The big ‘R’
Given the level of focus from the media around the Access Economics’ forecast this week, it seems inevitable that we will get the big R happening. Forecasters seem hell bent on making certain it happens so they can all be right….so where does that leave property owners in South Australia?
According to all the latest reports South Australia seems to have dodged the main line of fire in regards to its economic performance to date, and in one report was even described as the “Hidden Performer”. We seem to be quietly operating under the radar. When it comes to business we are a tough State and in property we have a history of resilience and consistency, avoiding the extreme highs and lows of the other States’ boom/bust markets. Transaction numbers were 35% down in the latter part of 07 verses 08 which may have helped the stabilisation of prices. Rather than meeting the market, a number of property owners in South Australia are simply opting to withdraw from sale and rent out their properties.
What we are experiencing is real!
From what I see, there will be a dip in our median price soon as the results of Spring ’08 work through the system. I have gone on record saying we have seen a 10 to 15% softening in the market (some areas have done much better, some worse) and this is exactly what most of the people in the know and agents are reporting.
Toop&Toop have a reputation of achieving top outcomes for our clients so we continue to monitor the market closely to ensure this remains the case. Given we are achieving sales when others can’t, we are confident what we are experiencing is real. We have not seen any panic selling yet but we saw some pressure situations late last year, there seems to be good underlying demand as soon as the price aligns with the market. Auctions are still working in most cases, but not necessarily selling under the hammer, often within a few days.
I can’t see any headline deterioration in prices this year, maybe another 10% in some segments of the market. Another interest rate drop will be extremely useful and we are watching those unemployment figures.
Three key factors
Three key factors continue to positively impact our market. Firstly we have not yet seen the massive surge in unemployment in South Australia, (this is the most critical factor to watch in coming months). The second is that we have record low interest rates which are still falling. Thirdly the rental returns for residential property is improving with the current tight rental market. Many property owners with secure jobs have essentially had a win with lower costs all around, including travel and leisure.
Other factors positively impacting us include the drop in the cost of petrol, the lack of alternate safe investment options, the arrival of the 7th Battalion with 1100 Soldiers this year, the success of the Governments’ International Education initiatives and immigration providing added stimulus to population growth. The upshot is that property activity is down, prices according to the statistics are holding and South Australia is well placed to weather the International financial and property storm.
Take advantage of a secure job and adopt a long term view, trust in history and keep in mind we believe current buying is better than we have seen for over 18 months, understand that stats lag reality and take advantage of that. Do not expect a bargain basement in South Australian property but do enjoy the fairer prices and lower costs right now. This is the market to buy and sell - transacting in the same market is best under these conditions but sell first, buy second and be in a position to offer unconditional.
This is a GREAT time to be moving up - a GREAT time to be buying investments.
Anthony Toop, Managing Director
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