Weekly Melbourne Property Market News - Archive

Monday December 15th

With the spring season drawing to a close we have seen the “clearance rate” climb to 57%. Private sales picked up to 635 for the week and this is the figure that we will be watching throughout 2009. I have been saying for months, the “clearance rate” is an obsolete statistic. Agents have finally worked out to put their clients before their agencies’ advertising.

In 2009 properties under $500,000 will most likely continue their positive march. The median price for the last twelve months according to the REIV increased 3.6%. I believe this figure will rise steadily throughout 2009. Investors who are secure in their jobs will be looking to capitalise on other vendors insecurities. With interest rates dropping and rents rising, neutrally gearing a property, maybe even positively gearing maybe possible in some areas early in 2009. Investors should however be aware that yield is not always the best indication of a good investment property as the capital growth may not be the best.

First Home Buyers looking to pounce on the governments first home owners boost will be pushing up the price of the sub $500k properties until at least June. Then it will depend on whether the government extend the boost or not.

All in all, properties that are in good locations that show a history of good capital growth, have an improving yield and are under $500,000 will be the hottest property for the first six months of next year. In the later half of the year, depending on the economic outlook and what consumer sentiment brings, properties between $500,000 and $1M will be the next bracket to move. Once the economy begins to recover, properties above $1M will rebound extremely well. If you are in the market for this type of property, spring 2009 may well be the last time to buy at reduced prices before a recovery in early 2010.

It has been a tumultuous year throughout the world. Next year will probably be easier to read than this one. Although some downsizing in nearly all industries is a fact that we will need to get used to, it will also be a time for opportunity. Don’t look back in 2010 and say “why didn’t I buy property last year”

Whatever property you are looking at next year, come in and have a chat to us. Our office will be open from 5th January next year.

From the team at JPP we wish to extend our best wishes for the holiday season to all our avid readers and wish you the very best fortune in the New Year.

Ian James

Monday December 8th

Total sales stayed above 1000 again this week and the clearance rate was up by 4%. Anxiety runs hot around the holidays and any properties that are still on the market after next weekend will struggle to sell this year. There are about 700 auctions booked for next weekend and only about 200 for the Saturday before Christmas.

Whether it is the First Home Buyers Boost, people becoming a little more confident, rental price increases or the world wide sentiment improving, one thing is for sure; there are more buyers in the market at the moment than I have seen all year. Our enquiry levels are up for both owner occupiers and investors alike. Buyers are coming back into the market with a lot more confidence that property prices are going to level out or turn fairly sharply up again in the near future.

With interest rates pegged to drop further and rental prices increasing, neutrally geared properties are no longer a pipe dream. What used to take several years for rents to catch up to interest payments, now good property can be purchased and in some areas and be revenue neutral in as little as a couple of years. This will only be possible if you buy before the property prices begin to rise again.

To illustrate this, a 3 bedroom family home in Frankston may cost $280,000 which would cost about $16,800 to finance. If it is well located, and neatly presented it should be possible to earn between $13,500 - $15,000. After some rates, charges for maintenance, some property management fees etc, which are tax deductible and your negative gearing tax deduction, there may be as little as $2000 per year to find. If in the next 2 years the rent went up, similar to what is happening now and interest rates are still going down which will reduce your expenditure; your income would surpass your outgoings.

First Home Buyers need to purchase before 30/6/2009 to ensure the extra boost the federal government is offering. If you are considering upgrading your property, now is an excellent time to changeover. Whilst the top of the market is more depressed than the bottom, your sale may not be fantastic but you should be able to buy very well.

Anyone thinking of purchasing a new property, be it to live in or as an investment should come in and have a chat. There is no obligation at our first meeting.

Ian James

Monday December 1st

If you read the “Gloom and Doom” printed in the media yesterday, then you may not have noticed that 1157 properties sold last week. This is the best result since April this year. Real Estate Agents are beginning to understand that Auctions are only good advertising for their agencies, not for the vendors’ property price.

There are more properties selling now than there were one month, three months and even six months ago. Everyone who wants to purchase a property in the next twelve months needs to prepare for some vigorous negotiation. Most good Real Estate agents are very smart. They will change their methods and move away from auctions and back to private treaty negotiations.

Purchasers who still want to buy good property at a good price will need to move quickly. Early through next year, the property prices will cease to be reported with poor clearance rates. The Real Estate industry will simply not give the media “gloom and doom” to write about. In fact the figures coming out from the REIV will improve steadily, regardless of what actually happens in the market place. This will be due to the fact that the clearance rate percentage will lose its appeal. More properties will be sold privately and undisclosed, making it even more difficult for the general public to understand what is happening in the market.

This is not such a bad thing from the confidence angle. Good property will serve the majority of people very well as an investment. It does not have the “dot com” or mining share price surges, but it also doesn’t have their downturns. Unlike some of the largest companies and banks in the world, I cannot recall a well situated property in Melbourne every losing 100% of its value. I cannot even recall any time where a well located property even lost 50% of its true value.

Even as the world economy takes a nose dive throughout next year, Australia, and in particular, Melbourne’s property market, is poised for strong growth over the next ten years. For those of you, who have enough headaches from work and home; think about a long term, “set and forget” property investment, upgrading the family home, or buying that first dream house.

We are happy to have a chat anytime.

Ian James

Monday November 24th

It was hit and miss this weekend. With the cold and rain putting a dampener on people’s spirit (and wallets) the clearance rates were again at a low of 53%. Across the board this week there were sales and properties passed-in in the under $500,000 home buyer range, sales in the $500,000 - $1m upsizing range and million dollar plus range. We do however note that for the third week in a row there was an increase in total sales.

Not unusually we opened the paper this morning to numerous pass ins in Brighton, Albert Park, Kew and Glen Iris among many other top end areas. What was slightly different this week was the pass ins in Elwood, Brunswick, Preston and Moonee Ponds, again among others. The latter suburbs are areas prominent with units and apartments and medians around the $500,000 - $700,000 range, which were yet to be hit too hard.

Saying this however it shows that we are still in a buyers market. Unlike this time last year when you would go to auction and stand there with your hand up until you had beaten other potential purchasers off or ran out of money, we are now seeing a lot more negotiation after the auction. Coming up to Christmas, even more properties will be negotiated at prices that will be dependent on financial circumstances of the buyer and seller rather than on what the property is necessarily worth.

If you are thinking about buying either now or post Christmas why not come in for a no obligation chat about what we think the market is doing and how we may be able to assist you.

Courtney James

Monday November 17th

The “clearance rate” was 54% across the weekend. The media would have us believe there was no movement and that things are going from bad to worse. What they neglected to explain was the increase in total sales of 21.63%. These figures are the same ones supplied to the media by the REIV.

Auctions are designed to achieve one bid over the second highest price. When the market is “firing on all cylinders” there are frequently multiple people biding which pushes the price higher than it may achieve normally. When the market is only achieving one interested party at the higher levels then Auctions do not benefit either the buyer or seller. For example; if two people are interested in a property, Buyer 1 has $420k and Buyer 2 $450k then an auction would finish one bid over $420k and if this is well below the reserve then negotiation by both sides becomes very difficult. Once the auction has been passed in the negotiations can be strained. The Buyer will think they have offered something fair and reasonable as they were the highest bidder, but of course the vendors’ expectations maybe a little higher.

An auction pass in negotiation is as difficult as it gets. There are high emotions. Everyone is nervous. There may be a lot of people around, and as a buyer you may not understand what your rights are. During the auction everyone is bidding on agreed terms. That’s right! Agreed terms; we frequently arrange for different conditions, settlement and deposit amounts. Once the auction has passed in all deals are off. Everything is negotiable!! You can offer different settlements, different deposit amount, add a building clause or anything else.

If you are looking to buy a property at the moment, negotiation is truly the most important factor in buying well. Once the property is assessed, a professional, experienced negotiator could make tens of thousands of dollars difference. If you are using a professional negotiator, it will be in your favour not the vendors!

Ian James

Monday November 10th

The “clearance rate” continues its course towards 50% and there were only 840 total sales last weekend. The government is talking more gloom and doom than the media and the “R” word is being talked about more openly than the previous whispers in the corridors of our politicians.

Interest rates around the world are dropping sharply; our own Reserve Bank dropping 0.75% off the cash rate and the Bank of England 1.5% last week. Our big banks are grabbing a small slice of the profit each time the reserve does this. Most of the banks passed on 0.58% - 0.65%. If the banks continue to profiteer on each deduction the Reserve makes, the government and the Reserve Bank will need to come up with another solution to stimulate the economy.

It can also be said that, whilst most people that were polled by the Herald Sun today, wish to see a drop in Australian immigration, more and more people are still travelling to Melbourne from other states and settling in the “Most liveable city in the world”. This is continuing to put pressure on our infrastructure, our accommodations and our property prices. With more and more people looking for houses either to rent or buy, our demand for housing is still rising. Our supply, whilst slowly increasing thanks mainly to the First Home Owners Boost, is still falling short.

All of the above factors will lead to an increase in housing prices and will make it nearly impossible for future generations to afford to buy property. In the market under $700,000 we can see that every well located property, that is presented well and marketed accurately, tends to sell very well. We attended an auction in Murrumbeena on Saturday that was a great 2 bedroom villa unit, in an excellent location. 9 different people bid on this property and it sold above where it should have. The Agents, Gary Peer and Associates, did a good job on behalf of their vendor. Another property we purchased on the weekend in Northcote was bought under the hammer just shy of $700,000. This property was extremely well located and presented and had several potential purchasers.

The first home owners grant is beginning to kick into play. Good properties around $300k - $500k are becoming scarce. If you can get into the property market, now is the time to do it. “Find” the right property, “Assess” it accurately and then have a professional “Negotiate” it for you. The best properties will not be bought without competition, nor will they be given away by the Real Estate Agents.

JPP is running another seminar with information available to First Home owners and Investors. It is being run this Thursday evening at the Glen Eira Town Hall. Places are limited so please follow the link to book your seat.

Ian James

Monday October 27th

We are back to the shrinking “clearance rate” again. The clearance rate dropped to 53% but the total sales for the week climbed 18%. Whilst most buyer agents and selling agents will tell you the market is “hitting the wall” or that the market is in free fall, this is a total fallacy. Investors are moving into the market in droves. Our enquiry levels for First Home Buyers are up by 75%. There are plenty of good properties out there to buy at very good prices. But don’t be surprised by competition at the best.

Of the properties purchased last week, more than 60% were bought under competition at auction. We purchased one property where 4 interested parties were bidding after the property was “on the market” and the amount between the final bid and the first to drop out was only $4000. The property was sold in excess of $400,000. Conversely, another auction we attended was sold under multiple competition, $150,000 over the asking price. It was very obvious this would happen after due diligence had been performed. This was no surprise to us, our clients or the other real estate agent who was also bidding.

The high end of the market is always the most volatile. The closer to the Melbourne Median Price, the less volatile the prices are. We will see median prices in the top 20 highest priced suburbs show the greatest downward movement over the next 6 months. If you actually analyse these sales you will notice that the majority of these properties will not be the best in their class or there will be some excellent properties selling below their true value for some specific reason, either quiet sale, long settlement or special requirement. It is the latter type of property that will make the most money in the long term. In the lower priced suburbs, under $700k, the key to buying well is selecting good property and then negotiating the best possible price.

Real Estate agents are creatures of habit. Melbourne is so used to auctioning property that both the agents and purchasers expect all property (that is thought to be good) will be auctioned. But good, experienced Real Estate Agents are not stupid. They will change with the times and the market. There will be a lot more private sale negotiation from now on.

It is now imperative to choose the property very well, assess the property very accurately, and now you must also negotiate with a very experienced property negotiator. If you want to secure an exceptional property at the right price come and see us at our free seminar at Glen Eira Town Hall on Thursday November 13, or give us a call to organise a “no obligation” meeting to discuss your requirements.

Ian James

Monday October 20th

This opinion of the market has taken me nearly four hours to write this morning. I have had about 6 phone calls from clients, past clients, reporters and friends asking me “what is happening in the market?”

The current market is being driven by two opposing forces. One, similar to the stock market, is falling confidence. All the papers are talking “recession” with one analyst in the paper this morning saying Australia will be in recession by Christmas. Last time someone explained economics to me, a recession is two successive quarters of negative growth. Growth in Australian GDP was 2.7% in the quarter to June 30 and this means it is technically, as well as unlikely, for Australia to be in Recession by Christmas.

The other influence on the property market is Supply and Demand. Supply is very low for good properties throughout the Melbourne Metropolitan area at the moment. Demand is getting stronger for good property. Therefore prices should go up as demand outstrips supply. We also have a dramatic a rental crisis, long term serviced apartments have exceptionally high occupancy rates, a growing population and a reduction in new housing approvals.

These two opposing influences are keeping the property market buoyant. As interest rates are dropping, and rents are rising, we can see investors who are looking for some stability of investment, heading back to the safety of bricks and mortar. We also know that if there is a choice between an over $1M investment and under $1M that offers a better return and a similar or better capital growth then it is obvious to go after the properties that show excellent long term growth, and are cheaper to purchase and offer a much lower volatility in price.

In my opinion, this can only lead to a growth in property prices. It will start in the sub $700k category and then move, slowly, into higher price brackets. Within the next 6 - 12 months, properties below $700 will begin to sell strongly. And, if we add to this the government incentive of doubling and / or tripling the First Home Owners Grant, we should see very good growth in this sector. Properties over $1.5M will always sell depending on whether the agent and vendor pitch to the correct price. Good property always sells well, average or poor properties sell at the right price and tend to fail when marketed above their correct price range.

Investors or owner occupier’s main dilemma is now getting good advice on what they will have to pay at any given time in the market. Prices will fluctuate dramatically in the next 12 months. Buyers can save tens of thousands of dollars by knowing the market and having a professional negotiator on their side. Remember, the vendor will be using a professional to negotiate – so should you.

If you have any comments or would like to have a chat, please do not hesitate to email or give us a call.

Ian James

Monday October 13th

There has been a drop of about 6% in the total sales within the metropolitan area last week. Unfortunately, the “clearance rate” bears no resemblance to what is going on in the market, except by coincidence. Between all our advocates we visited nearly 15 auctions over the weekend, only one of which sold under the hammer. All the rest were negotiated under the same conditions as any normal private sale.

If you are buying a home in Melbourne you need professional advice. Advice that is designed to assist you not the vendor. If you cannot accurately assess what a property will sell for, you could be paying 10% too much or miss out on the bargain of a lifetime.

We have bought several excellent properties at very reasonable prices lately and also some very good properties at excellent prices. Professional Real estate Agents are very good negotiators. The vendor is paying a fee to have somebody to represent them during the negotiation; any smart purchaser will do the same.

Whilst some analysts are estimating the last three to four years growth has been wiped off share portfolios, Melbourne’s property prices have risen over 10% in the last year. We have very low vacancy rates, a population increasing faster than any other capital city in Australia and housing approvals for new homes dropping.

The RBA dropped interest rates on Tuesday and have strongly signalled further rate cuts in the coming months. Rental increases are getting larger and more frequent. This means the difference between cost of borrowing and income produced from rental return is getting closer. Investors are flooding into the market.

If supply is decreasing and demand is increasing there is only one way for property prices to go. Property prices will increase dramatically over the next 24 months. Buying now is one of the best ways to safeguard your future prosperity. The statement “as safe as houses” is very apt in the current economic climate.

Come in and have a chat or attend one of our free seminars and see how we can help you buy your next property.

Ian James

Monday October 6th

With the football season over, the snapper season just beginning and the weather starting to turn on the warmer days, property sales in Melbourne should begin to heat up. The clearance rate of 68% doesn’t really mean too much whilst the auction numbers still make up less than half of the total sales. We need to watch overall sales. 996 sales from auctions and private sale means we are holding in the total sales numbers. Excluding last weekend, over the past 5 weeks there has been an average of just over 1000 properties per week sold in the Melbourne metro area.

The US government has passed the bail out plan and will begin to assist the financial institutions, firstly in the USA, but this will filter throughout the world. Is the economic crisis over – of course not. We can see our federal politicians already making excuses for our banks not passing on any interest rate cut that will occur on Wednesday. We see that economists are predicting the market will not pick up until the first home owners scheme kicks into gear in 2011. We can see everyone assuming the share market will be in trouble for quite some time.

If we then look at Australia’s overall property outlook, I would say property prices will remain very flat, if not drop 5% or so. In rural areas where mining and agriculture may drop off slightly, there will be less demand for housing. (This is a totally different topic, that I will talk about another time – but property spruikers promoting positively geared rural properties could well end up with large scale negative capital growth soon) But!! Melbourne is in the grip of a chronic shortage of property. Chronic meaning “a persistent and lasting disease or medical condition, or one that has developed slowly”. Whilst housing approvals are down, due in part to the credit crunch and there is a growing increase to the number of people arriving in Melbourne, we also have a change of numbers of people per household. With all these factors leading to a “chronic” shortage, the simplistic rules of supply and demand will most likely prevail.

Property in Melbourne will go up in the short to medium term. There will not be a “Wall Street” style drop in property prices. Investors, who for the first time in seven years saw, dramatic falls in their share portfolios are starting to look at adding direct property to spread the risk. Property does not go up and down like stocks. Owner occupiers who have remained out of the market earlier this year will begin searching again. Tenants who simply cannot get rental accommodation in their preferred locations will down grade their expectations and look to buy. Demand will exceed supply in the Melbourne Metropolitan area. This will have an upward effect on property prices that will increase over the coming years. Even if property prices don’t start to gradually climb, the shortage of stock will compound and create another market similar to that, which we saw in 2007. If you have not bought prior to this time, you will miss out on very valuable growth.

Buying property in Melbourne is a long term secure investment. You won’t double your investment overnight, nor will you be “day trading” but you can secure your financial future with a little bit of help. When was the last time property in the Melbourne Metropolitan area lost 90% of its value? Have a think about that next time you are buying shares in a company even in a bank!! (Bear Sterns was sold to JP Morgan for less than 10cents on the dollar)

Buying property on your own is scary, time consuming and becomes exasperating. Buying property should be like retail therapy on a grand scale. Get an expert on your side. Give us a call or come in and have a chat!

Ian James

Monday September 29th

With the crowning of the new premiers of the AFL for this year, we congratulate the Hawthorn Football Club. We also begin the spring real estate season in earnest. The next three weeks will indicate what the stock levels will be like for the rest of the year. I don’t think anyone is too certain what will happen in the markets of the world. Whether the Multi – Billion dollar bailout in the USA will strengthen or weaken our markets. Will there be such a credit squeeze, that we will go back to the times of 20% deposit, or will everything continue on as it did during the 2001 downturn on Wall Street.

When contemplating the price movement in the market, I will always come back to supply and demand. If the selling agents do not increase stock levels then property prices will remain resilient due to the shortage and may well increase. If the selling agents flood the market, then of course there will be a downturn in “average” prices. Good property will still continue to sell well. Melbourne is still the fastest growing capital city, and whilst housing approvals are low and seem to be stagnating, the number of people looking for homes is increasing and this is putting upward pressure on rental accommodation.

Over the next twelve months the key to buying good real estate at a good price will be quality assessment and quality negotiation. Any person contemplating any property purchase within the next twelve months, either to live in or as an investment, will do very well to seek advice in these two crucial areas of property acquisition.

We are running a seminar on property negotiation – a buyers’ perspective and also discussing some of the hotspots around Melbourne that should appreciate well in the coming years. It is on at 6.30pm Wednesday 8th October at Glen Eira Town Hall in Caulfield. Click here for more details.

Ian James

Monday September 22nd

Again the market moved up sharply this week and moved back over the 1000 sales mark. This is the fourth time since March this has occurred. And again the drop in clearance rates is virtually meaningless. Next weekend is virtually a non event for auctions due to the AFL Grand Final; it will be interesting to see the number of private sales that still proceed.

For those of you perturbed about little things like the world economy, and such other trivial matters as stock market crashes and resurrections and what it will do to the Melbourne property market, you may have missed a small article quoting RP Data. They believe rental returns will increase by 14% over the next year. If this trend is continued for five years, a good $500k investment property returning average rent, in a good location, with average depreciation could easily be revenue neutral within about 5 years. If this occurred and the average trends of the last 25 years continued, you could have a property appreciating at better than 10% pa and the tenant is paying for the whole thing.

Add to this the supply vs. demand issue which is always the dominant influence on price movement. With building approvals not keeping pace with increases to our population, the price over the long term must rise. Add the fact that investors are returning to the stability of property and the possibility of being revenue neutral in a relatively short time frame, and you have the basis for excellent long term outlook in the Melbourne Residential property market.

Owner occupiers are starting to consider their position in the market as well. As investors continue to come back to the market, this will put a lot of pressure on the first home buyers especially.

Prices will begin to climb, slowly at first; the spring selling season is upon us and the total number of sales is rising. By February or March next year, with perhaps one or two interest rate reductions and the prospects of revenue neutral properties even closer at hand, property prices in Melbourne have nowhere to go but up.

Ian James

Monday September 15th

The clearance rate jumped to 68% whilst total sales dropped by just under 2%. There were 959 total sales last week reported to the REIV. 366 properties sold via an auction campaign, either before, during or after an auction was advertised, whilst 539 properties were sold by private treaty. As we move into the busier part of the spring selling season during October and November, it will be interesting to watch whether the numbers of Auctions will increase. There is usually a greater urgency for purchasers, coming closer to the end of the year, to try and be settled before the start of the new school year. This puts a greater demand on property. Will there be an equal supply, or will prices be forced up due to the Supply vs. Demand equation? Only time will tell.

There will be some increase of property and this will mean purchasers will need to reassess their searching techniques. It is better to filter your choice of property when looking on the internet and then talking to the agent to try to cut down on the number of properties you need to view. On a Saturday and Sunday there are only so many open times and “Murphy’s law” predicts all the properties you want to view will be open at the same time or at opposite ends of the day. Each week you should be refining your parameters to reduce your need to visit every property. Here are some handy hints when searching:

• Know what you want and try not to get sidetracked.
• Write out a run sheet before you leave home. Note the address the open time and the agency name.
• Regularly attend auctions of similar properties in your target area.
• Keep notes on properties you have seen and then follow up what happens at auction.
• Before inspecting any property, call the agent and ask him what price they are quoting. (Many agents now do not indicate this in their advertisements).
• Try not to view too many properties in a row – you can easily merge their details.

If you are going to buy a property without assistance, you must try and mitigate your lack of experience. Have a plan, work out the type of property, style of property, its characteristics, its size and its value. THEN STICK TO IT.

Have a look at our “How to” series for more tips on the property buying process.

Ian James

Monday September 8th

Whilst the market clearance rate went up 4% (Yahoo!!) the overall sales figures dropped 4%. There were a total of 977 sales reported to the REIV last week with the preceding week showing 1023. I noticed in the Age this morning even the agents are now saying the true rate for sales under the hammer would be closer to 18% as the vast majority of properties still pass in but are quickly negotiated after the auction.

If you are buying a property within the next three to four months you will almost certainly have to negotiate with an experienced Real Estate Agent. We are running seminars over the next couple of months with topics such as Negotiation - A buyers perspective, we will have Melbourne "hot spots" and checklists of things to do before purchase. These seminars will be conducted at the Glen Eira Town Hall and there is no charge for this. These are informal talks and there will be a chance put specific questions to our panel of experts.

Please come along and ask questions, or send them to us and we will answer them on our "How to" page on our website.

Ian James

Monday September 1st

Welcome to spring! And of course the papers are full of failures in the market place: "59% clearance rate means that nobody is buying property". This week there was a 24% increase in the total number of properties bought against the previous week. Last week there were just over 500 private sales and a similar number of auctions. This week there were 573 auctions and 685 private sales. All these numbers are courtesy of the REIV.

Further to this, the "Spring" selling season doesn’t really kick in until October. With cold, wet weekends, and the AFL final series taking up most of September, we usually find the market builds up slowly to a rush in October.

With RBA interest rates almost guaranteed to drop this week, the banks will probably offer something within the next couple of weeks. There is a good chance a further rate cut in November would push the prices up before Christmas. The "autumn" selling season starting in late January, should be very strong. The lack of new home building approvals and the lower than average number of sales this year will leave buyers outweighing sellers. There is only one thing that can happen when demand out strips supply. Prices will go up. We do not even have to factor in the rental crisis.

With the slow demise of the numbers of properties selling under the hammer at auction and the increase in the necessity to negotiate "one on one" with vastly experienced real estate agents, there has never been a greater need than now to get professional assistance when buying a property.

Call us on (03) 9523 1054 and book a no obligation meeting to discuss how we can assist you.

Ian James

Monday August 25th

Another fairly lacklustre weekend for auctions saw the "Clearance Rate" slip to 63%. But there were still over 800 property sales in Melbourne last week. Just because auction numbers slip a little doesn't mean the market is shutting down. At the same time, the major banks are coming as close to saying they will cut rates if the Reserve Bank does. Investors and Owner occupiers are beginning to re enter the market. Purchasers are still looking for "the bargain of the century" and just as stubbornly vendors are still looking for a 20% increase on last years prices. The market must come to a balance.

And the market will balance. There are always a variety of factors which have an effect on the market. There are economic effects, such as interest rates, inflation, vacancy rates and confidence levels. There are social factors, such as migration - currently standing at 60,000 people a year entering Melbourne. And there are always political factors. I don't have enough room here to start talking politics. But the market will always go back to the fundamentals. SUPPLY VS DEMAND. Demand is increasing after a very low turnover throughout the first half of the year and the potential lowering of interest rates. If supply does not increase as well then prices will go up. Just as there will always be death and taxes, if supply is low and demand is high property prices will increase.

For any of you looking to get into the market over the next 12 - 18 months, the next three months will be crucial. Owner occupiers tend to try and purchase in October and November, in order to settle in before the new school year. Investors will have just got their tax returns after negatively gearing their last investment. This can nicely form their next deposit. There is also a normal increase in property sales and this should allow prospective purchasers some good choices.

The key to a good purchase, especially in a balancing market, is assessing the market value of the property as accurately as possible. There are three magic numbers to try to ascertain before negotiating. What's the property worth to you? What's the property worth to the average purchaser? (Market value) And finally, what is the lowest amount the vendor will accept? Have these three figures worked out as accurately as you can before you begin the all important negotiation. If you cannot work out these numbers, seek advice from a professional Buyers Agent. The vendor's agent is not allowed to assist you with these numbers. He is contractually obligated to get the most money out of you that he can. It does not make any difference to him if your financial institution values your purchase 20% below what you paid, but it will make a big difference to whether you can fund the purchase of the property. A small error in estimating the value up or down will mean the difference in overpaying by $20,000 or not buying the property.

Before you go and spend half a million dollars, consider paying someone for some advice. I don't know of anyone who would go to court without legal representation; even if it is a $5000 dispute with a neighbour. Our government chooses to try and curb some of the habits of selling agents and then say they are assisting people who are purchasing property. This will never be a successful. Selling agents cannot help the purchaser - that would be unlawful. Before you purchase your next property at least talk to us. The first meeting is free and without obligation.

Ian James

Monday August 18th

A clearance rate of 66% this weekend, whilst very well received, does not denote the almighty change in the market. The fact that thousands of people attended the Home Buyers Show certainly does. Thank you to all those who visited the JPP team over the weekend.

It was great to talk to so many people who are intending to come back into the market place sooner rather than later. The mix was fairly well spread over investors and owner occupiers. Thank you also to the hundreds of people who attended my question and answer sessions on Saturday and Sunday. Anybody wishing to hear me speak about negotiation and the Melbourne property market can go to our website and get booking details of the upcoming seminar at Milano's in Brighton on 25/8/2008

Throughout the weekend, whilst speaking to many people who are in the market to purchase, I noted a similar thought. Most have waited until they were sure the interest rates weren't going up any further. None were too sure whether they would come down due to the banks, but all were happy to take the plunge as of now. Most were comfortable with their own economic outlook and nearly all pointed to migration as the largest catalyst causing them to buy now.

With the newspapers full of problems with the public transport system, the roads are always clogged, our water supply is running out etc: it is relatively obvious our population is dramatically increasing and causing these events. This is spurring on home hunters to take the plunge.

Ian James

Monday August 11th

July has been the busiest month this year for JPP. Our enquiry levels are as high as they have been in twelve months. And its not just investors flooding into the market, the owner occupiers are back. We have purchased 15 properties on 10 days. These properties ranged from family homes in Melbourne's best suburbs to investors units in Inner Melbourne to some of the best properties in Geelong. Vendors are beginning to meet the market; owner occupiers and investors are flooding back to the market. I believe the spring season will be a very hectic time. The Reserve Bank and the bigger commercial banks will obviously play a pivotal role; but, Supply and Demand will run the market as it always does.

As the cold weather freezes the Dandenong Ranges, buyers are starting to brave the wintry conditions. Most reporters are telling us the clearance rate is down, the market prices are falling and the ocean levels are going to rise by 3 metres. The reality is agents are marketing properties well above what the market sees as fair value and accordingly the properties do not sell. As soon as the agent comes back to meet the market, the property will usually attract attention.

Those vendors, who understand that a well marketed property will usually perform better than one that has a poor marketing strategy, are selling their properties easily and usually well above asking price.

It is not the fault of the agents in asking for more than the property is worth; it is usually the vendors dreaming that their property has continued with another 20% rise since the start of the year. We all know this is just not the reality.

There has been a very handsome 14% increase on median house price between June 07 and June 08 and if we had this kind of growth year in year out like some of the better parts of Melbourne have done over the past 10 to 12 years, then I would be extremely happy.

We are continually seeing properties sold weeks after a failed auction, when the vendor finally begins to understand what their property is worth. However, those that are marketed accurately are attracting multiple bidders and stern competition which usually pushes the price up above expectation.

The RBA will drop interest rates; the major banks will certainly not raise them. At the Parliamentary inquiry into banking competition last week, ANZ's Mr Rowland likened a Reserve cut to a drop in price of one ingredient in a loaf of bread. What an absolute "crock". When funds were cheap overseas and the Australian economy began to heat up, the RBA began to raise interest rates. The banks immediately passed on every full rate rise. If it were such a miniscule ingredient, why were the full rate hikes passed on Mr Rowland?

Property prices have a natural floor, unlike stocks in a company. If the company is incredibly poorly run, it can go out of business and shares in this company are worthless. Property does not operate like this. The market demand is increasing on a daily basis. 1500 people a week are coming to Melbourne to live here. There are not enough rental properties now. When interest rates come down, the disparity between rent and loan repayments will become so close that renters will re-enter the property market.

Supply and Demand are the quintessential elements controlling property prices. Prices will eventually have nowhere else to go but UP!!!!!!!!

Ian James

Monday August 4th

To say the top end of the market is slow is a ludicrous statement. It is unlikely to get 20% over value at an auction now, but properties are flying when they are 5% over market. If you bought a piece of land for $900,000, built a $700,000 home on it and then in this market received an offer in excess of $2M, who wouldn't be happy? Obviously some people still think last years growth was normal. A property such as this was passed in with a reserve of $2.3M. On auction day they were offered $2.1M. Five weeks later the property sold for $2.1M.

There are plenty of properties like this across the entire market range. The clearance rates are showing us that you won't get absolutely unrealistic prices when you sell. But you will still get a good price. If vendors accepted realistically "good" prices then clearance rates would be back in the high 70% range.

Anybody waiting for the property market to see a drop of 10% in the next 12 months across the board is talking about another country. Owner occupiers are flooding back to the market. Our enquiry levels are higher than they have ever been. And not just with investors. The mass media has finally decided to tell everyone the Reserve Bank won't be lifting interest rates in the near future. In fact they immediately talk of massive reductions. Our politicians are already telling the banks they must pass on any RBA reductions. (Good one Mr Swan - Who is running the RBA - you?)

There are plenty of potential purchasers who have held off buying in the last six months. There are plenty of prospective vendors doing the same. That will change. It has to! At the start of the year I thought the market would start to move again in February and March 2009, I am now not so sure. I think we could see significant upward movement as early as October.

Plenty of Vendors have worked out they can get a "good" price for their property. Nobody could have expected last year's upward trends to continue indefinitely. And they haven't. The market will continue to rise, but at its normal 7%-10%, until everyone works out we have more people than accommodation and then the prices will sky rocket again.

If you have been thinking of buying a property there is an easy adage to remember: "The best time to purchase property is yesterday". Tomorrow I will give you exactly the same advice!

Ian James

Monday July 28th

The media usually catch on slowly. It's easier to sell papers whilst printing gloom and doom. THE PROPERTY MARKET IS ALIVE AND BREATHING.

After last weeks multiple bids at auction, I was engaged in 4 private sale negotiations last week. All of which had multiple potential buyers. One was purchased by another party who were willing to pay well above market value. We were successful with three others, with two at fair and reasonable prices, whilst one was very good buying.

Our enquiry levels which had increased to yearly highs through last month, mainly by investors, are now being matched with heightened enquiry from owner occupiers. The majority of people requesting help to purchase properties are looking for assistance in knowing what to pay.

Anyone can put their hand up at auction, and if yours is the last hand up you win. BUT HAVE YOU? If a good auctioneer pushes the price up to $900,000 and its not yet "on the market" and you put your hand up to "earn" the first right to negotiate; What are you going to do when you get inside? What happens if the property is only worth $850,000? What are the rules regarding negotiations after an auction?

If the agent is asking $650,000 and you bargain him down to $630,000, you will be feeling very happy until you find out the property is only worth $600,000.

Property prices are about to jump again. Rentals have increased in some areas by 15%+ this year so far. Most economists are in agreement the RBA is not about to raise interest rates any further and may even drop them closer to the end of the year. I always assumed February or March next year would be the next jump in the property market, I now think this will be sooner rather than later.

If you are thinking about buying property over the next 12 months, why don't you come in for a no obligation chat.

Ian James

Monday July 21st

For the fourth weekend in a row I have been to auctions with more than three people bidding at properties on the market. There is a strong return of both investors and owner occupiers to the market place. Some properties purchased over the weekend sold at prices that may not have been attained in December last year. If we look at the media comment from most agents they are saying the same thing.

The market is heating up again and it is due to two major factors. Firstly, good property has a habit of always going up over the long term. Even with the "drop" in the market this year most good properties will still show 12 month increases above 10%. The March 2008 Melbourne Median price still showed a rise of 14.4% for the year (REIV Statistics). Can the Stock Market show this?

Secondly, good property is scarce. Supply and demand factors are way out of sync. Many people have been putting off their house purchase for the past six months, to see what would happen. Now they are in a position where they must buy or rent and both of these are daunting tasks. If stock doesn't increase by October, to quote Paul Braddock, ANZ Banks chief economist "there will be the mother of all booms in the property market"

It is not easy to find good property, and when you do you have to be prepared to "fight" for it to a certain point. You need to set limits, but you also have to be realistic. Good property, will always be good property and whilst everyone thinks the market is in the doldrums, smart people are buying these good properties.

Always do your research, always have a plan. Use a professional Real Estate Agent that is working specifically for you. Unfortunately, your accountant, your loan broker, your valuer or your best mate will not be able to assess and negotiate as well as a seasoned professional Real Estate Agent. Buying property in this market without using a Buyer Advocate is fraught with danger. You need to know what to buy, when to buy and how much to pay. You need to be able to negotiate with a seasoned professional.

Get an Expert on your side

Ian James

Monday July 14th

The Herald Sun Money section has thrown out the "R" word. Recession means an economic slowdown, evidenced by two consecutive quarters of negative growth. We have the Reserve Bank on one hand holding interest rates where they are, whilst we have banks arbitrarily increasing them to protect their profits. We have speculators in the market place buying up oil and sending the prices through the roof, regardless of the fact the supply has remained constant, and in fact the northern hemisphere has lowered usage; probably because of the price increase. The lending for new building is down approx 20% and the Master Builders Association believes the new home market will be in the doldrums for the next 12 - 18 months at least. This is while the State Government is telling us we will need to build an additional 380,000 new dwellings to house the highest level of immigration we have seen in 20 years.

There are so many contradictions on the economic landscape that it is difficult for anyone to work out what will happen over the next few years. It is a time when most predictions begin to follow historical precedent. We know that over the past 25 years property values in Melbourne's suburbs have grown between 10% and 12% where the amenities are good, where public transport is evident and where Owner occupiers prefer to live. We need not even mention the fact that the vacancy rate for rentals is less than 1%. People have to live somewhere!!!!

There will always be sales of properties, either because the vendor is economically forced to sell (loss of job, interest rates raised too high, cost of living out weighing income) or socially forced to sell (births, deaths, marriages, divorces, employment relocation). Obviously the motivation of the vendor can play a part in what the property will finally sell for, but either way the market is usually met.

Buying whilst the market is flat and holding until it picks up again is the strategy that most long term property investors will tell you almost never fails. It does still come down to buying the right property at the right price in the right time.

Call us for a no obligation meeting to discuss your options

Ian James

Monday July 7th

Why aren't the property market median prices in free fall?

We are in the depths of winter, the middle of the school holidays and a free falling world stock market!! The world financial experts are talking about recessions, Hyundai are talking about car sales dropping, the climate is changing and the Murray River is drying up. Yet property prices have remained remarkably resilient.

We know they have dropped a little from last year, we know that bidders are not losing their heads at auctions, but we also know that whilst the clearance rate for auctions has remained fairly steady in the 60% range, and the number of private sales has increased. In fact, since early March, when the turnover was up closer to 1300-1400 sales per week, we are now seeing consistent turnover figures in the mid to high 900's. Sales were down slightly over last years figures this week because it wasn't school holidays this time last year.

Property prices are staying buoyant and will continue to do so even in the face of adversity in other financial sectors. Even if banks put rates up independently, property prices within Melbourne's more established suburbs will continue to hold their value and in the near future resume their upward trend. Vacancy rates are at their lowest numbers on record, people coming to Melbourne are at a twenty year high. Ever heard of supply & demand?

The market is poised to take off again as early as the Spring season. The ANZ bank has said "the growing housing shortage is setting Australia up for the 'mother of all' housing booms" and Commonwealth Banks' Securities chief equities economist Craig James said buyers had fled the property market because of high interest rates. "With population growing at the fastest rate in 18 years, we simply should be building more homes, not less," he said. "Interest rate hikes have spooked investors and budding owner-occupiers. Investors are putting their money in the bank and people are staying in the rental market longer. But the situation is unsustainable."

I know property is hard to get started in, but even a one bedroom apartment for $200,000 in areas well serviced by good public transport and walking distance to cafes and shops, will appreciate over time and get your property portfolio started. For those of you that are struggling to save for your first home, think about buying an investment property first, leasing it out to assist in mortgage repayments, get some capital growth and then use it as a deposit on your own home.

For those of you who have been burnt in the stock market have a think about direct property investment. Talk to your financial planner or call us today to organise a meeting to see if we can help you. Buying property is not difficult if you have the right team on your side.

Ian James

Monday June 30th

Clearance rates this week differ in the two newspapers; maybe not all properties being passed in or sold are getting reported!!
The Age with 477 Auctions, Clearance rate 65%
The Herald Sun with 477 Auctions, Clearance rate 62%

Either way, no big shock. School Holidays, Petrol Prices, Tax Time could all be weighing in on these figures.

This time last year there were 614 Auctions with a clearance rate of 85%. More buyers, more choice.

The Range Stats below show the Higher end is struggling with clearance rates at 45% in the $1m - $2m bracket; whereas the $300,000 - $400,000 is still moving along at 70%, making good negotiating the key to a good buy. More reason to get an expert on your side.

Lets see what the next week brings for the start of the new financial year.

Sam James

Monday June 23rd

With clearance rates well and truly established in the low 60% range, we turn our focus on which properties are worth buying. Most people who do not have to sell at the moment - won't be. Those vendors that are putting their properties on the market are usually doing so because they are moving due to family or work commitments, or they are simply selling then buying (when exchanging properties it doesn't matter what market we are in - what you lose on one you gain on the other side).

What this generally means is supply is low but bargains can be there if the property is good. As an investor the cheapest property in the area is not necessarily the best long term investment. However, buying whilst the market is depressed means you have the greatest chance of capital growth as the market takes off again. It is your choice of property that will be the key.

With an extra million people due into Melbourne over the next 12 years, property prices should rise very well. Although most of the 380,000 new dwellings that will be required will be built in new estate areas, the majority of the capital growth will probably be much closer to the CBD. Fuel prices are also beginning to take their toll on properties 25km or more from the CBD.

Areas that are close to the CBD with excellent transport facilities, good local cafes and restaurants, easy access to hospitals, major shopping centres and places to walk the dog or play in the park are going to be highly sought after. Access to educational facilities and community infrastructure are also components of highly sought after locations. Refer to our article on property selection in our "how to" series.

The choices you make now as an owner occupier or an investor will make a difference as to your asset position in the future. Why don't you call for a no obligation meeting and come in an discuss some of the options that are available for home buyers.

Ian James

Monday June 16th

After the long weekend's lacklustre turnover, we were again shown that the market is not dead and buried. 67% clearance rate on 600 auctions is better than most of the results of the previous three months. The third week in March was the last time the clearance rate was above this.

It is becoming more obvious that assessing a property accurately is a key ingredient to buying well. Three people fought out a spirited auction in McKinnon on Sunday lifting the final price over reserve. The house was well located, offering excellent attributes of good light, accommodation and entertainment areas and was very well finished. The property was marketed at the right price throughout the campaign and therefore reached its objective: selling at a good price for the vendor.

Conversely, when we see offers 15% over market value for properties and these offers are declined, we can see that some vendors are still in a state of denial regarding the market, and others are simply waiting for the ill-informed to appear.

Buyers who are borrowing money from the banks and who are reliant on a reasonable valuation must take this into account when placing offers. Even at auction, a Valuer does not have to value the property at the final selling price. This means if you are borrowing say 80% of valuation from the bank and you pay $600,000, then you are expecting to borrow $480,000 and this is no doubt what you have done your figures on. But, if the bank values the property at $550,000 then they will only lend you $440,000. Where will you get the other $40,000 from?

It pays to get a professional to assist you when buying a home. When choosing a Buyers Advocate, ask if they sell any properties, or do they accept any commission sharing arrangements with any Real Estate Agents. All we do is assist our clients to buy property.

Ian James

Tuesday June 10th

A 61% clearance rate over the long weekend from only 190 offerings is fairly symptomatic of the current market. There were also nearly 500 private sales - this is more encouraging. We are still seeing reasonable turnover in the market place, but much of it now is dependent on good negotiation and assessment skills.

Even good agents who consistently work in the market can be fooled by fickle purchasers. A Northern suburbs flat that should have had excellent competition by multiple investors failed to receive a single bid on Saturday, even though the agent thought he had multiple interest. However, I have no doubt this property will probably sell very quickly if the vendors have a reasonable expectation.

No matter the state of the market, people will be born, pass away, move, get married or simply want a change of scenery. Although we are in a "buyers" market, our enquiry levels of the past three months show us that not only are investors flooding back to the market, owner occupiers are also creeping back in.

Petrol prices will rise, interest rates will go up and down and steady, there will be higher taxes and governments promising us lower taxes, but one thing is sure, people in Australia will always want to buy property. We are expecting one million new residents over the next 12 years and these people will need a further 380,000 dwellings to house them. In my opinion long term capital growth for property is as close to a forgone conclusion as you can get.

Ian James

Monday June 2nd

Another week of 64% clearance rates. Another week of agents saying that it is impossible to pick this market. Most media outlets have moved to call the market a “Buyers Market” and to some extent I agree with this. Most agents, however will keep telling us the market is fickle and that good properties are still commanding higher prices.

All of the above statements are true!!

The key ingredient here is the type of property that you are looking to purchase. Good properties do sell very well. These properties need to be taken off the market early in the campaign for a fair and reasonable price. Some properties, that are not presented well and may need a fair amount of work, are currently not selling very well.

A case in point. We looked at a property in Prahran that was offered at auction and encountered no bids. It was a well located period home with very good “bones” but a little tired and in need of some tender loving care. The property was offered at $850k, $815K then $799k. We purchased this property in the $750's. An apartment that we looked at in Glenhuntly on the weekend was being offered at $330 - $360k. This was a two bedroom apartment with lock up garage in a small block, easy walking distance to the station. We told our client this property was an excellent prospective investment and should sell between $400 - $410k. It sold for $407K.

If you are in the market to buy a property today, you should speak to a professional buying Agent who is on your side. We are currently in a market that would make it very easy for the ill informed to easily pay 10% more than you would need to, and for the investors out there, you could easily miss very good opportunities simply because they are not quoted accurately.

Ian James

Monday 26th May

I don't think anyone would disagree when I say; we are moving into a totally new era in Real Estate. Already we can see the two distinctly emerging trends in areas of Melbourne and Sydney. We can see that a proportion of the suburbs will show growth patterns ranging from 10%-15% per annum over a 10 – 20 year period, whilst others will show 6%-10% for a similar time frame. Property prices are advertised at numbers that have little or no relevance to the final price or worse still, to the market value. The clearance rate has levelled out in the low 60% range and all the commentators are agreed we have moved into a buyers market. Buyers now need to get better representation and assistance.

And the need for better representation starts here:

If you have to go to court, you take a solicitor. If your car breaks down you go to a mechanic. Before most people put in their tax returns they speak to an accountant or a financial planner. But when people buy a house they only speak to a selling agent. Or someone who says they buy and sell property.

I cannot think of any other industry where the government does not legislate to attempt to protect both parties as well as they can. Financially, we do our taxes which the ATO scrutinise. The tax man is the first to suggest getting good advice from an accountant. When we elect a government, we are told the best way to get good government is to have a “very good” opposition. If you get arrested, by law, you are “read your rights”. Why is it that when you are making the largest single purchase in your life, you are not told what your rights are and what is even worse, the only information you can usually get comes from the other teams representative.

If you went to court and represented yourself against a Queens Counsel the convening magistrate would counsel you regarding your lack of experience and judgement and suggest you get representation. Why does the governing body in Victorian Real Estate fail to do the same?

Consumer Affairs Victoria continues to publish names of agents that have done the wrong thing; they attempt to make changes to law and legislation to stop good selling agents doing their jobs. SELLING PROPERTY! They are doing everything they perceive they can and for this I applaud them, but, when will they understand they simply need to balance the ledger? We need a strong robust Buyer Advocacy fraternity.

Selling agents can then be free to do as they wish, within the law, in order to get the best price for their client; the vendor. Buying agents should be just that Buying Agents. Selling agents should be just that Selling Agents. If you were selling your property with an agent who was assisting and taking a fee for assisting people to buy, and they could not show them your property (It is illegal to act for more than one principal) wouldn't you use an agent that exclusively sells and therefore doesn't have the conflict.

Conversely, Buyer Advocates who do any type of Vendor Advocacy open themselves to this exact dilemma. If anyone of their buying clients is in any way interested in a property they are receiving a fee (or a commission from the selling agent), they are trapped in a moral and ethical dilemma. They cannot assist their buying client whilst taking money from the seller (that is illegal), they cannot simply say to the vendor, I won't take a fee from you, and then they are working solely for the buyer, whilst having intimate knowledge of exactly what the vendors want. Whichever way the go they are trapped into an impossible dilemma unless you don't allow the situation to occur. BUYERS BUY and SELLERS SELL.

Next time you are thinking of buying a home, ask your advisor does he only help buyers or does he sell property as well.

Ian James

Monday 19th May

With the clearance rate at 63% again this week, we can see ourselves settling in for the winter sales season. This tends to be a time where volumes become lower, and negotiations become far more intense. If supply drops off whilst demand stays level, then pressure occurs in certain segments of the market.

Investors have well and truly come into the market place as there are more distressed sales of property. Your choice regarding style and location of property will be paramount in your success as a property investor.

There is much talk of the government trying to coax institutional investors in to offering low cost, affordable housing to those people who need assistance. This is not being offered to the average Mum and Dad investor, who by the way own 80% of the rental properties. We also read everyday from the “property advisors” spruiking positive geared property is selling well.

I am not a financial advisor; I only assist people once they have made the decision to have some direct property in their investment portfolio. Personally, I agree with this, but each person should seek the advice of a reputable financial planning professional. There are two main ingredients in any investment; Yield and Capital Growth. In layman's terms yield is the rent you receive each week from the tenant and Capital Growth is the difference between what you purchased the property for and what you sold it for. (Or what the property is worth today).

For the purposes of this comment, I will be very simplistic. The average property is seen as “negatively geared” if your interest on the mortgage and other costs (rates, insurance, body corp. etc, called outgoings) is greater than the income you receive from the tenants. Because the government sees this as a net loss, it is treated like any business loss and you can reduce your taxable income because of this. When the tenants' rent outweighs the interest and outgoings it is deemed positively geared and these funds will be added to whatever other earnings you have and taxed accordingly.

Most areas where the capital growth rates tend to be at the higher levels (the more established suburbs of major cities, where there is good infrastructure) unfortunately usually have the lowest yield (%return). The opposite is also true. Where the capital growth is limited because of distance to infrastructure and not as many people wanting to live there, the rental return tends to be higher.

So which is better? Higher yield and lower capital growth or vice versa? If you can afford to negatively gear (where you will need to contribute out of your own pocket each month to make up the shortfall in interest) and you achieve good capital growth, I believe this will offer the greatest benefit if you wish to grow your property portfolio. If you have limited capital growth then the only way to get the deposit for your next property is to save, rather than use the equity (capital growth) from your current investment property.

Go to our “how to” series on our website to read more about Yield vs. Capital Growth in the coming weeks.

Ian James

Monday 12th May

Hallelujah!! The whole market has turned around now we have a clearance rate of 64%, which as one paper described it as 65%. What's a single percentage point between friends? But it is great to see that the whole property market is now safe and that the world economy is recovering! I am sure we will find the answer to how the Universe started before next weeks figures are released!!!!!

Doesn't anyone have anything useful to write? A few weeks ago a 67% clearance rate sounded the “death knell” for the property market as we know it. Yet a 64% clearance now signals the revival??

Last week it was announced that in the first quarter of this year Brisbane and Perth median house prices had surpassed Melbourne and our market was in for a downturn. Let's look at a little more data. In April, there was a 29% increase in new home loans in Melbourne. There was a decline of 4% and 5% in both Perth and Brisbane. Melbourne is still welcoming more and more people to our city and even the State Government is looking at ways to assist people to buy smaller properties.

Regardless of “one off” statistical data, Melbourne property prices have to increase over the long term as a simple function of “supply vs demand”. Whether the market will be flat for a week, a month or a quarter is unknown, but if we look at short term time frames in the property market, then we need to look over five years. The state government are mooting a new scheme to try to persuade people to buy smaller houses in the metro area. Changing the density of certain areas of the city will assist people in the short term but in the long term property prices will continue to rise, just like most other capital cities around the world.

We see today the release of new figures that our farmers are starting to come back to some financial reward. This will in turn mean that rural areas will again have a strengthening income. This in turn will make buying and renting in rural areas harder, forcing more people back to the city. Our State government is trying to assist people into these rural areas with changes to the building grants for first home buyers.

What is encouraging to potential purchasers in the market place, is the current figures for numbers of private sales. Whenever a property is up for private sale, is purchased before auction, after auction or is passed in and then negotiated, the whole deal must be looked at. Whether there be negotiations for special conditions, special terms, vacant possession or receipts of rents and profits, a good negotiator will do so much better than simply going to auction and sticking his hand in the air.

If you require any help negotiating a property transaction please feel free to contact us on 9523 1054 or read through our website at the “how to” series.

Ian James

Monday 5th May

As I am sure everyone is thinking 60% clearance rates means the end of the property market as most people understand it. With the quarterly median price across Melbourne falling 8.6% from the December Quarter to the March Quarter, it is obvious we need to sell all our property, all our shares, take our money out of banks that are going bankrupt and place all our money under the mattress or bury it in the back yard. If we read everything that is currently being written then we may be thinking of some of these things.

Let's look at some numbers that span a reasonable timeframe. The Valuer General gives us increases every year going back to 1999, with an average increase across the whole of the metropolitan region of 10.5% pa. This does not include the 2006 – 2007 figures as they are not yet available but we know they will substantially increase this average. Within these years there have been times of almost no growth such as 2004 – 6% and 2005 - 3%, and there were some excellent years of 2001 – 18% and 2002 – 16%.

In other words, trying to justify the market movement and where it is headed by looking at one quarter's movement is absurd. We know that Melbourne has now “slipped” to the fourth highest median priced capital city behind Sydney, Brisbane and Perth. Adelaide and Hobart still trail Melbourne. If we look at the current housing shortage, the fact that we have more people coming into our fair city than any other and the fact that our median prices are the fourth lowest, it is fairly obvious that the “downward” trend of the past three months cannot continue for very long.

It is true that interest rates and the world economy are in turmoil. Europe and the Americas are slowing whilst the Asia Pacific region is going from strength to strength. China's property boom may end up with a closing of the market to foreign investment. If we assume the interest rates are not going to continue to increase and the government (both federal and state) give us a favourable budget, then we must assume that further investment in the “Australian Dream” of owning your own property will continue. This will compound the distinct lack of supply in Melbourne and ultimately raise prices.

As far as individual suburbs are concerned, in any major shift in the market, the suburbs with a median furthest away from the overall Melbourne median will be the most volatile. This means that they will be the first to go down in a downturn, but will also be the first to go up in a turn around. Suburbs that show good infrastructure, good job prospects, good transport and recreational facilities will continue to outshine the others. There will be some good buys in the next few months, with some excellent negotiation opportunities, however, do not wait too long. The market will turn up again, AND WITHOUT MUCH NOTICE!!!

Ian James

Monday 28th April

Total Auctions	358
Passed In	116
Passed in after Vendor's Bid	83
Sold Before Auction	49
Sold at Auction	187
Sold after Auction	6
Clearance Rate	68%
Total Private Sales	451

The long weekend brought us another quiet weekend in the property market. With only 358 auctions on the weekend, the 68% clearance rate doesn't mean all that much. But going forward we have now finished with all the long weekends, Easter & school holidays until later in the year, and we can see some good clear periods that Real Estate Agents like so much to market property in. There will be many people feeling the banks interest increases as well as those from the Reserve Bank.

Investors are moving back in to the market place very strongly, with good solid properties on good land located in solid positions, surrounded by infrastructure such as parks, schools, public transport and cafes are selling extremely well. Investors also have other ways to fund investment properties with their super funds.

Over the coming months we will see how much the US led credit crunch will lead our property market. In my opinion it will not be that much. We are still in the worst situation for accessible rental properties that we have seen in recent memory. Unemployment is still very low and most people have made very good equity in their properties over the past 3 years. We should also mention there has been no slow down of people moving into Melbourne. We still have that little problem of one million people expected here 10 years earlier than planned.

When looking at property investment, short term is 5 years, medium term is 10 years and long term is longer than 10 years. With this many people needing accommodation in the best city in the world to live, whatever short term movements in property prices occur, they will be short lived.

Ian James

Monday 21st April

After another huge weekend of almost 1100 auctions and 644 private sales recorded by the REIV, we still had a clearance rate in the 60% range. This is showing us that although the market has well and truly turned from last year, good property that is well priced still sells, and sells easily.

We no longer see three or four people bidding for every property. When we are negotiating face to face with an agent, we do not assume there is another party waiting in the wings to pounce if we do not agree to the vendor's agent's price. In fact the agents do not tend to play the card: “I have another buyer who will pay that much - you need to give me more”. Or even the throw away line that everyone has heard as soon as they show interest: “I have another offer that will probably buy the house today – you had better give me your best offer”. These lines no longer sit very well, even with die hard agents.

On Saturday at one auction that I attended, when the property was passed in to us the lead agent immediately made a bee line for the other interested party. Now normally I would have raised quite a commotion, because it was fairly obvious he was trying to negotiate with the other party in order to put me “over a barrel”. This is a very common technique used by agents to give themselves, both an unfair and arguably, illegal, advantage. (The agent represents during the auction that they will FIRST negotiate with the highest bidder.) But, in Saturday's situation, whilst I was inside speaking to another of the agents (who was not the negotiator) our second team member watched the exchange between the lead negotiator (who should have been in with me) talking to the other interested party. It was the lead negotiator that came away with his shoulders dropped and the other party walked off and left the area. When my partner called me to tell me this, it was the most valuable piece of information to allow me to negotiate from a position of immeasurable strength. Needless to say, we bought the property on the day and our clients were extremely happy with the outcome.

Property assessment and negotiation have become as important as property selection. Last year, negotiation was all about securing the property at a fair price, now it is about both securing the property and paying a “good” price. The market will not remain balanced for long. It will turn back to a sellers market probably before the end of the year, as investors flood back to property after being mauled in the stock market. The old adage, “Make hay while the sun shines” is very apt at the present time.

Monday 14th April

The auction clearance results over the weekend were exactly what most professional Real Estate Agents expected. Clearance rates were again in the 60's and with next weekend's potential 1300 auctions the rate will probably drop again. Last year with clearances regularly in the 80% range, buying at auction was simple for people who had money to burn; “keep bidding until you are the last one with your hand up". This year that has all changed.

Last year, if you had no idea what you were doing you could simply watch the auction and compete with other potential buyers. This year things are different. If there are no other bidders, which will happen at about a third of all auctions, then you had better have a very good idea of what the property is worth. If you are too high you will overpay and if you are too low then you won't get what might be a good property. EVEN GOOD PROPERTIES CAN PASS IN AT AUCTION. Assessment is the key preparation to be able to negotiate, whilst experience is necessary to close the deal.

When the property market is as finely balanced as it is now, in other words it is not a sellers market like last year nor is it a buyers market, then whichever team has the best negotiator will usually fair the best after the auction has been passed in. The auctioneer, whom you may have met or had a chat to before the auction, is quite often the agency principal, or at the very least an extremely experienced Real Estate Agent. It is his or her job to negotiate the highest price for his client the vendor. These agents are usually involved in at least a couple of negotiations every week and so they were probably involved in over one hundred property negotiations last year. How many were you involved in?

When people sell a property the vast majority will pay up to 3% of the purchase price to hire a professional negotiator to act for them. Why do you think they do this? Marketing a property is not that difficult nor is it very expensive now we have the internet. The majority of the fee paid to a selling agent is for their expertise in appraising and negotiating a property. If you are considering buying a property and you did not negotiate at least a couple of hundred properties last year, you should think about speaking with a buyers advocate.

A buyers advocate will not only save you money immediately by negotiating the property better than you, but also and more importantly assisting you in choosing the best property, taking into account both your needs and also the potential for long term capital growth. These savings will far outweigh their fees in the same way the selling agents do.

Ian James

Monday 7th April

Again last weekend we saw interest in auctions waning. Clearance rates including all properties sold before and after auctions only reached the mid 60% range, although the better properties sold well and with multiple bidding. We are now back to the times where selling agents must prove competition. Most agents will agree there is usually one buyer for every property with only the very best having multiple buyers.

If we look at the breakdown of clearance rates on the weekend we can see the highest rates were in the lower end of the market. This can mean either the vendors at this level are keener to sell, or alternatively the investors are moving into this end of the market. I think it is a mixture of both. There should be some good properties at good prices for the investor that does his homework this year.

Something else to think about as an investor: Mortgage brokers are now more valuable than ever. Last year most of the bank rates were similar. The deals they offered may be slightly different but the rates were similar. As the Reserve Bank moved, so did the majors and soon after the minor banks followed. This is not the case at the moment. All the banks seem to be “jockeying for position” independently of each other and many of their rates differ depending on individual circumstances. It would be a good idea to have a mortgage broker give you a quote as they can quickly look over all the banks' options at the same time.

If you would like a referral to a mortgage broker, please do not hesitate to call. We receive no commissions based on our recommendations. We only recommend those brokers that have done good work for our clients or our staff in the past.

Ian James

Monday 31st March

The market has now well and truly corrected!! The balance has been restored to the market place, being that we now see approximately one buyer for one person selling. Last year, there were usually three buyers for every property being sold and this is why auctions did so well. Until the market settles, probably sometime later this year, then good negotiations will be the key to not only getting a good price, but also being able to secure the property in a timely fashion.

Do you know what to do if the Real Estate agent calls you on the Thursday night before auction and says, “We have an offer that is enough to purchase the property you are considering. It will be sold tonight, would you like to still purchase it.” This will happen more and more often this year. We have already had agents ringing us to ask if we would do a deal prior to auction. A 63% clearance rate includes all properties sold before auction, sold after auction and passed in and sold on the day. This can make the real rate of “sold under the hammer” closer to one in five or 20%. Negotiation will play a far greater role this year in the property purchases than it did last year.

Do you know what to do when the auctioneer passes the property in on your bid? Do you understand that the auction is now over and that the deal will be concluded via private treaty? The auctioneer is no longer simply an orator accepting bids from people who will outbid each other to win the property. He has now changed his persona to a supremely experienced negotiator who is not working for you. You have now let him know that you want the property enough to be the highest bidder and he will now attempt to do the best possible deal he can. No matter how good a negotiator you are in the business you are in, I would suggest the auctioneer would be equivalent to a “Queens Counsel” and you are there representing yourself. He has probably negotiated a couple of hundred properties last year. How many did you negotiate last year?

Vendors do not sell a property based solely on price. It is the overall deal that counts. What is the settlement period, what is the deposit amount, is there a finance clause, is the contract subject to a building inspection, are there outstanding matters of agreement that need to be resolved or is it a simple contract note that everyone understands.

Vendors will also have accurate information regarding the market. Information only Real Estate Agents, Valuers or anyone in the property industry has access to. Just having some Valuer General Data from a $50 report that is usually 3-4 months old (Valuer General Data is updated at settlement not purchase) is not going to give you similar information to that, which the real estate agent has given the vendor. If you know what this information is, and you analyse it correctly, then you will be able to have a very good educated guess at the bottom figure the vendor is likely to agree to. Information is the quintessential element in be able to negotiate from strength.

If you are considering buying property in the next six months, or you have tried to purchase unsuccessfully, why don't you give our office a call. We offer a no obligation first meeting to anyone who is interested in buying property. I guarantee it will be the most enlightening hour you will spend in your entire property search.

Ian James

Tuesday 18th March

As predicted the reported clearance rate fell below 70% for the second week in a row and don't hold your breath for any relevant data next week as it is Easter. Has the property market taken a nose dive, is it following the Dow Jones index. NO!

There were over 1400 scheduled auctions for last weekend. A new record for Melbourne. We know that supply and demand are the quintessential ingredients driving prices and where there is an abnormal supply there needs to be an abnormal demand to maintain the “Status Quo”. We had a normal demand for Saturday. Many good properties sold well and many not so good, didn't sell at all. This is normal behaviour for the Melbourne property market. It was simply intensified because so many properties were on the market on one day. This is simply a matter of timing for Easter and Labour day making it the only main selling day for March.

Is the market the same as it was four weeks ago? NO! There are enough media outlets breathing forth gloom and doom. The Reserve Bank may lift interest rates again but they may not. What would happen if they dropped the rates? Everyone from the Prime Minister to David Koch on Sunrise has said the Reserve Bank has gone too far. I am not a world renowned economist. I don't know if they have or they haven't. But I do know if they level out the interest rate or, actually drop the rate, then the property market will take off, rapidly mimicking the growth of last year.

Buyers have a small window of opportunity whilst vendors have become a little “uncomfortable”. There may be some good properties to be had over the next few months and how long that continues for will depend on external pressures on our economy and how the media reports it.

Ian James

Tuesday 11th March

A 67% clearance rate on any normal weekend may justify some thoughts as to where the market is going. But there were only 145 properties passed in. This is less than half of the number passed in the previous week. Only 145 people failed to sell their properties on the weekend. Next weekend there are over 1400 auctions scheduled. Show me a clearance rate below 70% then and there will be plenty of worried vendors. With Easter the following weekend, we expect plenty of vendors and Agents will be ready to negotiate a lot more readily than has previously been the case.

Statistics are fantastic. You can make them say whatever you want. As far as increases in Melbourne Median price we have three sets of figures we can look at. The increase in Median house price for the December Quarter 2007 compared to that of 2006 was 23.4% whilst the movement from the previous quarter was a staggering 12.8% (so movement for a year based on this number would be 51.2%: 12.8% x 4) whilst the yearly median house prices 2006 to 2007 was only 12.6%. In other words, what would you like to hear: house prices moved 12.6%, 23.4% or the equivalent of 51.2%?

Choosing which properties to buy is not a matter a statistically analysing the market and then making your purchase. You do not buy “the average” property. You do not buy “the median” property. There is no doubt we need to look at data, but the key is knowing which data is useful. It is knowing what groups of data contradict, or enhance your analysis. Knowing how to break down the information into useable chunks is important.

Whilst an area we have bought many properties in has shown a yearly movement of only 16%, the area within Seaford where we have bought several properties has shown prices growing from around $300k to around $380k over 12 months and then further movement up to the low $400's within the last 4 months. We also know that Eastlink will open shortly and therefore a further rise throughout the area is probable.

History suggest that properties over very long periods of time usually appreciate between 7% and 10% pa. That means they double in value every 7-10 years. To be an average, this means there will be some areas above this mark and some below. Properties that consistently appreciate 10% - 15%pa are what we target as good capital growth prospects.

There will be a lot more properties coming onto the market in the coming months and the good properties will still sell very well and even quicker than they did last year.

Ian James

Monday 3rd March

Clearance rates are not the only market indicator, although the general public could not be blamed for thinking so. Stock supply, interest rates, property presentation and how the sales campaign is handled also plays a big part the sales process.

Properties that are well located, well presented and under quoted will always “exceed” public expectations. They will not, however, usually exceed the “professionals” expectations. We read in the papers of properties that were quoted at $750,000 - $820,000 and they achieve results of $950,000 or higher. What the public does not see or understand is the fact there are three or four comparable sales showing us that mid $900's has already been paid for this type of property and that the professional agent already knows it will go well into this range. BUT IT LOOKS GOOD TO SEE THE AGENCY NAME IN THE PAPER GETTING “RECORD” RESULTS. It is not to say that what the agency is doing is wrong. It is the aim of the Real Estate agent to get the highest possible price for the property whilst doing everything legally and morally correct.

When buying property you are entering into a legally binding agreement. This agreement is negotiated by the two parties, agreed to, and then formalised into a Contract of Sale. Both the vendor and the purchaser try to do the best deal they can. But! The process is so one sided as to be almost illegal. The vendor is paying to have a professional negotiator represent them. By law he must be licensed and by definition, understand all the intricacies of a property transaction. A good Real Estate agent will be involved in 50 – 100 negotiations per year. The average buyer will have either no experience or maybe “Dad” who has bought a house before and knows a “thing or two.”

If two parties went to court and one was represented by Queen's Counsel and the other was representing themselves, with obviously no formal training, the Judge or mediator presiding would strenuously recommend they seek competent counsel. Our government has set up “Legal Aid” to alleviate this issue. But what do they do with Real Estate: Nothing!! Trying to set rules for the vendors' representative to in any way assist the purchaser leaves the Real Estate Agent in an impossible situation. If the government is serious about levelling the playing field they need to assist purchasers not attempt to hamstring Vendors agents.

Buyer Advocates are not new. They are used throughout the world in the USA, UK and Europe. They are beginning to become prevalent throughout Asia and the Middle East. Buyer Advocates must be licensed in exactly the same way as Real Estate Agents. They act for the Purchaser in the same way a Real Estate Agent represents the vendor.

Buying a property correctly is about assembling a team of advisors to assist you. Advice is required in areas such as: finance, legal, value, negotiations and then some advice about choosing the property that is right for you. A competent buyers agent can do or organise all of these people.

Ian James

Monday 25th February

People buy and sell properties everyday. Whether it be a buyers market or a sellers market. Vendors still want to sell their properties and yesterday morning will have woken to the headlines in the Herald Sun “Home Buyers Bolt” and The Age “Is the boom over?” Are property prices going to start a free fall? Is the median price going to drop between 20% and 30% this year? OF COURSE NOT!

Vendors will realise they can not ask “over the top” prices for their properties. Purchasers should now become more discerning. Some purchasers bought property last year and didn't care what they paid. Doesn't every property go up by 30% every year? OF COURSE NOT!

This year smart investors and owner occupiers alike will move in to buy good property at fair and reasonable prices. Good Properties are houses that are well located, in the median to upper quartile of the suburb, are well built and maintain most of the attributes that a larger segment of the market find appealing.

After choosing the “right” property then you need to assess it correctly. Listening to the Real Estate Agent and using only his information for this task can be fatal. The way an agent quotes or gives you certain examples of previously sold properties which are bias toward making you think the property is worth more than you should pay is not illegal or immoral. It is not even “under-handed.” THAT'S HIS JOB. If you were paying somebody to sell your home would you want them to assist the purchaser, who is not paying them, or would you prefer they attempted to do the job they were hired to do: SELL THE PROPERTY AT THE HIGHEST POSSIBLE PRICE. Any purchaser wanting to assess a property correctly should get professional advice from somebody with their interests in mind.

Once you have located and assessed a property, and it suits your needs, you then need to negotiate with a professional negotiator who is working for the vendor. If you have assessed the property correctly, then you can deal from strength. If the market is a little shaky and the vendor a little nervous then putting in a legally binding offer before auction at a price that is both fair and reasonable should get the vendors representative talking to you in an amicable fashion. Putting in an offer that is ludicrously low will almost never buy the property before auction. Human psychology shows us that people need to “lose” before they will lower their expectations. In other words, failure at auction will help lower the price but it increases your risk of purchasing the property.

It looks like we will have a short window of opportunity to push some vendors who may be a little nervous of impending interest rate hikes and now the prospect that everyone will desert the property market into some better deals for the purchasers. Until the collective media writes a banner headline “boom time for Melbourne Property” or the like, negotiations for property will move back to an even keel not really favouring either party.

Ian James

Monday 18th February

We have just seen the results of the first weekend's auctions that carry some importance. Next weekend has over 1100 scheduled auctions. We can take the results from last weekend and analyse them effectively as there were over 600 properties on the market. We know from the results published in the Herald Sun that less than half the properties offered for Auction on the weekend were eventually sold. Even though clearance rates talk about 72% this includes all properties sold before, sold after and passed-in then negotiated on the day. The amount sold under the hammer would probably be closer to 25% - 30%.

Prices over the weekend were exactly as expected. Those properties with excellent location, amenities, good accommodation, a little bit or a lot of “WOW” and priced and quoted correctly sold very well. For example a 3 bedroom unit in Lorranne Street Bentleigh was quoted $570k - $630K and was well built, presented well and is in a fantastic location. We had estimated $720 - $730K to our client and it sold $735K. It was “on the market” at $650k. This was slightly above expectation and although there were three other bidders we counselled our client to pass and move on to the next one.
Alternatively a 4 bedroom renovated family home in Chapel Road Moorabbin on 820sqm was quoted $600k - $660k sold for $646K. Comparable sales last year are around this price and if it were this time last year that would have meant a significant jump in price.

Agents are asking us to do deals in some instances and others are rejecting our offers. Next weekends results will either signal another year of unprecedented growth or a tempering of the market. We will see a lot of stock on the market in the new estate areas but they will again most likely be facing single digit capital growth. This means they are struggling to match CPI. There will also be more total stock come onto the market as people try to cash in on growth over the last few years. GOOD PROPERTY WILL STILL SELL EXTREMELY WELL BUT AVERAGE PROPERTY WILL NOT. Property selection, assessment and negotiation will become far more crucial than ever before.

Melbourne has about 1000 people per week moving into the most liveable city in the world. There is a finite amount of property on the market and if we look at every major city on the planet, all good property goes up, average property has average growth and poor choices can cost you a lot of money. Professional assistance should be sought by all prospective property purchasers this year.

Ian James

Monday 11th February

Another week has slipped by this year leaving us no closer to seeing any trends. Whilst the “clearance rate” is up there near 80% there is not enough volume to give us any indication of where the market is going.

There were some anomalous results of family homes selling below expectation whilst reports from some outer suburban agents are saying that people are queuing to get into opens and offers are very forthcoming on properties. The amount of good property coming onto the market continues and agents are very quick to “chat” about offers and deals, the market is still a long way off giving any clear signals as to what will happen for the rest of this season. Just because one property sells below expectation, this does not mean we are seeing a trend.

This is the first year I can remember the agents agreeing so quickly to enter early deals. With several deals already away this month and another seven offers on the table, it would be easy to assume that agents are a little worried and they are looking to grab any deals available. This is not the case. All of the properties we have gone after are being relentlessly negotiated. It is a case of finding good properties, assessing them quickly and accurately and then moving decisively.

In a rising market the key ingredient in buying well is paying the “right” price for the “right” property at the “right” time. Those potential purchasers that procrastinate through February and March will probably find themselves needing an extra 10% to purchase what they could have bought earlier in the season. It happened last year and could happen again this year.

Ian James

Monday 4th February

Sub Prime issues, stock markets falling all over the world, interest rates going down in the US and potentially up in Australia. We have a ten year drought seemingly coming to an end with FLOODS which may well reinvigorate our massive primary industry. The Chinese and Indian economies are becoming the dominant force throughout the world and they are major trading partners of ours. Chris Richardson from Access Economics has been reported to have said Iron Ore price increases for the year will inject more spending into the national economy than our stock market losses of last month. So what is going to happen to the Melbourne property market?? Anybody that tells you they know, is joking.

The Sydney market is flat, Queensland is under water, Perth has slowed and Adelaide is a very small market. Melbourne's population is said to be growing at 1000 people per week. This is higher than any other capital city in Australia. Demand for housing is high and supply is short. It means that property prices in Melbourne will most likely continue to rise at a very healthy rate. Maybe not the 20 – 30% of last year, but I would consider in the high teens to be probable if you buy well.

Whilst the fastest growth corridors are still the outer west and outer north, for the first time in decades municipalities such as Hobsons Bay, Glen Eira and Monash showed population increases.

Buying well is not only about negotiating the lowest price. It means making a good choice of property, assessing it correctly and then negotiating it in a timely fashion. Keep in mind that if the property is actually good, there will be competitors trying to buy it out from under you.

We will have a better understanding of how properties will perform this year once we see the February auction results. Until then, the signals from the local agents have been mixed and no clear pattern has emerged yet.

Ian James

Monday 21st January

Another week of gloom and doom on world stock markets! More media “experts” saying there will be a rate rise in February. Our new Prime Minister is promising an $18 billion dollar surplus in his first budget and more economic responsibility. But we are still at a 4.5% unemployment rate: what does all this mean for the housing market this year? Anybody telling you they know what is going to happen in the market this year will preface the comment with “this could happen”.

Plenty of Mums and Dads have a great deal more equity in their homes now than they had last year. Also, the expected tax cuts and the fact that most people that want a job can find one at the moment, means there will still be investors in the property market. More so if the stock market doesn't rebound. I think the property market this year will remain fairly similar to last year. The 20-30% gains maybe be tempered back to 10-15%, but the demand will again be strong and if supply doesn't increase, auction clearance rates will again be high and this means increased levels of negotiations will be necessary and accurate assessment of the properties worth will be paramount.

With the Australia Day weekend upon us and kids back to school next week, things will again be quiet on the new property listings but as of next week we should see a huge rise in the numbers of properties. Enjoy your last weekend break before the autumn selling season is upon us.

Ian James

Monday 14th January

Even though the market is yet to fire up there are reasonable supply numbers beginning to appear. It looks like there will be no massive shortage of property even though demand will still be outweighing supply in February and March. Even if interest rates move again as early as February, I still think property values will continue to perform well this year. As we see the first sets of clearance results from the big weekends of end of February and early march, we will be able to get a better idea on how the growth rate for property values will progress through the year.

Australia Day weekend will see the start of the autumn season with the properties going to auction late February beginning their advertising periods. It will be interesting to see how this years market will develop.

Ian James

Monday 7th January

After a tumultuous year in 2007, 2008 should be the year to build your property portfolio. We have seen massive gains in many suburbs across Melbourne last year and, although some of these suburbs will keep performing spectacularly, it is the neighbouring suburbs to the best performers of last year that will probably be the real movers this year.

Interest rates will probably rise again early this year and this will put pressure on the market under $450k but for the rest of the market this rise has been factored in and will probably result in no significant slow down. Stock levels should rise slightly from last year and this may mean there is a lot more negotiation than last year but above the $700k mark I think that purchasers will again outweigh Vendors, leading us to another year of strong auction results.

Areas such as Reservoir, St Albans, Sunshine, Fawkner, Thomastown, Croydon, Edithvale, Altona are just a few of the suburbs that may have good value properties this year, that should make good investments, for both the “value-add” investor or the long term “set and forget” purchaser.

Choice of good property, either purely for investment or to live in, is vital in increasing your wealth. It is not that difficult to manage the basics. Proximity to transport, schools, parks, cafes, major arterial roads are just some of the parameters we look for. Once the location is justified, then we look at the block. How big is it? What shape is it? Is it on a severe slope or covered with rocks. Most of these are obvious to anyone who looks.

The house itself is actually the last thing we look at, as it is the item we can change the most to suit us. Obviously it must suit our basic needs, but it may not be all we want, so look at its possibilities. Can this conservative 3 bedroom family home be turned into a two level 4 bedroom dream home? Could this 2 bedroom cottage be demolished, or updated to a brand new $400k house?

I hope everyone had a great break and has had a chance to recharge the batteries, as I think we are in for another very hectic year.

Ian James

If you found these articles interesting, you may wish to read more about the market and buying right - please see our regular series how to buy property in Melbourne ...