The Melbourne property market is settling down nicely into it’s usually winter norm. There are usually a few sales that will fly and a few that won’t. Buyers are faring a little better than vendors just at the moment as the stock levels are a bit above average but a 67% clearance rate in the heart of winter in Melbourne is certainly nothing to sneeze about.
The JPP team contested only four auctions at the weekend after three successful purchases earlier in the week. We were successful in two. The interesting auction was in an inner South East suburb. An agent quoting $450k - $500k received an unconditional offer on Wednesday evening of $532,500. This was rejected, as it probably should have been. The property was worth low to mid $500’s. At auction on Saturday the auctioneer opened on a vendor bid at $450k. After receiving no bids, the auctioneer went inside to receive instructions. He came back out and again asked for any advance to his vendor bid. He was grateful to receive a genuine bid of $460k. After no further bidding the auctioneer again sought instructions from his vendor. After this second break he began talking about the possibility of a pass in and finally solicited another bidder to enter the battle with $470k. This was relatively short lived with another bid of $475k seemingly stopping the nervous bidder in his tracks.
Lo and behold, the auctioneer needs more instructions from his vendor. It was actually becoming a little amusing and the crowd was beginning to wonder whether the vendor was running the auction by remote!! After the third resumption the property was announced “on the market”. To say this was a surprise was the understatement of the century. After a fourth stoppage and two more bids, the property was sold at $495,000. This was $37,500 below the unconditional offer that was rejected three days earlier.
I am still uncertain as to the motivation of the vendor but we were happy to buy a property well below the comparable sales in the area.
Thanks very much to all those who came and saw us at the Home Buyers Show at the Exhibition Buildings over the weekend. It is always a real buzz catching up with past clients as well as speaking to so many new people that haven’t heard about Buyer Advocacy.
If you are thinking of buying a property in Melbourne, either as an investment or to live in, please do not hesitate to give us a call
Ian James
Monday, July 26, 2010
Monday, July 19, 2010
Market Comment - Monday 19th July 2010
After a clearance rate of 72% on 525 auctions, which is 48% more than this time last year, and a steady increase in median house prices released last week from the REIV, both major newspapers yesterday had to include the word “Bubble” in their headlines.
Properties over the weekend saw good competition at all auctions JPP advocates attended. A two bedroom unit in Avoca Street in South Yarra was sold for $802,000 after being declared on the market at $660,000. The last, very similar, property in the block sold for $695,000 in May this year. There are still plenty of people out there looking for property.
The “Barefoot Investor” said you shouldn’t listen to anyone when hearing competing arguments about “unsustainable growth”. His advice is only buy if you can safely afford to do so. And his definition????? If you halve your income and interest rates rise by more than 50% (assuming none of the sensational economic progress that comes with that sort of rise) and you can still afford to buy then this is good. If you are planning to drop one income due to starting a family, then it is self-evident not to include that money in any future budget. If people wait until they can pay cash for a property then they will miss out on incredible growth that will occur in the next 10 years
With our population growing and our new home starts stagnating, similar to what has occurred over the last 10 years, it will take a decade to recover some parity between house supply and demand. Over the next five or six weeks, with our prospective leaders out on The Hustings, keep an ear out for anything about sustainable population. Labor’s new position on population growth is that Ms Gillard does not believe in a Big Australia, whilst I haven’t heard Mr Abbot’s view.
This will be a crucial part of the balance between supply and demand. If the government turns off the immigration tap which we so desperately need to fulfil our massive labour shortage, then this may slow down property price growth. But I doubt either party will do this as it is crucial for Australia’s continuing economic growth.
Assuming that population growth continues, we should see the top 20% of Melbourne suburbs average a growth rate of 10%- 11% p.a. over the next five to ten years. But it is the new estates which will be far more difficult to predict. New Estate prices are dependent on Builders and Developers’ margins on new homes. When interest rates are low and money is easy to get, builders put their margins up and the entire established property market rises with them. However, when times get a little tougher, the developers drop their margins in order to get more work, the established property prices in the area also need to drop any price so the sale price matches the market created by the developers. Whilst 2009 saw a massive price increase in Estate areas due to First home buyers giving builders their first home owner grants, we should see the medians in these areas drop back this year.
If you are thinking about purchasing a property please feel free to contact us for a no obligation meeting.
Ian James
Properties over the weekend saw good competition at all auctions JPP advocates attended. A two bedroom unit in Avoca Street in South Yarra was sold for $802,000 after being declared on the market at $660,000. The last, very similar, property in the block sold for $695,000 in May this year. There are still plenty of people out there looking for property.
The “Barefoot Investor” said you shouldn’t listen to anyone when hearing competing arguments about “unsustainable growth”. His advice is only buy if you can safely afford to do so. And his definition????? If you halve your income and interest rates rise by more than 50% (assuming none of the sensational economic progress that comes with that sort of rise) and you can still afford to buy then this is good. If you are planning to drop one income due to starting a family, then it is self-evident not to include that money in any future budget. If people wait until they can pay cash for a property then they will miss out on incredible growth that will occur in the next 10 years
With our population growing and our new home starts stagnating, similar to what has occurred over the last 10 years, it will take a decade to recover some parity between house supply and demand. Over the next five or six weeks, with our prospective leaders out on The Hustings, keep an ear out for anything about sustainable population. Labor’s new position on population growth is that Ms Gillard does not believe in a Big Australia, whilst I haven’t heard Mr Abbot’s view.
This will be a crucial part of the balance between supply and demand. If the government turns off the immigration tap which we so desperately need to fulfil our massive labour shortage, then this may slow down property price growth. But I doubt either party will do this as it is crucial for Australia’s continuing economic growth.
Assuming that population growth continues, we should see the top 20% of Melbourne suburbs average a growth rate of 10%- 11% p.a. over the next five to ten years. But it is the new estates which will be far more difficult to predict. New Estate prices are dependent on Builders and Developers’ margins on new homes. When interest rates are low and money is easy to get, builders put their margins up and the entire established property market rises with them. However, when times get a little tougher, the developers drop their margins in order to get more work, the established property prices in the area also need to drop any price so the sale price matches the market created by the developers. Whilst 2009 saw a massive price increase in Estate areas due to First home buyers giving builders their first home owner grants, we should see the medians in these areas drop back this year.
If you are thinking about purchasing a property please feel free to contact us for a no obligation meeting.
Ian James
Wednesday, July 14, 2010
Market Comment - Monday 12th July 2010
We can see confusion in the current market between the clearance rates showing the market is imploding and new loans data showing an increase in loans for housing. We have data from builders saying there are fewer house starts but we have rental data showing increasing rents and lack of stock. We have Welfare groups screaming to the Government that there is not enough housing yet we have the papers saying nobody is going to buy homes.
Catherine Cashmore, one of our advocates, wrote an article for the Age which was published yesterday titled “Seeing the bigger picture”. It tells us not to look at the microscopic picture, but to look at the whole market. I have notice the national news services have started to quote RPData clearance rates recently. WHY! Because they are lower than REIV as they take a different sample. In doing so it seems like there has been more movement in the market in a shorter time.
Overall, the Melbourne property market is in fantastic shape for people who own property, or those who are contemplating property investment. It is not so good for people who are trying to rent. I know I have said this many times before, but I will say it once more. The vast disparity between population growth, number of houses being built and current stock levels, means the only way for property prices to go over the short to medium term (3- 7 years) is up. STRONGLY!! Property prices in the top third of suburbs in Melbourne will double in the next 6 – 7 years.
In fact, if the governments, both state and federal, do not turn their collective attentions to this problem in the next few years, twenty years from now we will be looking at the European model of home ownership. 25% of the people will be property owners and 75% will rent forever. Bank loans will need to be generational; 50 years or more. Longer leases, such as 5 or ten years or longer, will be traded like property ownership is now.
We need to build more homes, but not in estates stretching out into the countryside. We need sustainable high density living areas throughout the Metropolitan area. We need to build “real” fast trains between Ballarat, Geelong, Bendigo and Bairnsdale. If people could commute from Geelong in 30 minutes to a true transport hub in Melbourne, then we could begin to grow our regional centres.
This would add value to these areas, make population growth and planning far better and also relieve the pressure on Melbourne.
If you are considering buying property please do not hesitate to give us a call for a free, no obligation meeting. If you would like to comment on anything here please feel free to send us an email.
Ian James
Catherine Cashmore, one of our advocates, wrote an article for the Age which was published yesterday titled “Seeing the bigger picture”. It tells us not to look at the microscopic picture, but to look at the whole market. I have notice the national news services have started to quote RPData clearance rates recently. WHY! Because they are lower than REIV as they take a different sample. In doing so it seems like there has been more movement in the market in a shorter time.
Overall, the Melbourne property market is in fantastic shape for people who own property, or those who are contemplating property investment. It is not so good for people who are trying to rent. I know I have said this many times before, but I will say it once more. The vast disparity between population growth, number of houses being built and current stock levels, means the only way for property prices to go over the short to medium term (3- 7 years) is up. STRONGLY!! Property prices in the top third of suburbs in Melbourne will double in the next 6 – 7 years.
In fact, if the governments, both state and federal, do not turn their collective attentions to this problem in the next few years, twenty years from now we will be looking at the European model of home ownership. 25% of the people will be property owners and 75% will rent forever. Bank loans will need to be generational; 50 years or more. Longer leases, such as 5 or ten years or longer, will be traded like property ownership is now.
We need to build more homes, but not in estates stretching out into the countryside. We need sustainable high density living areas throughout the Metropolitan area. We need to build “real” fast trains between Ballarat, Geelong, Bendigo and Bairnsdale. If people could commute from Geelong in 30 minutes to a true transport hub in Melbourne, then we could begin to grow our regional centres.
This would add value to these areas, make population growth and planning far better and also relieve the pressure on Melbourne.
If you are considering buying property please do not hesitate to give us a call for a free, no obligation meeting. If you would like to comment on anything here please feel free to send us an email.
Ian James
Monday, July 5, 2010
Market Comment - Monday 5th July 2010
REIV clearance rate for this week was 66%. This is similar to 2008 during the height of the GFC, and to last year where the July clearances were in the 80”s. However, we look at the volumes that are selling and the picture is different. The volume of sales this year has far outstripped 2008 and 2009. As did the total dollars. This time last year REIV stated $468M of property sold as compared to this weekend of nearly $517M.
It was noted that many opens were quiet and the auctions our team attended were mixed. Some flew while others left auctioneers wondering where the punters had gone.
Over the next 2 months we should see a natural quietening of the market. During winter, anecdotally, lower priced properties keep selling to investors and owners of the top end family homes normally spend this time getting their homes ready for the Spring market.
This is assuming the Reserve bank do not decide to move the cash rate from 4.5% tomorrow. Economists and other financial commentators have joined the punters shortening odds for a rise tomorrow. Centrebet has the odds of RBA for keeping cash rate the same as $1.14.
RPData have released some statistics today that have been picked up by the major papers. Clearance rates in the 50% - 60% range! Don’t confuse the REIV data with this. The clearance rate has not dropped 35% over the last few weeks. Both RPData and REIV are industry based and are feed in different ways. Both however cannot possibly pick up all the sales. The Valuer general of Victoria has just released very accurate figures for the calendar year of 2009. We are analysing these at the moment and will bring you some results over the coming weeks.
Statistics can be useful, but they are not the be all and end all of whether to buy or not. A professional advocate will be able to assist you in a decision as to the potential value of a property and its surroundings. Just because Seddon or Seaford have had good capital growth in the past, it does not mean every property for sale in these areas is a great buy.
If you are thinking of buying property give us a call for a no obligation first meeting.
Ian James
It was noted that many opens were quiet and the auctions our team attended were mixed. Some flew while others left auctioneers wondering where the punters had gone.
Over the next 2 months we should see a natural quietening of the market. During winter, anecdotally, lower priced properties keep selling to investors and owners of the top end family homes normally spend this time getting their homes ready for the Spring market.
This is assuming the Reserve bank do not decide to move the cash rate from 4.5% tomorrow. Economists and other financial commentators have joined the punters shortening odds for a rise tomorrow. Centrebet has the odds of RBA for keeping cash rate the same as $1.14.
RPData have released some statistics today that have been picked up by the major papers. Clearance rates in the 50% - 60% range! Don’t confuse the REIV data with this. The clearance rate has not dropped 35% over the last few weeks. Both RPData and REIV are industry based and are feed in different ways. Both however cannot possibly pick up all the sales. The Valuer general of Victoria has just released very accurate figures for the calendar year of 2009. We are analysing these at the moment and will bring you some results over the coming weeks.
Statistics can be useful, but they are not the be all and end all of whether to buy or not. A professional advocate will be able to assist you in a decision as to the potential value of a property and its surroundings. Just because Seddon or Seaford have had good capital growth in the past, it does not mean every property for sale in these areas is a great buy.
If you are thinking of buying property give us a call for a no obligation first meeting.
Ian James
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