Market Comment – Monday June 1st 2009

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The papers are again talking about dropping property prices over the weekend. They continue to write about the imminent bursting bubble; the media has a “love affair” with gloom and doom. There were 1453 properties reported as sold to the REIV last week. You need to go back to March 2008 to see this many sales. Unlike that week when the clearance rate was 67% this week’s clearance was 82% from 667 properties.

Our company has purchased 7 properties in the past 4 days and although they ranged from first home buyers at $450k to families up scaling over $1M all of them had multiple interest. Good property always attracts multiple interest when the property is well marketed.

RP Data and Rismark International’s Home Value Index released on Friday showed all mainland capital cities recorded an increase in the first four months of the year, except for Perth. Victoria had a rise of 4.5%. The ABS has released data for Jan – March for established properties and this showed a drop of 2.2%. If the market continues similar to what is currently happening and if we take into account the plethora of sales of new houses and sales in April, I think there will be an abrupt increase in Price shown in the next quarter’s figures.

Ask any Real Estate agent about stock levels. This is the real gloom and doom story. Stock levels are so low agents are sacrificing commission percentages to get the small amount of business that is out there. With a distinct lack of stock and an abundance of potential purchasers, prices of good property have nowhere to go but up.

Over the next few months when there would normally be a winter hiatus, I expect to see continuing high numbers of sales. As the World Economic Crisis worsens before the eventual upward move, there will be some more forced sales of property. Many people have already begun to divest themselves of there weaker performing properties and this will continue through the next 6 months. For buyers, this will not cause an all important “price crash” as the demand is so far outstripping supply, that more property may simply slow down the inevitable price growth.

Buying property is and has always been one of the safest and most secure investment choices. With rental prices on the increase, interest rates at a generational low, lack of quality stock and not many other viable investment options, direct property investment has never looked so good.

If you are considering purchasing a property, please feel free to give us a call to organise a no obligation first meeting.

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.