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November 2011 - Rich's Market Insights

November 2011 - Rich's Market Insights

By Rich Harvey, Managing Director propertybuyer

Welcome to your November propertybuyer market update.
In this edition we will look at;

  1. Rich's Market Insights
  2. Client Stories
  3. Webinar - Building a Bigger Portflio

1. Rich's Market Insights

Interest rates came down by 0.25% on Melbourne Cup day this month giving a much needed boost to many areas of the economy. However, it will take further cuts to fully restore confidence in the property and retail sectors. It comes as a positive sign but not enough to turn market around dramatically.

We are seeing different segments of the market performing quite differently.
In the price point up to $600k the first home buyer market is very active at present.  The NSW stamp duty concessions finish on Dec 31 and the interest rate cuts make mortgages a little more affordable for first time buyers.

Second or third time buyers and “upgraders” in the price range $600k to $1.2m are also active in the market seeking to upsize or downsize their respective residence.  But there is caution buying in this range where affordability concerns restrict budgets and paying over the market.

There is also considerable “deleveraging” occurring in the property market in places such as the Gold Coast, Port Macquarie and other coastal or holiday destinations such as Palm Beach where owners are seeking to offload their property to reduce financial stress.

Top end of the market (over $3m) has ideal conditions for buying.  Traditional top end areas such as Mosman, Balmoral, Kirribilli, Hunters Hill, Vaucluse, Double Bay, Potts Point or Point Piper have some sterling properties available for purchase (most of which are off-market).  At this end of the market there is no sense of urgency so buyers can cherry pick what is available.

But if the predictions of a series of interest rate cuts transpire, then I believe we will see sentiment shifting quickly….this is a key point I want to emphasise. Being actively involved in the property market for more than two decades, we see how buyers respond at the coal face to consumer sentiment changes.   As the market gathers momentum you will see more people attending open homes; instead of 10 groups through – you will see 20 groups, instead of 2 genuine buyers you will see four or five buyers competing at auction.  And this latent demand is what will push prices higher.

What position would you rather be in?  Racing to exchange contracts in a hot market or getting ahead of the growth curve and having adequate time to complete thorough research. This is where it’s important to get the guidance of an experienced Buyers Agent that can see through the market cycles and identify pockets of excellent long term value.

Andrew Wilson from Australian Property Monitors claims that while Sydney’s market is relatively subdued and resilient, it is showing positive signs for increased activity and potential growth heading into next year.  The most recent market figures from the ABS indicate median prices for established houses in Sydney fell just 0.2 per cent in the September quarter.  Over the course of the year, Sydney's median established house price has fallen by just 0.3 per cent.  Auction clearance rates were 55% last weekend despite the higher number of properties (over 600) that were up for auction.

The latest figures from RP Data (see graph below) show that the total number of dwellings approved in September was the lowest in more than two years.   That doesn’t create much hope for new home starts over the coming 6 to 12 months.  The low dwelling approval figures also aren’t going to help combat the undersupply issues that persist, particularly in New South Wales and Queensland.  Respected BIS Shrapnel forecaster claims that Sydney is massively undersupplied and will struggle to keep pace with demand.  So while the Sydney market in particular has shown resilience, it is also the best positioned amongst other capital cities for renewed growth.

Overseas buyers are fairly thin on the ground due to the higher aussie dollar.  Our enquiry levels from expats and overseas buyers has been very subdued this year.  In addition, executive bonuses have not been as high this year and therefore has not flowed through to the property market.  When the sharemarket is strong and high corporate bonuses are paid we see much greater activity in the market.  In a nutshell buyers’ being very savvy with their money. But I predict we will see a turnaround in confidence and hence activity early next year.

o the CBD and an inner city “vibe” lifestyle.

2. Client Stories

Here is a selection of feedback from some of our happy clients last month:

Buyer type: Investor
Buyer's brief: Looking for 2 apartments in good condition with good yield - total budget $2m
Asking Price: $710,000 and mid $900,000's respectively
Purchase: $680,000 and $885,000
Saving: $30,000 and $65,000

Buyers’ Agent comment (Matt Corbett):
These particular clients had returned to propertybuyer to buy 2 additional properties, both in blue-chip areas, good condition and available for immediate rental. We also had the added advantage of excellent depreciation, particularly in the latter apartment which was only a few years old.

What our clients say:
“Within a space of 2 months from our initial meeting with Matt Corbett, not only was he able to secure us 2 investment properties exceeding our desired criteria in both instance, but he also was able to have them both tenanted within days of settlement of each, at much higher rental yields that the median for the given locations.

At all times throughout the process we have found Matt, and all his colleagues in various supporting capacities, to be very attentive, informative, efficient and courteous. In such a short time, the sense of belonging, whilst detailing with them on a day to day basis, felt no different to me that what have been accustomed to with my own colleagues for some 32 years in our own organisation.  We will continue to buy more investment properties and in doing so we will continue to use the services of propertybuyer. I can’t fault them, and Matt in particular...I praise your performance.”

4. Webinar Invitation - Strategies to Build a Bigger Property Portfolio

We are moving with the times and holding our first webinar on Wed 7th December…Keep an eye in your inbox for an invitation to participate soon once we set up the links.

We will be discussing how you could create a property portfolio of 8 properties in less than 10 years that generates $100,000 pa in net additional cashflow and over $140,000 each year in net equity using a revolutionary new research system that starts off by scanning over 15,000 suburbs for exceptional capital growth potential and the hands-on assistance from a recognised property market commentator who has bought over 1,000 properties for investors just like you.

Can you imagine the lessons learnt buying over 1,000 properties in all property market cycles? Can you imagine the number of expert consultants and property industry contacts hand-picked along the way that will now be at your disposal?

At the webinar you will learn how to:

  • Find motivated vendors and off market deals
  • Gain access to wholesale and distressed properties.
  • How to use the services of a respected property commentator and be paid by us to do so in some cases (sounds crazy but hear us out on this one).
  • Manufacture capital growth by acquiring property at cost: use the 'instant equity' to buy more properties and repeat the cycle at will.
  • Find hot spot suburbs in 60 seconds using a remarkable new tool that scans over 15,000 suburbs and instantly measures their gap in demand and supply (and therefore capital growth potential).
  • Create a mix of cash flow positive and high growth properties without impact on your monthly outgoings or cash flow.

 

 

To fast track your property plans in securing your home or investment property, please fill in your property brief here or contact Jason Low, Manager Client Relations and Strategy on 1300 655 615 or +61 2 9975 3311 to discuss your requirements.

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