Market Comment – Monday 12th July 2010

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We can see confusion in the current market between the clearance rates showing the market is imploding and new loans data showing an increase in loans for housing. We have data from builders saying there are fewer house starts but we have rental data showing increasing rents and lack of stock. We have Welfare groups screaming to the Government that there is not enough housing yet we have the papers saying nobody is going to buy homes.

Catherine Cashmore, one of our advocates, wrote an article for the Age which was published yesterday titled “Seeing the bigger picture”. It tells us not to look at the microscopic picture, but to look at the whole market. I have notice the national news services have started to quote RPData clearance rates recently. WHY! Because they are lower than REIV as they take a different sample. In doing so it seems like there has been more movement in the market in a shorter time.

Overall, the Melbourne property market is in fantastic shape for people who own property, or those who are contemplating property investment. It is not so good for people who are trying to rent. I know I have said this many times before, but I will say it once more. The vast disparity between population growth, number of houses being built and current stock levels, means the only way for property prices to go over the short to medium term (3- 7 years) is up. STRONGLY!! Property prices in the top third of suburbs in Melbourne will double in the next 6 – 7 years.

In fact, if the governments, both state and federal, do not turn their collective attentions to this problem in the next few years, twenty years from now we will be looking at the European model of home ownership. 25% of the people will be property owners and 75% will rent forever. Bank loans will need to be generational; 50 years or more. Longer leases, such as 5 or ten years or longer, will be traded like property ownership is now.

We need to build more homes, but not in estates stretching out into the countryside. We need sustainable high density living areas throughout the Metropolitan area. We need to build “real” fast trains between Ballarat, Geelong, Bendigo and Bairnsdale. If people could commute from Geelong in 30 minutes to a true transport hub in Melbourne, then we could begin to grow our regional centres.

This would add value to these areas, make population growth and planning far better and also relieve the pressure on Melbourne.

If you are considering buying property please do not hesitate to give us a call for a free, no obligation meeting. If you would like to comment on anything here please feel free to send us an email.

Ian James

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About the author

Ian has been operating his own businesses for more than 25 years. During this time the self taught lessons of building the business, dealing with staff, suppliers, clients and economic woes have been invaluable. Ian is a fully licensed Real estate Agent, a member of the REIV and registered with the Business Licensing Authority.

Buying property is not just sticking up your hand and outbidding your rival. It is an emotional, fiscal and psychological decision that needs to be planned and well executed. Ian is usually involved in over three hundred property negotiations per year; ranging from the $250,000 first unit purchase for a young couple to multiple million dollar residential developments. Ian's business background and endless numbers of negotiations make him one of the industry's leading negotiators.

Ian is married with two adult children, living in Patterson Lakes. He is a keen fisherman when weather and business allows the time.