It doesn’t take a rocket scientist to work out everyone believes the property market is the place to invest. With an 85% clearance rate on 771 reported auctions and over 1200 properties sold last week, we can see there has been a slightly upward trend on last years results.
We have spoken about how long this will last and also about the “bubble” theory. This myth that 10% – 11% p.a. is not sustainable is just ridiculous. The better suburbs in Melbourne have been averaging this since 1980 according to the Valuer General data.
Even if we think about that fundamental “average” that everyone uses. The fact that “on average” properties will double in value every 7 – 10 years. This equates to between 7 & 10%. If this is true, then let’s assume 8.5% is the average for all property around the world. This means some countries will be higher and some lower. I am confident in saying Australia will probably be above average and therefore closer to 10%. If 10% is the average for Melbourne then there will be some areas above this point and some below. The top third of suburbs usually sits around the 11% – 12% mark.
If we assume this theory has merit, then all we have to do is choose properties that will perform in the top third of properties in Melbourne. This is again where we go back to historical data. We look and see what suburbs have performed well. We look at any changes to infrastructure and we look to the fundamentals that are relevant to all properties; such as proximity to cafes and shops, proximity to parks and gardens and train stations, access to road networks and major shopping centres etc.
People ask me every day:”When is the best time to buy property?” My response is always the same: “Yesterday”. I will say this today; I will say this tomorrow, next week and next year. Property prices rarely drop dramatically, they tend just to stagnate occasionally between bursts of excellent capital growth.
For the investors, there are tremendous advantages of safely leveraging your money, reasonable rental yields and attractive tax deductions as well. Direct property investment is not at all difficult if you get good advice. Be extremely weary of anyone offering free advice. Any advocates that say they charge the vendor whilst helping you would be at the very least a massive conflict of interest and at worst illegal.
Hire an advocate whose only purpose is to assist purchasers buying property. Call us anytime to set up your no obligation first meeting. You will learn more about buying property in Melbourne from people that buy property in Melbourne every week.
Ian James
Tuesday, February 23, 2010
Tuesday, February 9, 2010
Market Comment - Monday February 8th 2010
The autumn selling season is just starting to pick up pace with 832 properties reported as sold by the REIV last week. Volume is still very low and the first real test of the market will be February 20 in two weeks time. Anecdotally we have seen the huge surge of interest in property already. Every agent you talk to says they have huge numbers through open houses. The media is portraying property prices are “out of control” and that they are unsustainable. “Melbourne’s property market is on track to produce similar heat to last year”. “When will the bubble burst?” Most tabloid newspapers are simply looking for “sound bytes.”
The growth is sustainable!!!! And if your family does not purchase property soon it may be very difficult to get in the market over the next couple of decades.
Our Reserve Bank Governor, Glen Stevens has spoken often of the lack of dwellings in Australia, coupled with the increasing population growth as being one of the major factors of rising property prices in Australia. His deputy, Ric Battellino, gave an assessment of the Australian economy's future prospects on 25 November 2009. In doing so, he reviewed the much-discussed ratio of house prices to household income. He surmised that most articles are written about the different ratios of Australian and North American house price to income ratio. He spoke of the huge differences in non housing costs to people in North America, in particular health care and the much lower gearing of loans in Australia.
The amount of raw materials China will import from us over the next ten years will be greater than the total cumulative amounts they have taken in history. Our unemployment rates keep dropping. We are going to have to increase our population and whilst property investment remains at all time highs, nearly half of it is spend on refurbishment and alterations to existing dwellings.
We need to build more houses!!! We are not sustaining supply!!!
On the demand side, investors are not enamoured by the stock market at the moment. Over the last couple of years there seems to be one setback after another. The latest of course is the potential for a couple of European countries to be unable to pay their debts. This is driving investors to direct property investment in droves.
Buying a property, renting it out, refinancing it to utilise its equity seems all very simple, but it is not. You need to have a goal that makes sense. You need to have a good team, starting with a financial planner, accountant and mortgage broker. And of course you need the best advice you can get regarding the actual property and how to purchase it. You need to use a professional buying advocate to assist you with your purchase.
If you buy property without professional guidance in the most difficult property market in a decade then you might as well stick your money in the bank and let their fees and charges erode your savings.
Without professional advice you will spend more time looking at the wrong properties, ones you cannot afford or cannot secure. Without professional advice you will most likely over pay. And without professional advice you will be most unlikely to win the negotiation battle.
Have you noticed that people selling all hire professional real estate agents!!
If you want to secure property in the Melbourne property market this year come in and have a chat to one of our advocates. The first meeting is complimentary and obligation free.
Ian James
The growth is sustainable!!!! And if your family does not purchase property soon it may be very difficult to get in the market over the next couple of decades.
Our Reserve Bank Governor, Glen Stevens has spoken often of the lack of dwellings in Australia, coupled with the increasing population growth as being one of the major factors of rising property prices in Australia. His deputy, Ric Battellino, gave an assessment of the Australian economy's future prospects on 25 November 2009. In doing so, he reviewed the much-discussed ratio of house prices to household income. He surmised that most articles are written about the different ratios of Australian and North American house price to income ratio. He spoke of the huge differences in non housing costs to people in North America, in particular health care and the much lower gearing of loans in Australia.
The amount of raw materials China will import from us over the next ten years will be greater than the total cumulative amounts they have taken in history. Our unemployment rates keep dropping. We are going to have to increase our population and whilst property investment remains at all time highs, nearly half of it is spend on refurbishment and alterations to existing dwellings.
We need to build more houses!!! We are not sustaining supply!!!
On the demand side, investors are not enamoured by the stock market at the moment. Over the last couple of years there seems to be one setback after another. The latest of course is the potential for a couple of European countries to be unable to pay their debts. This is driving investors to direct property investment in droves.
Buying a property, renting it out, refinancing it to utilise its equity seems all very simple, but it is not. You need to have a goal that makes sense. You need to have a good team, starting with a financial planner, accountant and mortgage broker. And of course you need the best advice you can get regarding the actual property and how to purchase it. You need to use a professional buying advocate to assist you with your purchase.
If you buy property without professional guidance in the most difficult property market in a decade then you might as well stick your money in the bank and let their fees and charges erode your savings.
Without professional advice you will spend more time looking at the wrong properties, ones you cannot afford or cannot secure. Without professional advice you will most likely over pay. And without professional advice you will be most unlikely to win the negotiation battle.
Have you noticed that people selling all hire professional real estate agents!!
If you want to secure property in the Melbourne property market this year come in and have a chat to one of our advocates. The first meeting is complimentary and obligation free.
Ian James
Monday, February 1, 2010
Market Comment - Monday February 1st 2010
The REIV website tells us there were 960 sales in the week ending 31/1/2010. Of these 84 were sold at auction. This represents over $450 million worth of property.
Our 9 advocates were out and about on Saturday looking at over 30 open houses. In the range of $400k - $600k there would have been about 50+ people at each open. One agent we spoke to this morning said he had 90+ groups on Saturday and another 40+ groups on Sunday for a 2 bedroom unit in St Kilda East.
Enquiry levels on our website and phones have reached new records! Investors and owner occupiers alike!
It is fairly obvious that most potential property purchasers are heeding the media warning. “IF YOU DO NOT BUY SOON YOU WILL BE OUTPRICED BY THE MARKET.” We are not in a price bubble. Property prices are not about to spike and then do a “share market” 48% drop (All Ordinaries index dropped from 6492.4 to 3338.4 December 07 to March 09)
The Melbourne median house price is currently at $540,000. The media is generally saying that it will only be ten years before the median house price in Melbourne reaches $1 million. In my opinion we will be there by 2016 – 2017. (This would be an average of around 10% each year). Median units will probably be there by around 2020. At that price point if the banks keep their current lending criteria, the average person will need $255,000 as a deposit to be able to pay stamp duty and avoid lenders mortgage insurance.
Even with interest rate rises on the cards this year, starting with a probable rise tomorrow, don’t think that will affect the established property market. There are simply not enough dwellings to house our growing population.
We will have a better feel of price movement by the end of February, once we have seen three or four substantial weekends. But anecdotally, most agents are saying, whilst they have listings in the pipeline, there are not a huge amount ready to begin auction campaigns. If this is true, we will see property supply dwindle more than last year, whilst demand seems to have stepped up another notch.
If you are looking to secure property this year, I would strongly suggest at least talking to a Buyer Advocate. They are professional real estate agents who will assist you with property selection, assessment and negotiation. Be sure when talking to a Buyer Advocate to ask if they only BUY property.. & Not sell as well (Vendor Advocacy).
If you would like to make an obligation free appointment with us please give our office a call on 9523 1054
Ian James
Our 9 advocates were out and about on Saturday looking at over 30 open houses. In the range of $400k - $600k there would have been about 50+ people at each open. One agent we spoke to this morning said he had 90+ groups on Saturday and another 40+ groups on Sunday for a 2 bedroom unit in St Kilda East.
Enquiry levels on our website and phones have reached new records! Investors and owner occupiers alike!
It is fairly obvious that most potential property purchasers are heeding the media warning. “IF YOU DO NOT BUY SOON YOU WILL BE OUTPRICED BY THE MARKET.” We are not in a price bubble. Property prices are not about to spike and then do a “share market” 48% drop (All Ordinaries index dropped from 6492.4 to 3338.4 December 07 to March 09)
The Melbourne median house price is currently at $540,000. The media is generally saying that it will only be ten years before the median house price in Melbourne reaches $1 million. In my opinion we will be there by 2016 – 2017. (This would be an average of around 10% each year). Median units will probably be there by around 2020. At that price point if the banks keep their current lending criteria, the average person will need $255,000 as a deposit to be able to pay stamp duty and avoid lenders mortgage insurance.
Even with interest rate rises on the cards this year, starting with a probable rise tomorrow, don’t think that will affect the established property market. There are simply not enough dwellings to house our growing population.
We will have a better feel of price movement by the end of February, once we have seen three or four substantial weekends. But anecdotally, most agents are saying, whilst they have listings in the pipeline, there are not a huge amount ready to begin auction campaigns. If this is true, we will see property supply dwindle more than last year, whilst demand seems to have stepped up another notch.
If you are looking to secure property this year, I would strongly suggest at least talking to a Buyer Advocate. They are professional real estate agents who will assist you with property selection, assessment and negotiation. Be sure when talking to a Buyer Advocate to ask if they only BUY property.. & Not sell as well (Vendor Advocacy).
If you would like to make an obligation free appointment with us please give our office a call on 9523 1054
Ian James
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