Wednesday, June 30, 2010

Dooms-day melt down? Why this will not occur.

InsideStory Subscribers, this is hot off the press. We have Tim Lawless live on www.toop.tv at 1pm today, log in and watch it...or if you miss it, it will be available from 6pm tonight on pod cast and/or as archive footage. Sylvia is co hosting today for the first time so tune in!!

I have just had May results arrive from RP Data and it tells the story statistically that we have been reporting from the coal face for some time now.

The boom is over; stability returned but this reporty importantly addresses the dooms day spruikers with their predictions of a melt down, and explains the logic as to why this will not occur.

RPData (pdf)

Fantastic report, and a must read. Property is such a terrific asset class....at Toop&Toop we can't get enough of it.

Regards

Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group

Wednesday, June 23, 2010

Race to the end of financial year, are you ready?

Apart from those of you with self managed Super Funds who normally have their own good advice, all property investors should be taking a few moments to review last minute maintenance and tax deductible activities that can be included in this financial year tax returns.

Last week ToopTV touched on this subject with Rob DiMonte, Managing Partner of Deloitte's, and it may be worth watching that segment. Log on to www.toop.tv, sign up and download the podcast.

Essentially, tidy up as much maintenance as possible, sort out your financing structures and get all accounts/invoices in order this week.

My recommendation is to contact your accountant ASAP to run through any last minute opportunities prior to the 30th June.

So what is happening with the market? It is all over the place, but it seems to have dodged the bullet again!

One thing that is certain, there is a shortage of quality, well priced property and there are plenty of buyers. Another absolute fact is that the vacancy rate of rental property has plummeted. We have 2000 properties under management, and we are seeing vacancy rates of 0% in the city & North Adelaide, in the East 1.2%, South 0.3%, West 1.2% and North 0.9%. The market is considered ‘in balance’ at 3%! If this continues rents will rise - it is a call to action for investors.

Confidently predicting where the market is going is impossible at the moment. Every Tuesday our entire sales team meets in their respective offices to share information, brainstorm ideas and try to stay ahead of the game in terms of market trends. We track our own market indicators (TMI) with website hits, buyer numbers, stock levels and activity at opens. This information normally allows us to predict the best way to deal with any changes in conditions and adapt our marketing quickly to them.

Consider this. There is a generation of the real estate industry that has never experienced tough selling conditions. The only TASTE they had was during the last 3 months of 2008. It is not since way back in 1998, that we’ve experienced conditions where real estate was really hard to sell, irrespective of price. Anyone who has been in the business less than 12 years has no experience in selling properties when there is little or no demand. This new generation of real estate agents has their skills honed on getting listings, not getting sales. I believe we must turn our attention to both skill sets urgently.

A lengthy dose of tough market conditions is what will ultimately test how clever our current generation of real estate agents is, but it appears we may have to wait a little longer as conditions have yet again bounced back. Tt the moment when the pricing is right, it’s all go.

Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group

Friday, June 18, 2010

Winter Sales put heat on Buyers

People are asking when to sell and the standard real estate agent answer is invariably ‘now’.

While real estate seems to genuinely be about selling in the ‘now’, it is winter that always has everyone questioning this. It is a fact that people tend to feel great at the fist sign of spring sunshine, and that gardens burst into life at this time, but there is more to selling a house than gardens and warmer weather.

By far and away the greatest driver of the market is confidence and the way our economy impacts on peoples minds. The second greatest driver of property sales is ‘supply and demand’ - the relativity between the number of houses available to purchase and the number of active buyers ready to buy. In winter there is always a reduction in the number of sellers, yet buyer demand remains pretty much unchanged throughout the year, with the exception of the Christmas New year period. We have the stats to prove this.

Currently the Toop Market Index (TMI) is at 3.64 - this is our way of predicting where the market is tracking 3 to 4 months ahead of time. TMI measures active marketed properties against new buyers entering the market, creating an ideal forecasting measure. It currently indicates that confidence is falling and a shortage of property is keeping the market from capitulating. In South Australia this should continue to be a seller’s friend HOWEVER we seasonally see a massive influx of properties from September to November, making this the most dangerous period for those selling.

Reports predicting strong price growth, such as this week’s from BIS Shrapnel, cannot be ignored. They rely on the underlying shortage of available property to drive demand over supply, however seasonal factors are what need to be considered for those wanting to sell in 2010.

In spring, buyer demand changes ever so slightly while new sellers flood the market. Open inspection numbers (active sales) go from winter lows of around 1500 to virtually double at just under 3000. The total stock levels found sitting on websites and agents books (stock on shelf) balloon even more.

The wild card to all of this relates to what is happening in our economy. Given we have no control over this, and are merely passengers of that critical market driver, what we are able to control is our timing.

So my answer on whether to sell now or in spring? Sell NOW.

Be sure to see Wednesdays Toop.TV where we cover end of the financial year preparations for landlords and investor.


Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group

Thursday, June 10, 2010

Will SA’s property market again ‘hold up’

Will SA’s property market again ‘hold up’ in the new round of Global financial wows?

Consider the market dynamics at work.

Fear & Confidence. These are big drivers in property; fear negatively impacts property, confidence positively. Market segments affected by fear will take a hit!

Cost of funding (interest rates) and ability to service a loan (employment and business profits). Cost of funding has been increasing and some top end buyers have recently suffered losses in their share portfolio, but jobs have remained strong.

Supply & Demand (number of active sellers v buyers). Demand exceeding supply is a critical driver of SA’s market, right now we have an undersupply of property yet plenty of buyers.

Alternative investments. Investors look at all their options, including shares and interstate property. SA’s rental market is strong with low vacancy rates – good news for SA property.

Following the Reserve Bank’s hold on interest rates, CommSec released their view:

CommSec believes that the economy will lift later in the year, meaning borrowers should factor in rate increases of up to half a percent. But in the current environment this appears more of an upside risk. As we have seen over the past two months, the environment can effectively turn on a dime. The optimism that was in abundance in mid April has now given way to fear and uncertainty with investment markets increasingly skittish

The $64 million question is how long will interest rate settings remain on hold? Even the Reserve Bank would be hard-pressed making sense of the volatile environment”. Click http://adelaide-real-estate-news.blogspot.com/2010/06/insight-changing-market-conditions.html for the full report.

Since no one can be sure, what do we think?

My observation: The over $1m property market is impacted by any significant movements in the share market while the under $1m is impacted by job security. The market is volatile, and confidence rocky, yet there are too few quality properties available for the demand. This has driven strong sales. Job security ensures confidence in the affordable properties and lack of property has kept this market solid, but first home buyers are few.

The big issue right now is a lack of alignment between seller expectations & buyer capabilities!”

Properties priced to the market are flying out the door, while those priced by ill informed agents or emotional vendors are simply not selling. The blow out of time on market is simply the process of time for sellers to adjust their expectations. Sales are happening months into campaigns at prices well below those offered within the first few weeks. The old real estate saying ‘the first offer is your best offer’ is not always true, but is reality often enough.

What does all this mean? Sellers need to get their expectations and marketing right first up. Cheap selling strategies will create lost opportunity. Bargain hunters will struggle too; once a property price hits market alignment we are seeing multiple offers, yet banks are limiting buyer’s capabilities.

Toops Tip: BUYERS, the price you pay will be long forgotten when you’re enjoying the home you LOVE while that bargain may NEVER feel like home. SELLERS, don’t take risks with your sale process, do your homework, and remember that old real estate saying!

Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group

Incredible Admission as to what is really happening out there

InsideStory readers this is hot off the press from RP Data this morning, and is an incredible admission as to what is really happening out there.

RPData (pdf)

Also read my InsideStory article that was sent to print yesterday (for the weekend Advertiser) but is exactly aligned to this National report....it is changing really quick out there. Adelaide has its own unique set of dynamics so read my take on that.

Very important read!!


Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group

Wednesday, June 09, 2010

Insight: Changing Market Conditions

InsideStory readers



Here is the latest from CommSec. This is an important insight into the changing market conditions, be sure to read our own observations on this.

CommSec (pdf)

Regards


Anthony Toop, Managing Director.
www.toop.com.au
© Toop Real Estate Group