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