Market Comment – Monday May 4th 2009

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With a 77% clearance rate and over 1000 private sales last week we are certainly not in the doldrums as most commentators would have us believe. In fact we are moving along reminiscent of the pre GFC times during February and March 2008.

Wasn’t it fantastic to find out that our property market had fallen by 15%? Isn’t it great that you can now buy property $75,000 cheaper than you could before? What the Herald Sun’s headline on Saturday says is very true. In the December quarter of 2007 at the absolute peak of the market, in one quarter our median jumped by 12.8% to $485,000. It had been $430,000 the previous quarter. This was an abnormal jump and if you use this as the benchmark instead of an anomaly then it looks like Melbourne property is in freefall.

Nothing could be further from the truth. In fact if we look at September 2007 until now the fall has been only 4.6% according to the REIV figures. And these figures are very different from RP Data’s figures. RP data is used by the Australian Stock Exchange and their figures indicated a rise last quarter to $426,423 which would equate to a rise of 2.4%.

Last week there were 1000 private sales. Looking back through REIV data, there has not been this many private sales in one week in either 2008 or 2009. There were 1298 total sales last week and you would need to go back to March 2008 to see that many sales in one week. Even the total turnover of $572M is reminiscent of the heady days of 2007.

When the market turns south as it has throughout the world, people tend to sell off anything they do not hold near and dear. This means properties that are average or below average tend to be sold off earlier than those seen as above average. This will reflect in the total figures put out by any research institution. Good properties will always return good prices; “less good” properties will always return “less good” prices. If there are more “less good” properties on the market then the statistics will show a lower median price.

In an upturned market everything sells well. People will pay over the odds for all property whether it is good or “less good”. It is now those who payed over the odds for a “less good” property will feel the pinch. It is these people that may find themselves in a negative equity position. It is these people that will struggle to sell their properties for even what they paid.

If you are in the market for a property, now is a fantastic time to buy good property. So was yesterday and so was last year. Good property will always lease out well, it will always sell well and will usually show a better capital growth than a “less good” property.

You must identify good property from “less good”, work out what the right amount to pay is, and then secure the property before someone else does. This is what JPP Buyer Advocates does for our clients. We do not work with vendors, we are not paid by any real estate agents; all we do is assist people to purchase good property.

Please feel free to contact us for a no obligation meeting if you are considering buying any property throughout Melbourne metropolitan area or Greater Geelong.

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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.