August 2009: Cautious optimism the way forward

Welcome to your August edition of propertybuyer’s market update.

In this edition we will look at…

1. Market update by Rich Harvey
2. Client Stories
3. Next seminar - Creative Strategies and Maximising your Finance Options – Tues 15th Sept
4. We're Hiring...
5. Inspiration Corner - Thoughts of the Month

1. MARKET UPDATE “CAUTIOUS OPTIMISM THE WAY FORWARD” –By Rich Harvey

The Sydney (and much of the Australian) property market is on the move in case you haven’t noticed. So much has been happening in the property market at many different price points. Auction clearance rates have been much higher than last year hovering around 80% for Melbourne, 69% in Sydney and 45% in Brisbane in the last quarter.
The severe shortage of stock on the market during winter has meant strong competition amongst buyers for fewer properties resulting in prices rising in most blue chip suburbs.

We are seeing an amazing number of prospective buyers attend open for inspections. It has been common for up to 70 groups to go through a property when it first hits the market. If the property has the right qualities up to 20 contracts are issued and on auction day the reserve price is usually exceeded by a good margin.

First home buyers are out in force seeking to capitalize on the generous government grant before it reduces to half in September 30, then reverts to original $7000 on January 1. Savvy investors are currently out in the market, but the “herd investors” are yet to return to the market. Some commentators believe there will be a price drop in the sub $600k bracket once the FHOG disappears. While demand may drop back a little, prices in this bracket are unlikely to decline because there is still pent up demand for properties in this affordable price range. In addition investors are likely to enter the market in much larger numbers next year and with increased equity from other properties will be competing against each other for scarce quality stock.

However, the major driver of renewed activity in the market is lower interest rates. With improved mortgage affordability more people are entering the market to secure a roof over their heads or get an investment property.

All of this points to a strong resurgence in confidence in the property market.
Professor Steve Keen will no doubt be doing his stretching exercises in preparation for his walk from Canberra to Kosciusko with his T-shirt sign “I was hopelessly wrong on house prices - ask me how?”

The economic doomsayers who were predicting a massive meltdown in the property market will no doubt have to eat their words even more by this time next year. The Westpac-Melbourne Institute's Consumer Sentiment Index released this month has risen 28% since May this year confirming that confidence is returning to the markets.

I was interviewed by Peter Switzer in July last year (2008) and he asked me where I thought house prices were going in the year. I said that based on the fundamental shortage of properties in major capital cities we should expect to see a modest increase of around 6% to 7% in prices. This is exactly what has occurred. According to Residex, Sydney’s median price has increase from around $565,000 to $593,000 a rise of 6.56% in the last quarter. Other capital cities have also followed suit with Melbourne’s median price now at $498,000 showing a rise of 5%, Brisbane $452,500 (2.1%), Adelaide $382,500 (1.3%), Dawin $475,000 (3.35%). The only exception to growth was Perth with a median price declining by 1.36% to $469,000.

While the impact of the GFC has shattered the confidence of many investors and businesses, those with the right mental attitude, the right system, structure and team of advisors will make solid gains in the next property cycle.

As we head into spring I don’t believe we will see the same growth figures as over the winter period. This is the same concern shared by the Reserve Bank which is worried that lower interest rates and home buyer grants will simply push prices up (asset bubble) without delivering additional supply of houses. Spring will bring a much larger number of new property listings to the market and alleviate the pressure on prices to a degree. Spring is traditionally one of the best times to get the “pick of the bunch” as vendors and buyers get ready to buy and sell before the end of the year.

The road ahead for the property market is likely to continue to have volatility. The question of how high unemployment will rise still hangs in the air. The original predictions of 8.5% have now been reduced to around 7.5% - but I believe it may peak around 7%. The rental market has softened due to more buyers entering the market and typically lower rental demand during winter.

So what is the take-away message in all of the above?

• Select well located properties in the inner and middle rings of capital cities.
• Focus on areas where there is a history of capital gains and likely to be more appreciation due to access to shops, schools, beaches, transport and lifestyle appeal.
• Maintain a reasonable cash or equity buffer. Factor in an interest rate rise of up to 2% when calculating your cashflows. Leverage safely.
• Buying a property before the end of the year will provide some excellent opportunities
• Buy at a price slightly above the median price if you want a quality property, but don’t buy a property at twice the median price of the suburb – consider your exit strategy if you ever needed to sell quickly!
• Don’t pay too much or become emotional.
• Use a Buyers' Agent to get you to the front of the queue, and sniff out those hard to find quality properties and save you the stress of searching and negotiating.

Click here to start the converstaion about how to engage our team to make your property search or next negotiation much easier and save time, money and stress.

2. CLIENT STORIES

(A). Matt makes the sell/ buy process easy and efficient.

Buyer type: Home Owner
Buyers brief: Frenchs Forest, Belrose area
List price: Vendor looking for offers over $810,000
Purchase price: $775,000
Saving: $35,000
Time taken: 46 days

Buyers’ agent comment – Matt Corbett:
Paul and Sally were looking to up-size from a townhouse in Marsfield to a family home in a good suburban area. Firstly, I recommended an excellent sales agent to them and liaised with this agent throughout the process, as the timing of their sale and new purchase were most important. Once they had exchanged on their townhouse, there was a limited time period to secure a new home which met all of their requirements. They wanted a well conditioned home in an area suitable to raise a young family. We secured a lovely home in a cul-de-sac, directly opposite a park. The home had a very sensible flow with 2 separate living areas, and did not require any renovations, but had great potential to add value in the future.

Client’s comment – Paul & Sally:
"We first learned of the propertybuyer team, after seeing their presentation at the Sydney Home Buyer Expo. The idea of having someone experienced in spotting traps and in touch with the market place appealed to us greatly. So we didn’t need to take months ourselves, to learn the prevailing market, particularly in turbulent times. After meeting with and talking our plans over with Matt at their offices, we knew we were dealing an experienced, professional and down to earth practical team, that gave us the confidence that we would be buying what we wanted at the right price. We were delighted with quality of the contacts that Matt put us in touch with to help and sell our old townhouse.

From the outset, Matt kept us informed of what was showing up and we greatly appreciated his being there with us as we inspected properties, to give us a more objective take on pros and cons and investment value of potential homes. The follow-up appraisal report on properties with true valuations helped us weigh our options with more clarity. Having someone in the industry to talk opportunities over with, removed the pressure of the decisions needed.

For us, most of all, the greatest benefit was having an experienced strategist go into negotiation for us once we had made our choice, and knowing that the result was better than we could achieve and within our budget. The saving here was more than worth the cost. The anxiety of buying our new home has become a positive and exciting experience. Our family and friends were amazed at how quickly and well, we sold and then bought and I recommend to them and anyone else the propertybuyer team.

Thanks Matt for your consistent and friendly support."

(B). Off-market silent sale a win-win for seller and buyer

Buyer type: Home Owner
Buyers brief: Eastern suburbs – Bellevue Hill
Purchase price: $520,000
Time taken: 10 days

Buyers’ agent comment –David McElveney:
Reece and Emma were referred by a work colleague to use my services and were a little sceptical as to whether they really needed someone to do "their job" for them. I explained that finding the property is only the beginning and they now understand why. A previous client of ours was about to list his property for sale with a selling agent however he was so happy with our service in finding the property in the first place he decided to call and see if we had any suitable buyers first. And we did. Reece and Emma viewed a number of other properties and we eventually settled on our past client's property before it hit the market. Another silent sale!

The true value for Reece and Emma came later when their bank messed them around and I had to "coach" the valuer into understanding the value of the property. It’s through years of knowing how to keep a transaction going in the right direction that enabled Reece and Emma to secure their property. And our previous client saved almost $20,000 in agent's selling fees because he came back to us. Everyone's a winner!

If you are considering buying and would like to get the upper hand with a professional buyers’ advocate representing just you (not the vendor), sourcing and negotiating the best opportunities throughout Sydney and Australia, then please call our team on +61 2 9975 3311 or email us for an obligation free chat. Click here to send us your Wishlist…

3. SEMINAR – “Creative Strategies and Maximising Finance for Building your Investment Portfolio”

As spring approaches it’s a great time to get your finances back on track and set yourself on the road to financial independence. A lot has changed with finance and lending practices from the major banks. As a home buyer or investor you need to fully understand how these changes affect you and position yourself for success.

Our next seminar “Creative Strategies and Maximising Finance for Building your Investment Portfolio” will be held on Tuesday 15th September at North Sydney Leagues club.

Click here to book your seat

Part 1: Maximised Finance for Property Investors

Before you go shopping for a property it is essential you have a clear investment strategy and secondly that you know your borrowing capacity. Finding the property is the second part of the equation, but having the right finance structure around your property investment is crucial to reaching your financial goals. At our next seminar, I have invited Jane Slack-Smith, Principal of Investors Choice Mortgages to present her top tips and insights in the new world of finance and cover the following topics:

• How to get loans to buy multiple properties
• Setting up the right finance structure for long term equity growth
• How to maximise the amount you can borrow
• What has changed recently with bank lending criteria and how it affects you?
• Avoiding the seven deadly sins of property finance
• Re-value and refinance strategies – how to leverage safely to maximise the growth of your portfolio.

Jane Slack-Smith spent over 15 years as a mining engineer specializing in explosives. During this time Jane and her husband built a substantial property portfolio. Having just completed her seventh renovation Jane knows all about the opportunities and challenges investors and renovators face.

Jane started Investors Choice Mortgages to assist others in achieving their goals through property investing. Over the years Jane has been recognised for her contribution to the mining and finance industries being profiled on ABC Australian Story, being awarded with the prestigious Churchill Fellowship in 2000 and in 2006-to present being named in the Who’s Who of Australian Women. She also regularly contributes articles to Money Magazine and Australian Property Investor magazine.

Book now by clicking here:

Part 2: Creative Strategies for Building your Investment Portfolio

Many property investors will stop at one or two investment properties. Either they run out of cash flow or lack the knowledge or motivation to build a sizeable portfolio.
One of the most common questions property investors ask is: “How can I buy multiple properties” and "What types of properties make the best investment?"
In this session, Rich Harvey will uncover the myths about hot spotting and present his top property tips on:

• How to build a sensible property portfolio
• How to identify property hot spots
• Buying properties with a twist
• 10 critical questions to ask about an area
• Methods for identifying growth properties
• Creative property deals.

Rich Harvey, founder and Managing Director of propertybuyer will present many tips that could propel your knowledge to the next level. Rich Harvey is a professional economist, licensed real estate buyers agent and experienced property investor. Rich & propertybuyer have won numerous awards, including the prestigious National and NSW Telstra Business Awards and was most recently named the 2009 “Best Buyers Agent in Australia” by the Real Estate Institute of Australia (REIA). He is the winner of the NSW Real Estate Institute (REINSW) "Award for Excellence" in Buyers' Agency for the last 4 years in a row.

Date: Tuesday 15th September 2009

Time: 6.15pm – 8.45pm (6.30pm start)

Venue: Mackinnon Room, North Sydney Leagues Club, 12 Abbott Street, Cammeray, NSW

Investment: $30 single, $50 per double

Early bird discount: Book before Sunday 13 September and only pay $25 single and $40 double

Book NOW: Call our office now on 02 9975 3311 or CLICK HERE TO BOOK NOW for our seminar.

Look forward to seeing you there.

4. WE'RE HIRING....

Do you know anyone that might be suitable for the role we are seeking to fill below? If so, then please let us know!

Business Development Manager:
Do you have a passion for property? Are you enthusiastic about promoting Buyers Agency services to prospective home buyers and investors?

Due to continuing growth, we are looking for a Business Development Manager to convert new business opportunities. You will be responsible for:

• Qualifying and converting leads
• Marketing and prospecting
• Managing our CRM
• Proactively seek new alliance partners
• Developing and implementing a marketing plan
• Building and maintaining the propertybuyer brand.

You will be friendly, warm and personable, with an attitude of excellence, attention to detail and demonstrated sales experience. Converting new leads is the key function of this role.

You will be a great communicator with excellent people skills and the ability to establish trust and rapport quickly and easily. From your track record in sales you will understand the sales process and follow up effectively. While self confident and articulate you will understand the buyers needs and show empathy and exceptional customer service.

Interested? Please email your CV along with a brief outline of your skills and personal qualificationsas and why you want to become part of the propertybuyer team to:
The Managing Director: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or fax 9975 7944.

5. INSPIRATION CORNER

“It is one of the most beautiful compensations of this life that no man can sincerely try to help another without helping himself.” Ralph Waldo Emerson

“I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.”
John D Rockerfeller

“Wisdom is not a product of schooling but of the lifelong attempt to acquire it.
Albert Einstein

“Anyone who has made a mistake and doesn’t correct it is making another one.
John C Maxwell

I hope you enjoyed your August update and we look forward to keeping you informed in the next edition.

If you would like to buy a property and have a professional buyers advocate on your side sourcing and negotiating the best opportunities throughout Sydney and Australia then please call +61 2 9975 3311 or email us to find the easier way to buy property. .

Warm regards

Rich Harvey
Managing Director
Tel: +61 2 9975 3311
www.propertybuyer.com.au

PS…. YOUR REFERRAL IS APPRECIATED
Your subscription to propertybuyer’s monthly market updates are absolutely FREE! As a return favour, please send this newsletter to someone you know that would also benefit from the information. The majority of our business comes via referrals, therefore I would really appreciate your help. Please forward this email to a friend or colleague, by pressing the “Forward” tab on your email program and suggest they subscribe.
Many thanks. Rich