Market Comment – Monday November 16th 2009

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1375 properties were reported as sold last week by the REIV. Just over 650 of these sold at auction. The market is running hot and will most likely do so for at least another three to four weeks. Enquiry levels are still high and I don’t see any other trend for property price but up. We know that rental vacancies are still at an all time low, we know that property investors are re entering the market in droves and we know that even with a couple more rate rises; money is still cheap and easily accessible for residential purchasers.

So where will the market go next year. The historical averages going back to 1980 show us that according the Valuer General’s data, approximately a third of suburbs in Melbourne have had an average median price increase in excess of 10% per annum. In ‘layman’s terms’ property prices in Melbourne’s best performing suburbs have doubled every 7 years. The best 10 – 20 have doubled every six years.

We have had tremendous competition this year for property and it has pushed our median price up quite strongly. Anecdotally, most of that growth has occurred in the last 4 months. But median prices are simply a statistical analysis tool that can sometimes be very inaccurate. (We discussed this a couple of weeks ago). It is supply and demand that will be the true indications of where the market goes.

As good property continues to sell throughout 2010, prices will rise dramatically. I would estimate an annual rise greater than 10% next year. And this will be on average property as well as good properties. As usual, there will still be the bottom third of properties that will not sell well, but on the whole I believe we will see market indicators rising between 10% & 15% by September next year. How hard the last quarter of the year runs will be dependant on the level of stock at the time.

There may be a small amount of investors that go back to shares next year as the market begins its next cycle, but there will still be ample buyers to outweigh sellers throughout next year.

If you are considering property purchases within the next twelve months please feel free to call or make an appointment to drop in for a chat.

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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