Perfect Strom, Buyers Flock In

Written by Property News | Wednesday, 09 May 2012

First there was the Global Financial Crisis and then the European and US Debt Crises. Collectively their impact on a resources-boom-protected but still nervous Australian market has been a return by investors to the security of bricks and mortar.

This noticeable move by investors to again secure property has been given a boost by a number of factors - falling property values and the knowledge that Australia’s national housing shortfall will see rents rise for some time to come. It all adds up to ...

a buyer’s market, a market that is gradually heating up in a way many industry observers simply failed to predict.

Doncaster and surrounding suburbs are certainly seeing daily evidence of this trend.

In the past few weeks leading agent Hudson Bond has had multiple offers on a number of properties spread across the price spectrum:

• 254 Thompsons Rd, Lower Templestowe, Mid $500’s - two offers

• 310 Serpells Rd, Templestowe, Low $700’s - three offers

• 34 Hillcroft Dr, Templestowe, $800’s - two offers

• 5 Dion St, Doncaster, $700’s - two offers

• 37 Sharon St, Doncaster, $1.3 million - three offers

• 13 Totara Court, Lower Templestowe, low $700,000’s - two offers.

Hudson Bond Principal, Paul Kounnas, said that in his long career in real estate he had never seen a combination of circumstances quite like those of the present period.

“Normally a growing demand for properties would be met by increased property prices. this is not the case today as many properties that were artifi cially infl ated in price during the recent fi ve-year boom are now returning to normal levels,” Paul said.

“It is a truly unique situation and when you mix in the appeal of extraordinarily low interest rates there is every indication that the buying momentum will grow.”

Paul said that Baby Boomers who saw their retirement nest eggs scrambled in the Global Financial crisis were leading the return to bricks and mortar security in an effort to quickly build a retirement portfolio.

“Some are selling the family home to free funds for smaller properties and still others are reverse mortgaging or using their equity to borrow.

“The buyers we are seeing are well aware that crisis level rental vacancy rates of around 1.4% will ensure rents continue to rise in the face of estimates Australia has a national rental housing shortfall in the order of 250,000 properties that will not ease in the foreseeable future.”

Hudson Bond’s level of buyer inquiries is growing on the strength of a good portfolio of well-priced investment properties such as:

• 1 Mahoney Street, Lower Templestowe - renovated three bedroom home at $625,00.

• Apartment 202A, 1-19 Colombo St, Mitcham - new one bedroom unit $329,500.

• 2/800 Elgar Road, Donaster - new three bedroom townhouse $680,000.

• 6/115 James Street, Templestowe - newish two bedroom townhouse $545,000.

“While we have a good number of listings, the level of inquiry is so strong that we would advise anyone thinking of selling to contact us immediately for a free market appraisal.

“We are fully expecting that buyer numbers in this market will continue to increase. The soon-to-retire Baby Boomers have a limited window of investment opportunity to recoup their GFC superannuation losses and the European and US debt crises have made them too nervous to turn to the traditional areas such as shares, commodities and futures.

“There is a school of thought that Australian shares should be an alternative but in the face of recent liquidation announcements by major builders and manufacturers, the Baby Boomers see that as too great a risk.

“Real estate has long been the safe alternative and in the present market it is being seen as the only alternative,” Paul said.

Market Update March Quarter 2012

Written by Paul Kounnas | Thursday, 26 April 2012

Median house prices across Melbourne remained flat for the March quarter. The REIV March quarter median house price in metropolitan Melbourne was $535,000, up $5,000 from the revised December quarter median of $530,000 (this was originally reported as $560,000).

The market is continuing to consolidate which indicates that we are in the stability phase of the property cycle.

Until the world economy and consumer confidence improve, the property market is likely to remain flat for the short term.

When you look at the change in median house prices for the various suburbs within Manningham you may be a ...

little confused by the large disparity in price movements from one suburb to the next.

Don’t take the quarterly price changes too seriously as they can be extremely inaccurate.

The annual change in prices is a better indicator, although this too can be inaccurate because the March 2012 quarterly figure will eventually be revised by the REIV as they collect more data.

Generally price movements within the city of Manningham are more uniform than the median price data shows.

What Will 2012 Hold For Property?

Written by Paul Kounnas | Wednesday, 08 February 2012

Confused is the word that best describes the real estate market at the moment – at least as far as the media and many gurus are concerned. There are so many different views on where the market is heading that meaningful analysis seems impossibly hard.

Sure, the market is flat and properties have lost some value in recent months. But that just means there are more buying opportunities.

Despite the worst predictions, in the past year Melbourne dwelling values fell just 5.8% according to the latest RP Data figures. ...

Even though prices may remain flat for a while and some properties could fall further, there’s absolutely no reason to expect a crash as the media would have you believe.

There are only four things that could make our property markets crash: Recession, High Unemployment, High Interest Rates, and Oversupply.

Recession, although a possibility is unlikely in the face of our current resources boom. Rather than high unemployment we are seeing a shortage of skilled labour necessitating an increase in immigration. High interest rates are not going to happen any time soon as we have just had a reduction and may yet see another.

Property oversupply also won’t become a factor as we have a national shortage.

HSBC’s Chief Executive Economist, Paul Bloxham, points out the dwelling price to income ratio has remained stable since 2003 at between 3.5 and 4.5. He is forecasting growth in disposable income per household of around 5% per annum over the next few years on the back of strong employment and wages growth – a pointer house prices will grow at this pace.

The fundamentals for a strong medium and long term market are sound as Australia has a strong economy, full employment, rising wages, affordable interest rates and a growing population.

“Historically property prices go up in small booms, catch their breath and sometimes even drop before moving up again.”

“In reality, potential short term problems only underscore the importance of sticking to the basic rules of property investment. Look for property at the right price, in the right location, with the right rental income.”

“This market provides opportunities below intrinsic value as a hedge against further falls.”

Market Update December Quarter 2011

Written by Paul Kounnas | Wednesday, 01 February 2012

Median house prices across Melbourne rose by 1.9% in the December quarter. According to median house data released by the REIV the Melbourne median house price is now $550,000, up $10,000 in the last three months.

The doom and gloom experts who predicted a crash in property values in 2011 got another year wrong. What we experienced instead was a year of controlled price adjustments.

Some experts are predicting that the market may have bottomed out. However the positive data from one quarter is not enough evidence, particularly with median house prices which historically can often swing wildly from quarter to quarter. We ...

have to wait and see what happens with the economy over the next three to six months.

Some believe the property market in 2012 will return small positive gains on the back of the recent interest rate cuts.

The performance of units and apartments during the quarter also had a small increase, mirroring the house market.

The continuing uncertainty about the international economy means our property market will remain subdued. Once the right polices are implemented overseas we’ll see consumer confidence lift and so will property prices.