate prices in the outer suburbs, thanks to the State Government Bonus for first home owners who are building, they will not have the same net effect on the inner suburbs. This will continue to be dominated by buyers of second and subsequent homes and property investors. Whilst we can continue to develop huge tracts of land out past Pakenham, Craigieburn and Werribee, there are no more such divisions happening within 20km of the CBD. Property prices in these areas, whether flats, units, townhouses or large blocks of land must rise and continue to do so for the foreseeable future as the demand massively outstrips supply. It would take a reversal of all of the indicators (stock market, unemployment, growth of our economy) to change this.
Properties in areas such as North Melbourne, Collingwood, Richmond, Prahran, Windsor, Elwood, East Melbourne and South Melbourne will show tremendous growth with small flats in smallish complexes.
Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside will continue to show a resurgence for $million family homes. However, I see the biggest upward movement to be potentially sub-dividable land in the suburbs that have great infrastructure, parks, gardens, good shopping precincts and public transport. Plenty of families will be buying homes that in 5, 10 or 15 years will be subdivided down to townhouses.
The ABS has shown us the average amount of people per dwelling is down to 2.4 and if there is no change to this trend I can see a lot more townhouses in our future.
If you are thinking of purchasing a home to live in or want to buy an investment property, feel free to give us a call for a no obligation chat.
Ian James
If we then listen to most of the real estate agents in Melbourne and Geelong, we find that there is also a dramatic increase in buyer demand. Fuelled by the First Home Owners Grant, Bonus and Boost which, thanks to the Victorian State Government, will be around a lot longer than anyone imagined, as well as our escape from the ‘technical’ recession, demand for property is going through the roof.
The stock markets have had a long sustained rally, and this may been seen as the turning point for the Australian economy. If so, more and more people will want to get their money out of bank guarantees and back into earning better returns. There has already been an upsurgeance of investors into the property market in the lower end around the $300k – $500k range. When you add this to the first home buyers in this range, it has pushed prices up in the vicinity of 5%- 10% this year already.
With the resurgence of the stock market we also expect to see a further push back to the mid range market $800k - $1.5M. Families that have sold their homes in the $500k range, and who are feeling quite secure in their employment future are flooding into this mid range family market. With little exception, throughout Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside there have been very few times in the last 3 months that multiple family homes have been on the market at any one time in this range. When these individual properties do hit the market, competition is fierce and prices are being driven up dramatically.
Even the market over $2M has come back strongly over the past 3 months. Each property we have gone after that has stacked up as a good property, on good land, in a good location has seen three four and five people vying for the purchase. If we look back twelve months, selling agents were ringing us weekly with properties to sell as they had no enquiry from prospective purchasers.
So where to from here!
We assume there will still be plenty of fallout from the Global Economic Crisis later this year. We assume unemployment will rise above its present level. And we assume people are still nervous about jumping back into the stock market at the moment. That leaves direct property investment still on top of most people’s “safe investment” lists. The FHOG might continue to elevate the new estate prices in the outer suburbs, thanks to the State Government Bonus for first home owners who are building, they will not have the same net effect on the inner suburbs. This will continue to be dominated by buyers of second and subsequent homes and property investors. Whilst we can continue to develop huge tracts of land out past Pakenham, Craigieburn and Werribee, there are no more such divisions happening within 20km of the CBD. Property prices in these areas, whether flats, units, townhouses or large blocks of land must rise and continue to do so for the foreseeable future as the demand massively outstrips supply. It would take a reversal of all of the indicators (stock market, unemployment, growth of our economy) to change this.
Properties in areas such as North Melbourne, Collingwood, Richmond, Prahran, Windsor, Elwood, East Melbourne and South Melbourne will show tremendous growth with small flats in smallish complexes.
Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside will continue to show a resurgence for $million family homes. However, I see the biggest upward movement to be potentially sub-dividable land in the suburbs that have great infrastructure, parks, gardens, good shopping precincts and public transport. Plenty of families will be buying homes that in 5, 10 or 15 years will be subdivided down to townhouses.
The ABS has shown us the average amount of people per dwelling is down to 2.4 and if there is no change to this trend I can see a lot more townhouses in our future.
If you are thinking of purchasing a home to live in or want to buy an investment property, feel free to give us a call for a no obligation chat.
Ian James
Monday, June 1, 2009
Market Comment - Monday June 1st 2009
The papers are again talking about dropping property prices over the weekend. They continue to write about the imminent bursting bubble; the media has a “love affair” with gloom and doom. There were 1453 properties reported as sold to the REIV last week. You need to go back to March 2008 to see this many sales. Unlike that week when the clearance rate was 67% this week’s clearance was 82% from 667 properties.
Our company has purchased 7 properties in the past 4 days and although they ranged from first home buyers at $450k to families up scaling over $1M all of them had multiple interest. Good property always attracts multiple interest when the property is well marketed.
RP Data and Rismark International’s Home Value Index released on Friday showed all mainland capital cities recorded an increase in the first four months of the year, except for Perth. Victoria had a rise of 4.5%. The ABS has released data for Jan – March for established properties and this showed a drop of 2.2%. If the market continues similar to what is currently happening and if we take into account the plethora of sales of new houses and sales in April, I think there will be an abrupt increase in Price shown in the next quarter’s figures.
Ask any Real Estate agent about stock levels. This is the real gloom and doom story. Stock levels are so low agents are sacrificing commission percentages to get the small amount of business that is out there. With a distinct lack of stock and an abundance of potential purchasers, prices of good property have nowhere to go but up.
Over the next few months when there would normally be a winter hiatus, I expect to see continuing high numbers of sales. As the World Economic Crisis worsens before the eventual upward move, there will be some more forced sales of property. Many people have already begun to divest themselves of there weaker performing properties and this will continue through the next 6 months. For buyers, this will not cause an all important “price crash” as the demand is so far outstripping supply, that more property may simply slow down the inevitable price growth.
Buying property is and has always been one of the safest and most secure investment choices. With rental prices on the increase, interest rates at a generational low, lack of quality stock and not many other viable investment options, direct property investment has never looked so good.
If you are considering purchasing a property, please feel free to give us a call to organise a no obligation first meeting.
Ian James
Our company has purchased 7 properties in the past 4 days and although they ranged from first home buyers at $450k to families up scaling over $1M all of them had multiple interest. Good property always attracts multiple interest when the property is well marketed.
RP Data and Rismark International’s Home Value Index released on Friday showed all mainland capital cities recorded an increase in the first four months of the year, except for Perth. Victoria had a rise of 4.5%. The ABS has released data for Jan – March for established properties and this showed a drop of 2.2%. If the market continues similar to what is currently happening and if we take into account the plethora of sales of new houses and sales in April, I think there will be an abrupt increase in Price shown in the next quarter’s figures.
Ask any Real Estate agent about stock levels. This is the real gloom and doom story. Stock levels are so low agents are sacrificing commission percentages to get the small amount of business that is out there. With a distinct lack of stock and an abundance of potential purchasers, prices of good property have nowhere to go but up.
Over the next few months when there would normally be a winter hiatus, I expect to see continuing high numbers of sales. As the World Economic Crisis worsens before the eventual upward move, there will be some more forced sales of property. Many people have already begun to divest themselves of there weaker performing properties and this will continue through the next 6 months. For buyers, this will not cause an all important “price crash” as the demand is so far outstripping supply, that more property may simply slow down the inevitable price growth.
Buying property is and has always been one of the safest and most secure investment choices. With rental prices on the increase, interest rates at a generational low, lack of quality stock and not many other viable investment options, direct property investment has never looked so good.
If you are considering purchasing a property, please feel free to give us a call to organise a no obligation first meeting.
Ian James
Monday, May 25, 2009
Market Comment - Monday May 25th 2009
We need to go all the way back to the first reporting week in February before we find reported sales to the REIV dipping below 1000 (with the exception of public holiday weekends, Labour Day, Easter and Anzac Day). Even the number of auctions is on the rise with 475 reported to the REIV this week. A clearance rate of 81% is neither here nor there, it is the fact that we can assume that in excess of 1000 properties a week are being reported as being sold (there will be a lot more that go unreported).
What we need to look at, however, is the quality of what is on the market. We successfully secured 3 properties on the weekend and were out bid at another 3. Every property had multiple bidding after the each was declared on the market. Only one property sold lower than we expected. All other sold for ranges with 2-3% of expectation.
If we digest the above information, we can assume there is plenty of property and that it is easy to buy. This is incorrect. Most property currently on the market is what I would call – average or below average. Locations that are not fantastic, properties that are not finished and or need a substantial amount of work, or the vendors are not being realistic. The smaller amounts of great property that are on the market are the ones attracting huge prices above reserve.
The other key indicator that we have a fickle market is the fact that none of the quote ranges are similar. At the moment, $550k - $600k can mean the agent is after low $500’s, Low $600’s or has a reserve of $700k. If you are currently attempting to purchase property you need to choose wisely. Once you have chosen a property you need to assess it accurately. If you base your bidding or offer on the quote range you could easily be $100k out from what the property is actually worth. This is not as much of an issue if you are short of the final bid. That just means you wasted your time in going after the property. What would be many times worse is if you overpaid by $100k.
Just remember if you have a pre approval from your bank this is always subject to a valuation by the bank. If you have overpaid and the property is valued far less than you purchased it for, the bank may not give you finance. Alternatively, you could be up for tens of thousands of dollars in Lenders Mortgage Insurance.
Before you purchase any property give us a call. We offer a free no obligation first meeting. Whether you decide to use a professional Buyers Advocate or not, that meeting may save you many thousands of dollars alone.
Ian James
What we need to look at, however, is the quality of what is on the market. We successfully secured 3 properties on the weekend and were out bid at another 3. Every property had multiple bidding after the each was declared on the market. Only one property sold lower than we expected. All other sold for ranges with 2-3% of expectation.
If we digest the above information, we can assume there is plenty of property and that it is easy to buy. This is incorrect. Most property currently on the market is what I would call – average or below average. Locations that are not fantastic, properties that are not finished and or need a substantial amount of work, or the vendors are not being realistic. The smaller amounts of great property that are on the market are the ones attracting huge prices above reserve.
The other key indicator that we have a fickle market is the fact that none of the quote ranges are similar. At the moment, $550k - $600k can mean the agent is after low $500’s, Low $600’s or has a reserve of $700k. If you are currently attempting to purchase property you need to choose wisely. Once you have chosen a property you need to assess it accurately. If you base your bidding or offer on the quote range you could easily be $100k out from what the property is actually worth. This is not as much of an issue if you are short of the final bid. That just means you wasted your time in going after the property. What would be many times worse is if you overpaid by $100k.
Just remember if you have a pre approval from your bank this is always subject to a valuation by the bank. If you have overpaid and the property is valued far less than you purchased it for, the bank may not give you finance. Alternatively, you could be up for tens of thousands of dollars in Lenders Mortgage Insurance.
Before you purchase any property give us a call. We offer a free no obligation first meeting. Whether you decide to use a professional Buyers Advocate or not, that meeting may save you many thousands of dollars alone.
Ian James
Monday, May 18, 2009
Market Comment - Monday May 18th 2009
The weekend clearance rate exceeded 80% for only the second time this year. Whilst overall stock levels remain lower than this time last year, the official clearance rate is reported at a strong 82% of 434 properties that went up for auction. In addition, there were 762 private sales, taking the total number of properties sold for the week to well over 1000 yet again.
With news that the First Home Owner Grant will continue and the First Home Owner Boost will be phased out rather than stopped immediately, there is continued strong demand in the first home buyer market. And not surprisingly, the better properties regardless of the price tag are more often than not exceeding vendor expectations and their reserve with multiple bidding to try and secure the property.
As always, good, well positioned established property located within 20km of the CBD continues to do well and will continue to do so. Let's not forget that the population in Melbourne continues to grow and we have very low interest rates - two significant factors that impact on the market.
If you are thinking of buying or have found a property you are wanting to purchase, give us a call or send us an email and we would be happy to have a chat.
Antony Bucello
With news that the First Home Owner Grant will continue and the First Home Owner Boost will be phased out rather than stopped immediately, there is continued strong demand in the first home buyer market. And not surprisingly, the better properties regardless of the price tag are more often than not exceeding vendor expectations and their reserve with multiple bidding to try and secure the property.
As always, good, well positioned established property located within 20km of the CBD continues to do well and will continue to do so. Let's not forget that the population in Melbourne continues to grow and we have very low interest rates - two significant factors that impact on the market.
If you are thinking of buying or have found a property you are wanting to purchase, give us a call or send us an email and we would be happy to have a chat.
Antony Bucello
Monday, May 11, 2009
Market Comment - Monday May 11th 2009
This weekend saw what has become the typical clearance rate: 76% on around 440 homes that were set for auction. Of course, as we have been talking about for the last three months, there was again a very healthy private sale volume for the week. There were only 14 occurrences last year where the REIV reported that total sales exceeded 1000 properties in a week. We have already had 9 occurrences this year.
Whilst we wait to see what will happen with tomorrow’s federal budget, the market continued to move full steam ahead. Of the auctions we attended on Saturday, all sold under the hammer after spirited multiple bidding well in excess of the reserves. The auctions covered the ranges from $500k to well over $1M and all were hotly contested. Even the market over $2M seems to be picking up interest from many more people than most commentators believed would be the case.
We can see from the figures that are currently being reported that Private Sale negotiation is quickly becoming the most common method of sale, either because the property has passed in or the agents have decided that it is the preferred method of sale. Either way, anyone wanting to purchase a home over the next six months had better get some good advice or be ready to take on some very professional negotiators.
If you are thinking of purchasing or have already started looking please feel free to call and have a chat.
Ian James
Whilst we wait to see what will happen with tomorrow’s federal budget, the market continued to move full steam ahead. Of the auctions we attended on Saturday, all sold under the hammer after spirited multiple bidding well in excess of the reserves. The auctions covered the ranges from $500k to well over $1M and all were hotly contested. Even the market over $2M seems to be picking up interest from many more people than most commentators believed would be the case.
We can see from the figures that are currently being reported that Private Sale negotiation is quickly becoming the most common method of sale, either because the property has passed in or the agents have decided that it is the preferred method of sale. Either way, anyone wanting to purchase a home over the next six months had better get some good advice or be ready to take on some very professional negotiators.
If you are thinking of purchasing or have already started looking please feel free to call and have a chat.
Ian James
Monday, May 4, 2009
Market Comment - Monday May 4th 2009
With a 77% clearance rate and over 1000 private sales last week we are certainly not in the doldrums as most commentators would have us believe. In fact we are moving along reminiscent of the pre GFC times during February and March 2008.
Wasn’t it fantastic to find out that our property market had fallen by 15%? Isn’t it great that you can now buy property $75,000 cheaper than you could before? What the Herald Sun’s headline on Saturday says is very true. In the December quarter of 2007 at the absolute peak of the market, in one quarter our median jumped by 12.8% to $485,000. It had been $430,000 the previous quarter. This was an abnormal jump and if you use this as the benchmark instead of an anomaly then it looks like Melbourne property is in freefall.
Nothing could be further from the truth. In fact if we look at September 2007 until now the fall has been only 4.6% according to the REIV figures. And these figures are very different from RP Data’s figures. RP data is used by the Australian Stock Exchange and their figures indicated a rise last quarter to $426,423 which would equate to a rise of 2.4%.
Last week there were 1000 private sales. Looking back through REIV data, there has not been this many private sales in one week in either 2008 or 2009. There were 1298 total sales last week and you would need to go back to March 2008 to see that many sales in one week. Even the total turnover of $572M is reminiscent of the heady days of 2007.
When the market turns south as it has throughout the world, people tend to sell off anything they do not hold near and dear. This means properties that are average or below average tend to be sold off earlier than those seen as above average. This will reflect in the total figures put out by any research institution. Good properties will always return good prices; “less good” properties will always return “less good” prices. If there are more “less good” properties on the market then the statistics will show a lower median price.
In an upturned market everything sells well. People will pay over the odds for all property whether it is good or “less good”. It is now those who payed over the odds for a “less good” property will feel the pinch. It is these people that may find themselves in a negative equity position. It is these people that will struggle to sell their properties for even what they paid.
If you are in the market for a property, now is a fantastic time to buy good property. So was yesterday and so was last year. Good property will always lease out well, it will always sell well and will usually show a better capital growth than a “less good” property.
You must identify good property from “less good”, work out what the right amount to pay is, and then secure the property before someone else does. This is what JPP Buyer Advocates does for our clients. We do not work with vendors, we are not paid by any real estate agents; all we do is assist people to purchase good property.
Please feel free to contact us for a no obligation meeting if you are considering buying any property throughout Melbourne metropolitan area or Greater Geelong.
Wasn’t it fantastic to find out that our property market had fallen by 15%? Isn’t it great that you can now buy property $75,000 cheaper than you could before? What the Herald Sun’s headline on Saturday says is very true. In the December quarter of 2007 at the absolute peak of the market, in one quarter our median jumped by 12.8% to $485,000. It had been $430,000 the previous quarter. This was an abnormal jump and if you use this as the benchmark instead of an anomaly then it looks like Melbourne property is in freefall.
Nothing could be further from the truth. In fact if we look at September 2007 until now the fall has been only 4.6% according to the REIV figures. And these figures are very different from RP Data’s figures. RP data is used by the Australian Stock Exchange and their figures indicated a rise last quarter to $426,423 which would equate to a rise of 2.4%.
Last week there were 1000 private sales. Looking back through REIV data, there has not been this many private sales in one week in either 2008 or 2009. There were 1298 total sales last week and you would need to go back to March 2008 to see that many sales in one week. Even the total turnover of $572M is reminiscent of the heady days of 2007.
When the market turns south as it has throughout the world, people tend to sell off anything they do not hold near and dear. This means properties that are average or below average tend to be sold off earlier than those seen as above average. This will reflect in the total figures put out by any research institution. Good properties will always return good prices; “less good” properties will always return “less good” prices. If there are more “less good” properties on the market then the statistics will show a lower median price.
In an upturned market everything sells well. People will pay over the odds for all property whether it is good or “less good”. It is now those who payed over the odds for a “less good” property will feel the pinch. It is these people that may find themselves in a negative equity position. It is these people that will struggle to sell their properties for even what they paid.
If you are in the market for a property, now is a fantastic time to buy good property. So was yesterday and so was last year. Good property will always lease out well, it will always sell well and will usually show a better capital growth than a “less good” property.
You must identify good property from “less good”, work out what the right amount to pay is, and then secure the property before someone else does. This is what JPP Buyer Advocates does for our clients. We do not work with vendors, we are not paid by any real estate agents; all we do is assist people to purchase good property.
Please feel free to contact us for a no obligation meeting if you are considering buying any property throughout Melbourne metropolitan area or Greater Geelong.
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