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