Stronger and Stronger: The Market Returns to Form!


You can feel the anticipation in the air as crowds line up at open inspections, nervously checking their iPads for fresh listings and plotting a busy weekend of viewing homes. There’s no two ways about it – market is back! 2012’s year of fence-sitting is well and truly over, with a terrific return to form in consumer confidence. Of course, established suburbs close to Melbourne have continued to enjoy popularity throughout the last two years. In outer areas however – further from trains, amenities and workplaces – growth has been somewhat on hiatus during this period. Vendors are now responding to the market’s enthusiasm, with more listings coming to market and strong buyer interest and auction attendance. Over 900 properties are scheduled for auction state-wide over the coming two weekends. Last Saturday’s auction clearance rates are healthy, having achieved 73% sold from a total of 183 auctions held. The Age and other publications have begun to note the change of sentiment from the market, reporting that competition has increased, which in turn begins to impact on the prices achieved. The Australian Bureau of Statistics provides further proof that times are a-changing across the nation, with an increase in property prices of 2.1%.

What does this mean for you? If you’re a buyer intent on making 2013 the year of your first home, upsize or investment portfolio growth – strike now while the iron is hot. Early adopters and those who spot housing trends first are those who enjoy the greatest benefits when purchasing. Chisholm & Gamon are seeing larger numbers of attendees at open for inspections, with our databases growing full of aspirant purchasers. Now is the time to review your financial position, visit your broker and planner – do the research you need to ensure you are able to respond when the right property appears. Visit Chisholm & Gamon’s website and sign up to our buyer alert system, ensuring you miss no new listings to hit the market ‘softly’.

In the event you are selling to purchase again, 2013 offers you momentum and demand from a market previously conservative in their estimation of growth. S Why not take the time to meet with one of our agents and ascertain the value you may achieve at market. Who knows? It might be a welcome surprise.

More Market Talk

PPG_image 5_market updateEnzo Raimondo, Chief Executive of the Real Estate Institute of Victoria, raised some interesting points about the property market last week. In an article printed in The Age Domain section he discussed the hotly debated ‘housing bubble’ and encouraged owners, buyers and investors to look to at long-term market performance.

We all remember the significant fall in prices as the GFC crisis unfolded in 2009 when the median house price in Melbourne dropped a by $70,000. However we saw dramatic corrections in the 12-18 months that followed.

Mr Raimondo highlights the fact that in the same way that rapid increases in value are unsustainable and not positive for the economy, so are substantial falls. When prices drop considerably, and remain low, many home owners face negative equity, there are more mortgagee sales and a greater number of investors leave the market. When we see rapid increases, the reverse occurs.

2011 is proving to be a different year altogether with its own set of circumstances. We are seeing some lower price growth and fewer transactions than previous years. This, however, translates into great opportunities for those people in a position to buy. What we should remember, is that in the short term the market is bound to fluctuate. However, over a longer period of time – say, a decade or so – the property market has always provided positive capital growth and, at the moment, is supported by solid economic fundamentals.

Tags: market update, news, property, reiv

Melbourne Market Solid

PPG_May_image 3_market updateThe Melbourne property market remains solid this week despite some forecasts of a winter downturn. A Fitzroy North property fetched the highest house price at auction of $1.7 million over the weekend whilst a York Street, Prahran apartment sold for just under $2.5 million.

Supply/demand ratios are favouring buyers at present however, well presented homes, marketed correctly and with realistic reserve prices, are still generating plenty of interest and delivering strong results at auction. The year to date auction clearance rate sits at 61% with an average of between around 700 auctions each weekend in May according to Real Estate Institute of Victoria figures.

Astute investors are seizing every opportunity to grow their property portfolios snapping up well located houses and apartments close to infrastructure and within easy reach of the CBD. First home buyers are slower to take the plunge, most likely due to decreasing government grants and bonuses and the persistent media talk of further interest rate rises. But this may change with a 20 per cent decrease in stamp duty fees for eligible first home buyers starting July 1, 2011.

The metropolitan rental market continues its six-year trend of low vacancy rates. The most figures from March were 1.7 per cent, down from 2.3 per cent in December 2010. The last time the rental market recorded the ideal “supply/demand” balance was in January 2005, when the vacancy rate was 3.3 per cent.

Tags: market updates, news, property, real estate

Posted in News

Expert claims property market not oversupplied

australia propertyThe Australian housing market is not experiencing a shortage and rising interest rates will keep a lid on any further price growth, one property expert has warned.

The comments come as this week’s auctions results have showed the market is still recording fairly underwhelming results, with clearance rates at levels consistent with the past few months.

Institute of Actuaries Australia fellow Anthony Street says that while properties are overvalued, this is not because of a property shortage, as some experts have suggested. Rather, it is because of higher interest rates.

“Right now the amount of people per dwelling on average is 2.5. So if you look at the population growth over the past 12 months, it’s been at 350,000. For that you need 140,000 new dwellings, and there have been over 170,000 new dwellings started,” he says.

“This argument was started 18 months ago during when immigration really peaked, so you did have a short window of time when population growth was high and sort of outstripped supply.”

Street believes the market right now is at an equilibrium – with the supply of properties neither too much or too little.

“That having been said, I don’t think there’s an oversupply either. But you’re not getting the massive pressure on rents than if there was.”

This is the same opinion forwarded by SQM Research managing director Louis Christopher, who argues the sheer amount of stock on the market means while there may be shortages in some areas, this is not the overall trend.

So what is keeping Australian housing prices so high?

“It comes down to two things – interest rates and unemployment. We’ve had pretty low interest rates for the past 10 years, and banks are more willing to lend money to people to buy houses.”

“Look at the amount of debt households have now, it’s obvious credit has been flowing. And also unemployment is historically low, and continues to fall. Everyone who wants a job, has a job, and can continue to pay more.”

And yet, the housing market has basically been stopped in its tracks over the past year. Prices have remained flat, or fallen according to various research groups, and households – especially first home buyers – are finding it harder and harder to make their repayments.

“We’ve already seen it over the last 12 months – interest rates are around average, but the slowdown in the past six months has been due to increases in interest rates. And they aren’t massive by any means.”

However, Street says that as unemployment continues to fall, buyers will continue to meet repayments, and the ongoing demand for housing will keep prices in line, or at least buffer any major reductions.

“House prices are at a peak right now from an affordability perspective, because people haven’t been able to withstand higher interest rates. Any more will keep a lid on price growth.”

Meanwhile, the auctions market has performed in-line with the last few months of results, except in Sydney where clearance rates have increased to 60%.

According to the Real Estate Institute of Victoria, the clearance rate for Melbourne was 56% from 518 reported auctions. Chief executive Enzo Raimondo said in a statement the result shows “conditions have clearly shifted in buyers favour again”.

Meanwhile, clearance results in Sydney rose to 60.1%, while Adelaide and Brisbane both recorded 36.4% and 20.8% respectively.

Story source: Patrick Stafford

Tags: housing, news, property, real estate, research

Crisis looms as first-home buyers priced out of market

home loansAUSTRALIA faces a prolonged housing affordability crisis with the last bastion of cheap housing – new suburbs on city fringes – moving out of reach of most first-home buyers, research shows.

At the end of last year, three out of 10 lots for sale in new housing estates were accessible to average-income first-home buyers, a study of unpublished data from the National Land Survey Program has found.

City fringe subdivisions once provided first-home buyers with prized house and land deals at prices most could afford.

But in Sydney only one out of 10 lots is sold under an industry-accepted affordable land benchmark of $200,000 a lot. And the research has found that situation has existed since at least June 2008.

The loss of affordability has been pronounced in Melbourne as well, with 26 per cent of lot sales meeting the affordability benchmark, down from 90 per cent two years ago, one of the study’s authors, Colin Keane, said.

South-east Queensland had worse affordability than Melbourne, while Adelaide (75 per cent of lot sales meeting the affordability benchmark) and Perth (40 per cent) were the only major capitals building enough affordable housing in new estates.

”Everybody knows that established housing is beyond most first-home buyers … That’s a problem that is now extending to the greenfield frontier as well,” said Bob Birrell, a co-author and Monash University population expert.

Developers have repeatedly blamed soaring prices on dwindling land supply, calling for more rural land to be rezoned for housing and faster planning processes for new estates.

”The reduction of greenfield development capability across Sydney should be complemented by an urban infill strategy which ensures that there is adequate supply of affordable family housing opportunities,” the report said.

If this cannot be achieved, Sydney may lose even more aspiring home owners to other markets. Surging land prices and development bottlenecks have caused a slump in Melbourne’s greenfield land sales.

Residential land sales fell by 74 per cent in the year to September 2010, yet median land prices grew by 25 per cent to $225,750 in the year to last December, despite house blocks getting smaller.

The report’s findings follow Bankwest research showing key workers – teachers, nurses, police and others – face house prices more than five times their earnings in 84 per cent of local government areas in Sydney, up from 77 per cent in 2009.

This was an improvement from 2005, when 95 per cent of areas were unaffordable.

”These are the essential workers which we rely on every day to provide important services and they face the possibility of being priced out of housing in the communities in which they serve,” the chief executive of Bankwest, Ian Corfield, said.

South-east Queensland’s decade-long affordable-housing growth has come to a sharp halt.

Greenfield land prices in Queensland were now higher than Melbourne and ”that’s very significant at a macro level for Australia”, Dr Birrell said.

Poor affordability in Melbourne, south-east Queensland and Sydney could cause people to go to Perth, where new housing was cheaper and the job market better, he said.

The challenge facing the development industry was to keep prices down and maintain a healthy number of homes accessible to first-time buyers, the report said.

Story by Simon Johanson

Tags: economy, first home buyers, marketing, news, real estate

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