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
Tuesday, June 30, 2009
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
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