February 2013 - Get Ready for the Next Upswing
By Rich Harvey, Managing Director propertybuyer
Welcome to your February propertybuyer market update.
In this edition we will look at;
- Get Ready for the Next Upswing
- Client stories
- Webinar - How to Build a Bigger Portfolio
- Property Investors Forum
1. Get Ready for the Next Upswing
I have observed a definite change in the mood of the property market since the beginning of the year. Usually January is a quiet period but this year it has started with a bang! In our buyers' advocacy business we have seen a record number of inquiries come through to start the year. A lot of other sales agencies have reported a similar trend. They are concerned they may not have enough listings to satisfy demand.
The economic turmoil in the US has been averted for now and the Chinese economy which slowed last year seems back on track after recording strong growth in the last quarter.
Reports from my team of buyers' agents indicate there has been lines of up to 50 people just to get into an inspection. This was for a 2 bed apartment on the lower North Shore in the sub $600k bracket. There has been lots of activity at the "affordable" level. Some properties have seen 70 groups inspecting in the first two weeks, 15 contracts issued and over 10 offers. Great for the vendor...very tough for the poor buyer trying to compete.
Consumer and business confidence is on the rise. The sharemarket has broken the 5,000 point barrier showing a 25% improvement in the last year and the national unemployment rate is hovering around 5.4%. We have noticed that many home buyers and investors have paid down their mortgages (or saved money in cash management accounts) and are now in a comfortable position to upgrade or purchase their next investment property. The rising sharemarket should start to see confidence return to the prestige market as money flows via bonuses and profit taking. Prestige markets were sluggish in 2012, but we are seeing good value and more competition in the range above $2m. There are some gems to be found on the Northern Beaches.
Property moves in cycles and responds to the underlying forces of supply and demand which is strongly influenced by sentiment. There is some conjecture amongst economists about which way interest rates are likely to move this year. Some say the RBA has completed its "monetary easing" cycle and there will be no more rate cuts. Others say the economy is still sluggish and we need two more cuts (total 0.5%) to really kick start growth again. Either way, interest rates are at their lowest levels in a decade and with rising rents, investors are able to enjoy positive cashflow returns on well selected investments. Unemployment will be one of the key factors driving confidence in the housing market this year.
Reading the key signs in the property market, I believe we are seeing Sydney, Brisbane and Perth as the forward moving markets in 2013. Many investors fall into the trap of "waiting to see what happens" instead of riding the property wave. Don't wait too long to enter the market, or you could miss out on valuable exposure to a moving property market.
Western Sydney property prices are also on the move. With interest rates at historical lows, it is often cheaper to buy than rent in many areas. Investors are re-igniting their passion to find positive cashflow properties too. Our Granny Flat strategy is proving very popular for our investor clients. Stewart Fraser, our granny flat specialist has pre-negotiated discounted granny flat construction prices, which are one of the best on the market. The flats are rented immediately on completion and the combined rental from the house and flat is generating yields around 9% (i.e: positive cashflow $7,000 to $10,000 pa). With prices on the move, we are likely to see some yield compression and higher capital growth - but still overall a very positive investment opportunity.
Our recent "Hot Property Alert" for renovated townhouses in the Newcastle/ Hunter Valley area all sold out within 3 days. This was a highly sought after opportunity due to the low price point and high yields. If you missed out - don't despair, our investment specialist Kevin Mason is constantly searching for the next one! Click here to pre-register your interest or call Jason Low on 1300 655 615.
We will also be introducing a new "Profit from Subdivision" service very soon. We have engaged a specialist property consultant to work with us in identifying unique opportunities for subdivision around Australia to make a healthy profit over a 12 month period - this will only be available to qualified investors with at least $100k, pre-approved finance and at least 2 properties in their portfolio.
I attended a special preliminary inspection of the "The Block" last week to visit Phil and Amity's terrace. They have done a nice renovation job, but still have a few touch up's to complete. If you're interested to engage our services to bid at the auction please let me know ASAP.
2. Client Stories
Here is a selection of feedback from some of our happy clients last month:
Buyer type: Homebuyer
Buyer's brief: 3-4 bedroom semi close to Chatswood, under $1.4m
List Price: $1,300,000
Jeremy & May's story
To find a nice small house/semi, close to relevant shops and transport at the best price for us! Prior to engaging propertybuyer, we didn't really know all it was to entail. We were happy to look as we did to find our home, it was the managing of the sale we were less confident with.
Exactly how the sale was solved we were happy not to know. That it was successfully achieved was all that mattered to us! We were given estimates we were comfortable with so we are very happy with the result. Engaging propertybuyer is thoroughly worth your while if you would rather slightly distance yourself from the details of what matters.
"Engaging propertybuyer is thoroughly worth your while."
Buyers' Advocate, Matt Corbett
Jeremy and May were looking for a house or semi-detached dwelling close to Chatswood shops and rail. They had a budget of $1.4m and were happy to do some renovations if needed. Currently residing in a 2 bedroom unit in Wahroonga, they were looking forward to having some space, including a backyard. The property was listed for auction and the agent was indicating that the vendors may see prior for the minimum of $1.3m. After assessing the property, organising a pest and building inspection and emphasising the strength of the buyer, we exchanged one week prior to the auction for $1.25m. Jeremy and May were thrilled.
3. Webinar Invitation - Build a Bigger Property Portfolio
Have you watched our latest webinar?
Discover how to rapidly grow your property portfolio, like a seasoned investor!
Learn the insights into how to leverage your ability to buy more property and develop a strategy that will accelerate your wealth. You'll have the opportunity to ask questions during the presentation. It's one not to be missed!
After the presentation there will be a limited number of spots available to book in for a personalised one-on-one discussion with Rich Harvey. He will reveal how you too can access the best property deals rarely seen by those not part of the property industry.
4. Your Investment Property, Property Investors Forum
Rich is excited to be a keynote speaker again this Saturday 23rd February, 2013 at the Rydges Hotel Melbourne. Designed for both new and seasoned investors to show you how you can make serious money in Australia's property market. The organisers have offered propertybuyer's subscribers a special offer...
propertybuyer's special ticket offer - only $79! Promo code to use: IFM5
Rich's topic: Australian's next boom suburbs - how to pick the winners
• Quick ways to find areas that are about to surge
• How to fast track your property research using free stats
• How to conduct effective statistical and fundamental research
• How to avoid analysis paralysis
If you have ever asked any of these questions then this seminar is for you! We will cover these topics and more on the day. Bring your notepad, calculator and an open mind to learn.
To read more about this seminar click here, and to take advantage of our special ticket offer click here.
Looking forward to seeing you there and if you have any questions, please call us on 1300 655 615.
PS. Please invite your friends and work colleagues.