Market Comment – Monday March 23rd 2009

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Finally the media is starting to look past the clearance rate to the numbers of properties sold. This week’s sales of 1082 properties leaves only Labour Day week as the last time in 5 weeks turnover has dropped below 1000.

I was invited to speak at the Geelong Property Expo yesterday and one of the questions I was asked continually but in a different fashion was, ‘If the first home owners boost drops off in July, will the market drop”. There was an academic on the news last week from western Sydney who said the market would drop at least 20% and probably more. He went on to say we were looking at a US style housing failure.

He was obviously looking for some sound bite publicity. First home buyers, whilst very prevalent in the mark place have only moved from 17% to 24% yet the market has increased from an average turnover of fewer than 950 per week to 1073 per week over the last 5 weeks. These figures are the REIV reported data. Everyone who has any money and a secure job is flooded to the housing market.

What other investment can offer a 4.5% yield whilst historically through recession still looking at 10% growth over the long term. You can’t get that at the bank, and I don’t know anyone rushing out to increase their share portfolios. Bricks and mortar have always been the cornerstone of wealth creation. This year is a little different to others. Loans are cheap and returns are excellent.

A property for $500k bought now should be revenue neutral within a year or so and should still appreciate around 5- 8% this year and over the next ten I believe should be in excess of 10%. You only need $130,000 in equity (not cash) to be able to achieve this. If you buy good property in good locations for the right price you will do well.

Call us for a no obligation meeting to discuss your next investment property. If you are a first home buyer or upgrading your home we can help you save time, money and effort.

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.

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