propertybuyer Market Update, June 2011
By Rich Harvey, Managing Director propertybuyer
Welcome to your June propertybuyer market update.
In this edition we will look at;
- What's Really Happening in the Property Market?
- Asia Pacific Award Win
- Hot Deals
- Reaching Your Property Goals
1. What's Really Happening in the Property Market?
Despite what you may read in the mainstream media, the property market is not crashing – just softening. Long term savvy investors can read the signs as this being an opportune time to capitalise on a soft market. The median capital city dwelling price fell just 0.3% in April to be 1.5% lower for the year according to RP Data Rismark. This is a far cry from the doomsayers at JP Morgan and Prof Keen saying a 40% crash.
While many markets are soft, the Sydney market actually recorded a slight increase in median price. The latest figures from Australian Property Monitors shows that Sydney house prices rose 1.1% over the April quarter (this followed a 0.6% fall in the March quarter). Sydney’s unemployment rate is now sitting at just 5.0% compared to 5.7% a year ago. Strong migration, the continuing mining boom, population growth and a fundamental undersupply of housing are key factors that will help underpin the resilience of the property market.
Dr Andrew Wilson, Senior Economist of APM, said that the “biggest contributor to the April rise in house prices came from the top 25% of the market, which increased by 5%. The upper-middle price sectors rose by 1.7% while the bottom 50% of the market recorded no rise in median house prices over the April quarter.”
Vacancy rates across Sydney are still very tight with the Real Estate Institute showing that the inner and middle ring suburbs within 10km of the CBD are sitting at just 0.9% vacancy factor (from 1.1% last month).
A recent report by Fitch Ratings identified Queensland as the main state suffering the worst in mortgage arrears with mortgage arrears rising to 2% from 1.54% 6 months earlier. The overall national figures show that housing arrears rose from 0.20% in 2002 to 0.70% (ie more than 30 days in arrears). The media will of course sensationalise these figures out of context.
The Melbourne-Westpac Institute of Consumer sentiment fell 2.6% in June which is the lowest level since June 2009. Households are currently saving more, paying down debt and have a fear of further interest rate rises.
But it’s not time to hit the panic button and bail out of property…..rather, we are actively looking at many more acquisitions for our clients as vendors are discounting and negotiating with buyers to meet the market.
What we are likely to see is….
With unemployment low and wages rising, we are likely to see renewed buying activity later in the year. Once both vendors and buyers understand that values are unlikely to fall dramatically and the threat of major interest rates hikes wanes, the fundamentals of short supply and increasing demand should see properties prices stabilise then recommence their upward journey.
So where do we see value in the current market…
The prestige market is ripe for picking up quality properties in premium locations at a long term discounted price. For example, RP data report that Hunters Hill median values fell 31% to $1.42m from its highest price peak ($2.05m), Woolhara fell 18.5% to $1.84m from a peak of $2.26m, while Mosman has fallen 21% to $2.2m its highest price peak of $2.81m. Price movements prestige market are largely driven by a strongly performing sharemarket and higher levels of economic activity rather than interest rates.
In the middle price brackets, we are also seeing excellent value for houses in suburbs with median prices between $750k to $900k. An example is Frenchs Forest (median price $857,000) which is foreshadowed to see a new hospital built in the next 5 years bringing additional impetus for yield and capital growth.
At the lower end of the market, suburbs with median prices lower than $500k have been shown to be more resilient to price swings as they are coming off a lower base and being more affordable have great levels of demand. However, these suburbs are also more volatile to interest rate movements as mortgage owners are more sensitive.
The same message for all my updates remains. Don’t consider the property market as a single market. There are considerable variations in prices and property types and there are no short cuts to due diligence. It’s all about research, research, research.
2. Another Award Win!
I am very pleased to announce that propertybuyer was awarded winner of the
“Best Property Finder Asia Pacific” and
“Best Property Finder Australia” (the Five Star Award)
in the 2011 Asia Pacific Property Awards in association with Bloomberg Television and Google.
The award was presented at a high profile gala presentation dinner at the Longemont Hotel, Shanghai on May 31st. The award is recognised as a symbol of excellence throughout the global industry. The winner was chosen as a result of a meticulous process involving a judging panel of over 50 experts chaired by Lord Bates of Langbaurgh, covering every aspect of the property business.
Rich Harvey, founder and Managing Director of www.propertybuyer.com.au said “We are absolutely thrilled and honoured to be the recipients of the Asia Pacific Property award, and to be named the Best Property Finder in the region.”
The awards are judged on excellence in service delivery, experience, staff training, service offerings, marketing, testimonials, innovation, leadership, information technology, risk management and client case studies.
“Buying a home, investment property or commercial premises is the most expensive purchase a person will make in their lifetime. We see so many people make poor decisions based on emotion and ending up with classic ‘buyers remorse’ or paying over market value.”
“This award helps to reinforce our message about ‘buyer beware’. With property market conditions continuously changing, it is critical that buyers get totally independent and professional advice on a property’s true value”
Thanks again to all our clients for placing your trust in us. We greatly appreciate your business.
3. Hot Deals
My team has located some excellent deals in the past month: Please take a moment to review these deals and contact us to find out more….
Northern Brisbane 3 bed/ 2 bath/ 1 car townhouse for $345k renting for $350pw
We have a limited number of 4 bed, 2 bath, 2 car homes from $378,500 (discounted from $399,999) and returning a rental yield of $650pw to $750pw furnished – that’s impressive 10.3% yield!
Key growth drivers include mining agriculture and tourism.
Also have motivated developer offering $400k to $420k for 4 bed 2 bath 2 car house within major regional center and renting for $460pw.
Would you like to create up to $80,000 instant equity? House and land for $420,000, 4 bed, 2 bath 2 car (300m to shops), valuation approx $500k and rent $480 to $520pw. Only two blocks left.
Secured lovely 5 bedroom house with valley views for $550k originally listed for over $615k.
Located ideal first home 2 bed apartment for lovely young couple looking to step onto the property ladder for under $500k
Secured lovely 2 bed terrace in Darlinghurst 1 week prior to auction for $790k (appraisal up to $800k) and competed against 3 other buyers willing to pay more.
Northern beaches: Secured property in Freshwater for $615k (2 bed apartment fully renovated with great outlook) which was $15,000 less than appraised value.
Lower north Shore Purchased a 3 bed duplex for $835,000 originally listed for $910,000 in excellent condition and will rent for over $800pw.
Western Sydney – Secured positive cashflow property for $285k and organized construction of backyard flat will produce a total yield approx $525pw.
There are many more deals to describe but I don’t have the time to write about them all!.....
4. Reaching Your Property Goals
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 Bock from Sydney’s Northern Beaches who became the 61st Australian to stand on the summit of Mount Everest.