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
Monday, September 28, 2009
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
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