Market Updates
October 2010 : Where to for house prices?; Award winners again;
Propertybuyer’s October Update
Welcome to your October propertybuyer market update. In this edition we will look at…
- Where to for house prices? House prices over the decades
- Buying property in Super - Seminar Tuesday 23th Nov
- Clients stories and Hot Properties
- Sydney Property Expo (Oct 29-31) - Free tickets
- Award winners again!
- Inspiration Corner - Thoughts of the Month
1.HOUSE PRICES OVER THE DECADES
Over the last three decades Australian house prices have recorded periods of extreme growth contrasted with periods of weakness. With the benefit of time, the peaks and troughs of house price growth tend to even out, with Australian house prices recording an average annual rate of growth of 8.4%.
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That’s a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have well and truly underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8% per annum. The soft market conditions came at a time when Australia was entering the “the recession we had to have” and unemployment raced upwards from 5.8% in January 1990 to peak at 10.9% in December 1992. Mortgage rates during this five year period averaged 11.75% and peaked at 17%.
At the other end of the spectrum, the most spectacular five year run was recorded during the ‘boom’ which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9% per annum.
Currently the residential housing market is transitioning out of a strong growth phase, however economically the country is just starting to ramp up. Gross domestic product figures show the economy is once again growing at about 3.2%, unemployment is trending downwards, consumer confidence remains high and rental yields are showing the first signs of improvement after being eroded by value growth and lower rental rates during 2009.
In contrast to the broad market drivers outlined above, we can expect there also to be factors that will dampen market demand. Interest rates are likely to increase at least once over the coming 6 months after increasing by 150 basis points since October last year. Population growth appears to have peaked and will most likely fall further as the proposed cuts to migration are implemented and housing affordability is likely to become more of an issue in the larger metropolitan markets around Australia.
For prospective buyers it is worthwhile considering the long term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles. The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate that what was seen between 2009 and the first quarter of 2010.
(Article supplied by RP Data)
To identify properties that will outperform the average, please call our team us to discuss engaging our services and assist you in finding your next home or investment property. Please call +61 2 9975 3311 or This email address is being protected from spambots. You need JavaScript enabled to view it. for an obligation free chat. Click here to send us your Wishlist
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2. CLEVER WAYS TO BUY INVESTMENT PROPERTY IN SUPER (SMSF)
You are warmly invited to our next seminar “Clever ways to buy property in your self managed super fund.”
Date: Tuesday 23rd November 2010
Time: 6.30pm to 8.30pm (6.00pm for registration, drinks and networking)
Venue: Wesley Centre, 220 Pitt St Sydney (Lyceum room)
Investment: $47 single, $67 double ticket.
(Early bird price –before Monday: $37 Single or $57 Double
Book now at this link: http://www.stickytickets.com.au/4640
Speakers:
1. Ken Raiss – Director Chan & Naylor
- Looking at Superannuation in a different light
- Using a SMSF to purchase property with Debt
- The Enduring Family Superannuation Fund
- Asset Protection/ Estate Planning how to protect assets in your own name without triggering tax.
2. Rich Harvey – Managing Director, propertybuyer
- What types of investment property best suits a SMSF
- Finding the best of both worlds – high growth and high yield properties
- Traps to avoid with off the plan
- Top performing Investment strategies
- Hot deals (access off-market, discount and quality investment stock)
- Latest market updates
3. Other topics that will be covered include:
- Borrowing to fund a property in SMSF
- Understanding how to finance correctly and safely
- Tips and strategies to get the most competitive loan
- Other points…
Book now to reserve your seat. http://www.stickytickets.com.au/4640
Look forward to seeing you there!
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3. CLIENT STORIES & HOT PROPERTIES
Busy professional secures dream home
Buyer Type: Home buyer (Budget $1.7m)
Buyer’s Brief: 4 bedroom house in Upper North Shore
List Price: Auction: Guide of around $1.75m+
Purchase price: $1.65m
Saving: $100k
Timeframe: 21 days
Buyers’ agent comment: Matt Corbett
Breck and Veronica are expats currently residing in Hong Kong and wanted to buy a family home for their return to Australia in a few years time. They wanted the house to be in good condition for immediate rental but also have the potential to add value when they moved back to Sydney. I found them a property going to auction with an agent expectation of $1.8m, but a vendor that was motivated to sell prior. The timing was excellent as there had been a flattening of the market, so we moved very quickly to secure it for a fabulous price, over $100,000 below my evaluation.
What our clients say:
“Matt Corbett – what a star! My husband and I recently worked with Matt on the purchase of a property in East Lindfield. We were impressed with Matt’s knowledge, communication skills and the quality and depth of research that went into potential properties. Matt was able to leverage his relationships with the Real Estate Agent to get us a great price on a house we would have considered well outside of our budget. It’s a daunting proposition to buy a property while living overseas, but Matt made the buying process very easy and ensured we were informed every step of the way. To top it off, Matt’s a genuinely nice guy. It was an absolute pleasure to work with him. We will certainly be recommending propertybuyer to our friends and family.” Veronica and Breck
Investor scores a top yield near CBD
- Bought a top floor 1/1/1 in Pyrmont for just over $500,000 that will be rented for $825 p.w. delivering a gross yield of 8.5%
- Located in one of the key locations for Sydney’s capital growth
- Net effect of this purchase is what I subscribe to ALL my investors, i.e. where possible you should buy high growth and high yield
- Client was first time investor and quite nervous leading to us alternating the search from interstate to a local purchase meaning we had to be very patient in terms of their comfort mode rather than strictly our own recommendations.
- Bought a 2/1/1 in Lane Cove that allowed the client to be duplicitous in their goals, namely, to buy a home to live in for the short term and an investment for the long term.
- Private sale that allowed us to negotiate idea terms for the client
- Client initially came to us as an investor in the eastern suburbs but found poor value even for 1 bedroom units and so switched to a 2 bedroom unit in Lane Cove that they liked so much they decided to live in it
- We conducted 10 EPR’s and they were in danger of being priced out of a rising market so our patience got us there in the end
- Because the client was quite unfamiliar with Sydney being from the UK they leaned on our knowledge of the value pockets of Sydney.
- 1 Bedroom - From $375,000
- 2 Bedrooms - From $560,000
- 3 Bedrooms - From $695,000
To get propertybuyer on your side accessing more property and silent listings please call us now or email your details and we will be in touch, Click here to send us your Wishlist…
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4. SYDNEY HOME BUYER AND INVESTOR SHOW 
We have 30 free tickets to give away (normally $15) - just call my office on 9975 3311 and talk to Liz or Melissa or email This email address is being protected from spambots. You need JavaScript enabled to view it. if you would like a ticket.
We will be exhibiting at the Sydney Home Buyer and Property Investor Show October 29- 31. I have been invited back as a keynote speaker for both Saturday and Sunday and giving presentations at 2.00pm each day. Come and visit us and stand G36.
I will also participate in an expert panel alongside David Airey the President of the Real Estate institute of NSW at 3.00pm each day.
Further details of the show available at http://www.homebuyershow.com.au/
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5. AWARD WINNERS AGAIN!
I am very proud to announce that we were selected as the winner of the Award for Excellence in Buyers Agents by the Real Estate institute of NSW. This award is given to the Buyers Agent that has demonstrated outstanding achievement in a range of activities including client representation, appraisals, risk management, promotion and adding value to clients.
I will also go on to compete in the national awards (Real Estate Institute of Australia) in early 2011.
We were also finalists in the Australian Property Institute (API) Awards for Excellence for our submission on "Protecting the Buyer", and earlier in the year we received a "Highly Commended Award" from the My Business Action Coaching Awards program.
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6. INSPIRATION CORNER
“The horses that win races are not necessarily the ones whipped hardest, but are often the ones who just enjoy the run.” Anonymous
“The first method of estimating the intelligence of a ruler is to look at the men he has around him” Niccolo Machiavelli
“It makes not so much difference as where you are as who you are.” Dr Russell Conwell
“Whatever you can do, or dream you can do, begin it. Boldness has genius, power and magic in it.” Wolgang Goethe
I hope you enjoyed your October market update and we look forward to keeping you informed in the next edition.
To get a professional buyers advocate on your side sourcing and negotiating the best opportunities throughout Sydney and Australia, please call +61 2 9975 3311, click our wishlist, or This email address is being protected from spambots. You need JavaScript enabled to view it. to find the easier way to buy property.
Warm regards
Rich Harvey
Managing Director
Tel: +61 2 9975 3311
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Many thanks. Rich
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