Wednesday, July 28, 2010

The Top End in demand!

It’s the end of July and the middle of winter, yet so much is brewing in the Real Estate market.

An update from the frontline
When it comes to attendance at open homes, days on market and negotiating sales the feedback is virtually contradictive right now – it all depends on which area of the market you’re dealing in.

“$1m homes boom. Market confidence drives record sales”. That was the headline from the Sunday Mail’s David Nankervis last week, and he is spot on. The ball is well and truly rolling in the top end and sellers are tapping into this positive shift. At Toop&Toop we’re seeing registered buyers showing keen interest in beautiful homes priced over $1million, with early ‘off market’ inspections attracting good attendance. Last week I spoke of multiple bidders on a $3million home in St Georges – for those who missed out or are looking in this bracket, there will be more prestige properties being launched over the next couple of weeks (register as a VIP buyer at www.register.toop.com.au).

Across the board it’s quality homes needing little work that buyers are seeking, and in the Eastern suburbs there’s a shortage in the mid price bracket. Are these sellers still insisting on holding off for the age old ‘Spring launch’ just to compete with so many other properties? Or…

Is it a case of election fever?
Election days are a funny thing in the world of property… in fact, historically, election day sees BIG buyer numbers at open inspections. It’s true! Whether it’s time to go to the polls on a state or federal level, voters are forced out and about on mass, often planning in a few ‘stop offs’ along the way in the form of open inspections. As a seller, this isn’t the weekend you avoid, but one you embrace with arms wide open – and what better time to vote during the day than when your home’s open to buyers?

Interest rates
With the Reserve Bank set to meet this Tuesday it’s a matter of ‘will they or won’t they’. Earlier this week the finance sector were saying yes, but would the RBA really do this in the middle of an election campaign? After all, it may not bode well for the current government. Well Wednesday’s release of the inflation figures has subsided these concerns somewhat. With a growth of 0.6%, lower than the 1% forecast, it’s unlikely the RBA will increase the cash rate this week.

So with the cost of living on the rise and interest rates often viewed as an ‘uncertainty’ is property still the way to go when it comes to investing?

Showdown 2 – Property vs Shares
Greg Troughton and Amy Durant from REISA represented the property side while Mark Potter and Ryan Bamford from Baker Young Stockbrokers argued for shares. It was an intense and cleverly thought out debate with creativity used by both sides in bringing home their points. Guest judges Adrienne Smith (Commonwealth Bank), Cosi (SAFM) and David Stowe (NAB) all cast their votes with shares winning 2-1. But the public had the final say and they voted property as the Showdown 2 winner! Log on to www.toop.tv to catch all the highlights.

Mandy Wurth, General Manager
www.toop.com.au
© Toop Real Estate Group

Wednesday, July 21, 2010

The election, mining & property... who's set to win?

Last Saturday’s announcement by Prime Minister Gillard has certainly triggered an election frenzy across the country. The pollies are out campaigning hard, the press cartoonists are having a field day and the usual preference deals are being struck amongst the parties.

But when these political groups have such differing opinions, who will really end up the big winners, or losers, once the votes are drawn?

Here in South Australia mining, defence, the development of the new RAH plus the Northern Expressway are set to inject funds into our economy and boost our population over the coming years. As we all know, more people means a higher demand for housing, a positive impact on real estate and good news for property owners.

So where does the election play a part in this?

Mining, a key part of our State’s growing economy, has unequivocally been in the media spotlight over the past few months. It all started with the release of the Henry Tax Review and in particular the Resources Super Profits tax. Then shortly after the swearing in of our new Prime Minister, Julia Gillard, came the softening of this tax regime to focus solely on iron ore and coal, impacting just 320 companies rather than the original 2,500 and excluding any Uranium mines such as Olympic Dam.

This is where the potential politics comes in. Although the super tax has now been addressed, could the $21billion expansion of this prominent mine still be in jeopardy?

On a state and national level the Labor Government has continually backed Uranium Mining. In the opposite corner we have The Greens, who state in their policies that they will “end the exploration for, and the mining and export of, uranium”. With the two parties making headlines during the past week for ‘striking a deal’ on preference votes, it makes you wonder what exactly has been compromised to reach this deal. Perhaps nothing, as Greens have traditionally backed the Labor Party in the polls, but with such opposing opinions… I guess we’ll have to wait and see what unfolds.

The election aside, South Australia continues to perform well in the property stakes. The rental market is remaining tight, investors are returning to the action and the top end is performing well – we got a property away at auction just a couple of weeks ago for over $3million with 4 registered bidders! It just goes to show that buyers are looking for quality homes and all importantly, at a price in line with their expectations.

Mandy Wurth, General Manager
www.toop.com.au
© Toop Real Estate Group

Wednesday, July 14, 2010

We may be in the ‘off-season’ but our rental market is fairing well and set to strengthen

Winter seems to be fairing well on lots of counts this year, when it comes to our property market. Just a few weeks ago RPData analysts backed up our long held belief that June is one of the strongest months for sales in Adelaide, not Spring.

Now it’s our rental market’s turn to buck the trends.

This year June’s vacancy rates were almost reflective of our peak season (November to February) due to an increase in demand triggered by the end of financial year and an increase in corporate relocations. Toop&Toop recorded vacancy lows of 0.9% in the North, 1.8% East, 0.8% South and 0.6% in the city and North Adelaide. The West continued to fair a little higher, at 2.8%, with a number of Newport Quays properties currently vacant, yet there is a silver lining here also. Last week our coastal team let two penthouse apartments in this development - the interest is there.

When it comes to growth in rental rates over the month, it’s a different story. In the latest report from RP Data’s national research analyst, Cameron Kusher, rents around the nation, saw little or no change. Adelaide remained steady with a 0% change, yet when it comes to annual growth – we’re out on top at 6.7%, and it looks like we’ve much more room for growth.

We now host the most affordable rental houses in the nation with a median of $320 per week, lower than Hobart at $325. Our unit prices sit second to lowest $280 per week, with Hobart at $275 – it seems we’re literally neck to neck with Tassie.

This closely mirrors where Adelaide sits nationally when it comes to housing prices. Going on May figures (June’s won’t be released until later this month), Adelaide was second in affordability only to Hobart, with a median dwelling price of $387,500.

The price of our housing is constantly in the spotlight, with first home buyers finding it increasingly difficult to get their foot in the door of the property market. Those who took the plunge last year, ready or not, have now felt the pinch of numerous rate rises and may be questioning whether to sell or retain their property, by renting it out.

“… it makes sense that we will see demand for rental properties increasing over the next 12 months. Affordability pressures, due to higher interest rates and higher home values, are forcing many prospective buyers to remain (or return) to the rental market”.

According to Mr Kusher, the outlook for investors going forward is all positive… but renters may feel otherwise.

“Landlords are likely to be reviewing rental rates to make up for an erosion of profits caused by higher interest rates. Low vacancy rates and ongoing high rental demand means that landlords should have a reasonable amount of leverage to raise weekly rents upon a rent expiry. Higher rental rates should in turn lead to an improvement in rental yields and a greater incentive for investors buying into the residential property market.”

So the future is looking bright for the market in the ‘Year of the investor’. This week’s ToopTV, with Baker Young Stockbrockers’ Mark Potter, was a must see for investors keen on shares or property. To view or podcast the show go to www.toop.tv, and be sure to keep Wednesday the 28th July free for the second Property Vs Shares Showdown – we’ll see if property can make a comeback.

Mandy Wurth, General Manager.
www.toop.com.au
© Toop Real Estate Group

Wednesday, July 07, 2010

Tax Lotto... try House Lotto

The top end market in Adelaide has been alive and well over the past 6 weeks. Everyone seems to be asking what we mean when we say ‘Top End’ – well we’re referring to the over $1million price range.

Due to the proliferation of TOP END sales recently, we feel it is time to adopt another special category. So for the sake of discussion let’s split the TOP END into TOP END ($1 to $5million) and S.A ICONIC HOMES ($5million plus) categories. On our weekly Toop.TV segment we collectively call these two categories S.A’s Finest. Interestingly, there is still no pure residential home to have broken the $5.5 million ceiling in South Australia, and those that have been reported have either had additional development potential or other non-residential financial benefits.

This week’s headline of “Record breaker Ivanhoe back on the market for $7million” was interesting, and if a sale at this price were to be achieved Ivanhoe would be a S.A. ICONIC HOME sale as it is a single dwelling. The timing should tap into the current frustration of buyers who are searching for those rare S.A ICONIC HOMES. The article also states "Ivanhoe joins Cygnet Court waterfront home, with two marina berths, at Glenelg, which is on the market for $7.75 million" then goes on to cover the $6.5 million sale of Stormont in Glenelg.

So is South Australia finally moving toward achieving that first magical $10 million sale? Or are owners of S.A. ICONIC HOMES on the verge of winning HOUSE LOTTO? It really is like a lottery at the moment, but the stakes are high. The dilemma for buyers is that they have too few properties to choose from at the moment in this S.A. Iconic Homes category. Selling S.A ICONIC HOMES is completely different from standard real estate dynamics. Valuers and banks are often hesitant to support record breaking sales yet buyers in this market are financially independent. Conservative, professional advisors often become the real estate agents challenge rather than the actual buyer. This is where Adelaide’s unique networks come into play, while overseas markets are able to be accessed like never before utilising technology and the latest of online capabilities.

For sellers, once the property goes public the clock is ticking and getting a result, without lengthy delays avoids market fatigue, this can have serious consequences. Given such a small community, these super high profile properties become the focus of dinner party discussions within the Adelaide establishment and networks, which works positively in the first instance. However a long protracted sale invariably can end up with unhappy buyers & sellers.

As with all lotteries, you have to be in it to win it.

On the mainstream market, our TPI for June is 4.65 where 5 is normal conditions. June was a very strong month for sales and especially Top End. Be absolutely certain to watch Wednesdays Toop.TV as we had a fantastic, insightful look into what is happening right now with guest Anthony Keane, Your Money Editor and writer for Australian publication, My MONEY. To watch it just log onto www.toop.tv.

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

Thursday, July 01, 2010

Spring bumped as optimum time to sell a property

"The notion touted around property markets that spring is the ultimate time to sell could now be a myth according to rpdata.com research analyst Cameron Kusher..."

Well we have been spruiking it for years, and now it is official, June has been statistically proven to be the busiest time for property sales in Adelaide. RPData's latest report, released this week, is compulsive reading for property sellers especially if you are holding off to sell in spring.

We discussed this very issue on Toop.TV just 2 weeks ago, with RP Data’s Cameron Kusher (log onto www.Toop.tv Episode 34 and have a look). Cameron’s looked into the figures and surprise, surprise, in Adelaide Spring selling is rated the 3rd best time to sell.

We didn't need the stats to know this but wow, were we amazed at the results. They are spot on with our own local experience and align with the years of advice we’ve provided to sellers.

According to Mr Kusher, "while spring sees the greatest number of listings, there is evidence to show that these do not convert to the greatest number of sales. Within Adelaide, June has proven to be the busiest month for sales".

The report is a national one and is available here..
PropertyPulse (pdf)

Sales and listings (pdf)

Essentially, Spring is overrated by sellers. Feeling good with the arrival of spring sunshine and the gardens ‘taking off’ clearly doesn't translate to better sales. Reality is that buyer numbers remain very consistent over the entire year, but what occurs is their activity increases as more stock enters the market. Currently there are so few homes coming on the market that even with wavering economic confidence sales have remained strong. It is a fact that buyers are ultra discerning, banks tough to deal with and advisors cautious (if not negative), yet selling in winter continues to bring great outcomes for many sellers. Buyers simply have so few options.

It is winter where stock levels bottom out and when competing properties are at their lowest level, therefore as a seller you have the best competitive advantage.

So after 35 years in the business, finally it is a fact, Spring is not the optimum time to sell property.

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