Wednesday, April 27, 2011

Easter, inflation and the market

We may only be four months into the year, but I think it’s safe to say that for most, the five day break was absolute bliss! It’s been an incredibly busy time across all sectors, and the real estate scene has been no exception.

The volume of homes available on the market continues to be at above average levels for this time of year, with lower demand causing days on market to be extended. So, it’s understandable that a lot of sellers chose to have last weekend off and simply enjoy the break.

The beautiful thing about open homes on long weekends is that it sorts the ‘wheat from the chaff’ so to speak. Those who have a tendency to look at homes simply because they enjoy it, or have always wanted to see inside ‘that one on the corner’ tend to steer away from the property scene, leaving the active buyers on the hunt.

Those who took the chance to ‘stand out from the crowd’ and open their property over Easter were rewarded with the attendance of quality buyers, real feedback from the people who are active in the market place, and in some cases, the hard truth around pricing property in line with buyer expectations.

In this softening marketplace, pricing continues to be the biggest hurdle between sellers and buyers. If you were to liken elements of the current market to that around the time of the GFC, you wouldn’t be far off. While not as severe, the market has softened and buyers have developed an incredible nose for knowing when a property is deemed as ‘good value’. Anything above this and the result is little enquiry and a rather lonely open inspection.

Meanwhile it begs the question, are property investors feeling the temptation to get back into the market?

We know they’ve been waiting for the right time, and right financial reasons, to step into the game. Consistently good yields (Adelaide dwelling average at 4.4%), a stable rental market (Toop vacancy rate is just 1.5%) and the return of some affordable investments may be just what they’ve been waiting for!

However the latest inflation rates released just this week may turn out to be the bigger influence and deciding factor. Against economists’ well founded predictions, inflation figures have come out much stronger than the anticipated 0.6-0.7%. With the trimmed mean published at 0.9% and the year-to-year inflation rate brought to 3.3% (way above the RBAs 2.5% target), we may be set for a rate rise as early as May.

The influence this will have on the market? We’ll have to wait and see, but for many it will be far from good news if this comes to fruition.

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

Wednesday, April 20, 2011

Buying Vs Renting

It’s been debated for years that with the funds needed to buy a home, renting may be the better option… but is it really?


When you delve into the reality of home ownership and the sometimes uncertainty of renting, the pros and cons on both sides meet to form a compelling argument. Add to this the increased costs of living plus lack of affordable housing, and the care free nature of renting becomes an incredibly attractive option, especially to the younger generations.


The idea of fewer financial commitments, lower living costs, no maintenance or upkeep fees and a more flexible lifestyle make renting the number one choice for those moving out of the family home and embarking on their careers. And it’s not only the young ones who enjoy this flexibility.


Some individuals who have been in the workforce for a much longer period choose to ‘free up’ their cash flow and invest the difference between their weekly rent, and what their mortgage would be, into shares or long term deposits. It also allows them to live in an area they may not ordinarily be able to afford to buy in and offers flexibility for future job transfers.


Then there’s the great Australian Dream of home ownership. Given that you’re in a financial position to do so, buying property can offer great long term benefits, security and peace of mind.


There’s no need to look for a new place to live every time your lease expires, your hard earned money goes towards your own asset and, if the last 20 years is anything to go by, over time the property will appreciate quite significantly. In fact historically, Australian homes have seen an average growth of 9% per annum – perhaps not the case if you bought twelve months ago, but when it comes to property the best method is to always ‘buy & hold’.


Over the years as you pay off your home and head towards retirement, the security of having a freehold roof over your head is second to none.


At the end of the day the choice to rent or buy is both a financial and lifestyle decision, and it was debated fiercely this week on ToopTV’s Showdown 3. With ANZ Financier Tony Romano and the ATO’s Dom Romano in the buying corner and Toop&Toop’s Leanne Kuss and Jenny Drew standing strong for renting, the facts and logic made the final decision an incredibly close one. Log on to http://www.toop.tv/ to see the full debate on Episode 75.


Finally, from the entire team at Toop&Toop, we hope you have a relaxing Easter and ANZAC Day with family and loved ones.

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

Wednesday, April 13, 2011

Who pushed up the prices?

An online ‘First Home Buyers’ strike has been gaining momentum over the past few weeks in a bid to drive down property prices, instigated by tax reform lobby group, Prosper Australia. Their aim is to pull the First Home Buyer footing out of the market place completely, causing a domino like collapse and instantly creating ‘affordable housing’.


Now buying your first home has always been a challenge. Yes property used to be cheaper, but then wages were lower and interest rates were much higher. Property prices began their upwards climb when buyers increased their activity in the market place. Wage increases and declining interest rates from highs of 18% plus in the 80s allowed them to do this.


Then, in 2008, the GFC hit. In a bid to maintain economic momentum, the First Home Owners Grant Boost was introduced. At the time the Real Estate Institute and industry as a whole aired their concerns that this, combined with record low interest rates, would drive up prices… and it did.


A giant wave of first home buyers entered the market, causing a boom at the entry level of market pricing. Demand outstripped supply and property prices were pushed higher. In 2009, 190,852 buyers (70,000 more than the previous year) took advantage of the boost and jumped into property head first.


Then in 2010 the numbers dropped by almost 50% to 96,201. Why? Because the First Home Buyers who normally would have bought in 2010 and 2011 were ‘pulled forward’ into the 2009 buying boom.


So while some first home buyers are choosing to abstain from buying (largely due to the price increase driven by those previously in their position) and investors are waiting for the ‘right’ time, it’s imperative that sellers stay on the front foot when it comes to presentation, marketing and price.


Get the right advice, listen to the buyer feedback, market your property at a competitive level and be prepared that it may take a little longer to sell than anticipated. Price is ‘king’, if it’s right, it will sell. Toop&Toop started the business in the 80s when the market was at its worst. We have the tools and knowledge to get our clients the best possible results, even when times are tough – when it’s time to get serious, it’s time to get Toop&Toop.

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