propertybuyer Market Update, July 2011
By Rich Harvey, Managing Director propertybuyer
Welcome to your January propertybuyer market update.
In this edition we will look at;
- Mid Year Market Update
- Smart Ways to Make Money in the Current Market - Seminar
- Home Buyer & Property Investor Show
1. Property Directions for 2013
Should I buy a property now or should I wait? Should I believe the economists that suggest that the property market is overvalued and about to drop? Will interest rates rise this year? Where can I get a bargain? These are just some of the many questions our prospective clients are asking us every day.
Here’s my view on the market. Interest rates are unlikely to rise again this year – in fact Westpac have just released a report saying rates have peaked and predicting 1% decline by end of 2012. Now is an ideal window of opportunity to buy while the market is soft and vendors are more negotiable. Once interest rates drop and consumer confidence returns, you will see much more competitive buying in desirable suburbs. The fundamental undersupply of property in key areas will see an upward pressure on prices return.
The factors in the macro economy that have forced the RBA and banks to reconsider their outlook include:
The devastating QLD floods and cyclones in January (hitting the March quarter figures)
Global financial markets facing greater uncertainty
Consumer sentiment declining
Increased savings by households (ie frugality)
Inflation rate likely to stay at 3% or under for the year
High Aussie dollar – affecting our international competitiveness
Softening house prices across most capital cities.
BIS Shrapnel chief economist, Dr Frank Gelber, is predicting that due to shortage of supply in NSW and some parts of QLD, we are likely to see a 15% to 20% uplift in house prices over the next three years. Residex CEO John Edwards believes that while the market is patchy, Sydney is the shining star and will be the lead capital city for performance over other markets in Australia. RP Data Rismark national home index calculated that over 110,000 sales nationally, Australian capital city prices only declined a marginal 0.3% in the month of May.
Over the last 12 months, Sydney has been the only market to record a modest capital gain of 1%. Rismark also pointed out that the dwelling price to disposable income ratio is now at 4.2 times, which is the lowest level since June 2003.
Some property commentators and selling agents are saying we are now at the bottom of the market and its time to ring the bell. It’s hard to pinpoint the exact moment in time when the market is turning.
The Westpac/ Melbourne Institute released their July consumer sentiment results which showed a sharp fall in the consumer mindset. The index of sentiment fell to 92.8 points which was its lowest reading since May 2009. This has a significant impact on transaction volumes in property sales. The current debate over the proposed Carbon tax also dampens consumer confidence, while internationally the European sovereign debt crisis continues to create instability in financial markets.
A quick word on “bargains” – they are not all they are cracked up to be! While we all like to shop around and get the best deal, when it comes to buying property, it’s vastly different to buying a new T-shirt or pair of shoes. Remember – price is a reflection of what other people (the market) are prepared to pay. A property may be a bargain because:
It’s located on a busy road
Structural or termite problems
It’s a renovators delight! or
It’s a mortgagee sale – but how many other mortgagee sales are there in this suburb (too many mortgagee sales will depress values in the area).
Investors and home buyers alike should focus on the fundamental selection criteria when choosing the right property. Investors must look at the price point of most sales, population growth, rental demand, infrastructure development, employment opportunities and the quality of local amenities and attractions (ie how desirable is this area?) Visit our website to download a free report on the top 20 criteria to consider when buying a home or investment property. free-downloads
Housing finance data released this week by the Australian Bureau of Statistics (ABS)showed some improvement in the number of new mortgages being issued across Australia. The total value of housing finance commitments to owner occupiers increased by 2.2% for the month and are up 5.2% compared to the same time last year. The total value of investor finance commitments increased by 4.4% for the month however, the value of investment loans remain -12.0% lower than the same time last year. The total number of owner occupier finance commitments increased by 4.4% during the month and are up 4.0% over the year. The rise in owner occupier finance commitments is largely due to refinances which have increased by 11.4% during May and are 25.0% higher over the year.
2. Smart Ways to Make Money - Seminar
Many investors and property buyers dream of retiring early with a large portfolio of properties to set up their financial future. We all start out with grand ambitions and goals, but all too often we get sidetracked and fail to plan for success.
This seminar is all about being inspired to set realistic and achievable goals, overcoming your fears and setting a practical course to achieve build wealth through property investment.
Come and be inspired by local identity Stephen Bockfrom Sydney’s Northern Beaches who became the 61st Australian to stand on the summit of Mount Everest. Rich Harvey, Managing Director of the multi-award winning propertybuyer (buyers agents), will then speak about how to go about building a sustainable property portfolio, finding hotspots, creating instant equity and buying positive cashflow property with high growth. And Michael McKelvie from Mortgageport will speak about how to set up your finances for maximum success.
3. Sydney Home Buyer & Property Investor Show
I will be speaking each of the three days at the Sydney Home Buyer and Property Investor show at the Sydney Exhibition Centre, Darling Harbour. We’d love to see you there. Drop into our stall at Stand 220 for the chance to win an Ipad2.
Location: Property Investor Stage
Date: Friday 5, Saturday 6 & Sunday 7 August
Time: 4:00 to 4:30pm
Topic: “Property Investment: 10 Golden Rules”
Too many investors get emotionally involved in the decision to buy investment property, rather than looking at the facts and figures. Understand the top 20 criteria you need to successfully pick property winners and discover how to make the due diligence process simple.