SO WHAT IS HAPPENING TO REAL ESTATE IN OUR OFFICE RIGHT NOW? – DECEMBER 2008.
- Our office is currently the Number 1 office in sales revenue out of 45 Brock Harcourts offices in South Australia.
- In the last quarter (July - September 08) I was Number 3 of the top 10 consultants in the group of approximately 200 sales people in the Brock Harcourts SA family. Stephen Venn was Number 5 & Kaylene Garbas Number 6.
- PRICES ARE BEING REDUCED – Vendors are constantly reducing prices, on their own accord, to meet the market! To understand why, it is important to note that real estate sales are PAST SALES. Sales where contracts were executed two to four months ago. A sale that occurred three months ago is higher than now. The figures the Lands Title Office produce are historic figures based on past activity and past market sentiment. They don’t reflect the prices today, therefore the press reports that the Adelaide market is steady or a little down? – I believe this to be an underestimated reflection. I believe the real estate market is down in most suburbs by at least 10%.
- GOVERNMENT STATISTICIAN SALES VOLUMES - The property market statistics from the Lands Title Office show the slowing of sales in the marketplace and its associated parameters like consideration and mortgages.
PETER’S RULES IF BUYING AND SELLING TODAY:
- On a falling market; you sell first and buy last.
- If you are selling and not buying, for example finalising a deceased estate – it is wise to get feedback on the sale process and on the property itself. Is the presentation of the property at its absolute best? Buying signals are signs of an impending offer. For example buyers will ask questions and return for a second look with their friends, family member or building inspector. They’ll identify objections – “it needs painting / new bathtub”….ultimately trying to work on the price. However these are good indicators that they will make an offer! Then a skilled negotiation will result in a sale – SOLD!!!!!
ALL IS NOT LOST! REMEMBER THIS - If you are buying and selling in the same market at the same time, you are a winner, because the lower the sale price for the Vendor the less Agents fees and if you are buying the less stamp duty you pay. It’s ‘the gap’ you are concerned with; the “change over cost”.
If this does not happen – is it usually price?
Yes, therefore in a falling market it is better to reduce the price and get December 08 prices, not February 09 prices - as I fear the latter will be less!!
DEBT IS STILL A CONCERN
The average home loan of a Colonel Light Gardens office buyer is approximately $310,000. The average young couple borrows 90% of the value. Falling home loan interest rates of less than 7% are a shining light in the market, but are they? Japan has had zero interest rates over many years but the real estate there has continued to fall.
LOOKING FORWARD
With yields of 5% on some residential property and mortgages of less than 7% you would think house prices here will bottom out.
I DON’T THINK SO!! I believe real estate values only rise when the following stars align:
- The psychology or confidence star of the buyer is between their ears
and at the moment their ears are not all that happy!
- Rising Interest rate star
- Falling Unemployment star
- Local State Treasurer Kevin’s ‘get rich scheme’ is definitely a rising not falling land tax star. P.s. on my investments its working out at approximately 20% of my gross rents, which is ridiculous.
All the above stars are definitely not shining brightly and aligned, but then again the “Contrarian Investor” is possibly the wisest.
IN CONCLUSION:
My thoughts for 2009 are that the market will fall further which also presents an opportunity for those wishing to buy! The greatest fall will be at the top end and in the middle. The bottom end will stabilise for a while as first home buyers use up the $18000 - $25000 government grants, but there are only so many of these buyers in the market. In our office most of these first home buyers are single females so young men, my challenge to you is to go out there and BUY BUY BUY!
RENTS ARE GOING UP! – RENT ROLL NEWS FROM DIRECTOR OF PROPERTY MANAGEMENT OLIVIA GRIGG’S DESK FOR BLAIK ONEIL RENTALS PTY LTD TRADING IN CONJUCTION WITH BROCK HARCOURTS COL LIGHT GARDENS
I am happy to report that the news for investors in Adelaide remains positive, with vacancy rates still among the lowest in the country. Demand for rental properties remains strong, with the increased first home owners grant and low interest rates not generating the level of interest from long term tenants we thought it may.
The following statistic is a snapshot of local rental vacancy rates by postcode:
5034 - 0.5% 5042 - 0.7%
5035 - 0.4% 5043 - 0.7%
5038 - 1.0% 5046 - 0.7%
5039 - 0.5% 5061 - 1.9%
5041 - 1.4% 5062 - 1.4%
With the ongoing shortage of affordable housing, rental prices continue to increase as demand outweighs supply, particularly in the unit market. We are continually finding that units in our local area are being re-let before they become vacant and Saturday open inspections are attracting a huge number of prospective tenants.
Our rent roll continues to grow, despite slightly more of our landlords listing properties for sale than usual.
We are gaining many new listings from owner occupiers who have been unable to achieve the sale price for their home they were hoping for and have decided to lease their properties until the sales market strengthens.
If you would like an up to date appraisal of your property for rental, or any advice or information regarding our Property Management services, please call me on 0403 046 254 or email: olivia.grigg@brockharcourts.com.au
BROCK HARCOURTS COLONEL LIGHT GARDENS IS STILL A BOOMING OFFICE!