Properties in some suburban cities still selling quickly

Houses and units in Melbourne are selling quicker than in other capital cities around Australia, according to research by RP Data.
Although property is generally taking long to sell, figures show that in some suburbs within the mainland capital cities it’s still selling within a short time frame.
In an analysis conducted to November 2008, research analyst Cameron Kusher found houses in Melbourne and Canberra were taking an average of 31 days to sell, while Sydney houses were selling in 32 days on average.
Meanwhile, units in Melbourne, Sydney and Brisbane had the shortest average time on the market, selling in 28, 30 and 43 days respectively.
Houses in Melbourne’s Bayswater sold the quickest, being on the market for an average of 19 days and units in the Melbourne suburb of
Hughesdale changed hands in the shortest amount of time, averaging 16 days.
Kusher says in most capital city markets properties are taking longer to sell than 12 months ago.
“This is understandable given the current economic conditions and the fact that 2007 was a reasonably strong year for price growth across Australia, excluding the Sydney and Perth markets,” he says.
Houses and units in Adelaide and Darwin are taking the longest time to sell and these two capital cities are the only ones that had positive price growth in 2008.
“This is likely representative of the fact that vendors are holding out for a better sale price,” says Kusher.Australian Property Investor editor Eynas Brodie says sellers who price their property to sell from the beginning will have the best chance of success.
“Gone are the days when you could mark up your property to leave wiggle room for negotiation,” she says.
“In a market where buyers are spoilt for choice, this can be enough to stop prospective buyers from even taking a look.
“It’s important for sellers to remember that a property is only worth what the market is willing to pay for it.”

Properties in some suburban cities still selling quickly

Houses and units in Melbourne are selling quicker than in other capital cities around Australia, according to research by RP Data.
Although property is generally taking long to sell, figures show that in some suburbs within the mainland capital cities it’s still selling within a short time frame.
In an analysis conducted to November 2008, research analyst Cameron Kusher found houses in Melbourne and Canberra were taking an average of 31 days to sell, while Sydney houses were selling in 32 days on average.
Meanwhile, units in Melbourne, Sydney and Brisbane had the shortest average time on the market, selling in 28, 30 and 43 days respectively.
Houses in Melbourne’s Bayswater sold the quickest, being on the market for an average of 19 days and units in the Melbourne suburb of
Hughesdale changed hands in the shortest amount of time, averaging 16 days.
Kusher says in most capital city markets properties are taking longer to sell than 12 months ago.
“This is understandable given the current economic conditions and the fact that 2007 was a reasonably strong year for price growth across Australia, excluding the Sydney and Perth markets,” he says.
Houses and units in Adelaide and Darwin are taking the longest time to sell and these two capital cities are the only ones that had positive price growth in 2008.
“This is likely representative of the fact that vendors are holding out for a better sale price,” says Kusher.Australian Property Investor editor Eynas Brodie says sellers who price their property to sell from the beginning will have the best chance of success.
“Gone are the days when you could mark up your property to leave wiggle room for negotiation,” she says.
“In a market where buyers are spoilt for choice, this can be enough to stop prospective buyers from even taking a look.
“It’s important for sellers to remember that a property is only worth what the market is willing to pay for it.”

Think twice before fixing, broker advises

Homeowners considering fixing their mortgage rates should hold their fire and seek advice, according to Loan Market Group executive director John Kolenda.
With official interest rates at a 45-year low of 3.25 per cent, it’s a tempting time to move to a fixed-rate home loan but Kolenda says market economists expect the cash rate to fall as low as 2 per cent.
"I think rates will be at the bottom of the cycle when the Reserve Bank makes a 25 basis points cut," he says.
"We have seen the RBA make aggressive rate cuts of up to 100 basis points to try and prevent the Australian economy going into recession.
"When the central bank starts making smaller cuts that will demonstrate that it believes it has gone about as low as it needs to with the cash rate."
However, API deputy editor Matthew Liddy notes that fixed rates tend to move on the basis of changes in the wholesale money market, rather than strictly following the Reserve Bank's changes to the cash rate.
"This means that fixed rates could rise well before the Reserve Bank looks to start lifting rates once they hit their bottom," Liddy says. "As a result, it's never easy to pick the exact time when fixed rates are at their lowest point."
Kolenda says borrowers considering changing to a fixed rate should seek professional advice because fixed loans are often less flexible than their variable counterparts.
"Many fixed rate home loans don't allow you to make significant extra repayments to reduce the principal and if you do decide to pay it out early or refinance, there may be some substantial exit costs," he says.
"A good solution with rates at generational lows is to consider splitting your loan between a fixed and variable interest rate."

Property Prices unlikely to fall further for investors

Now is as good a time as any to buy property, according to investor and entrepreneur Damian Collins.
Investors can get good prices for property in this market, he says, and if you’re going to buy, make sure you get a good deal.
“You don’t have to rush in, but if you’re going to get into the market don’t try to time it too much,” he says.
Collins, who has 30 properties and runs a company called Momentum Wealth, admits one of his biggest regrets is trying to time the property market.
“Residential property is relatively stable in price, it might drop back 5 or 10 per cent,” he says.
“I’ve lost more money waiting for the right time to buy rather than actually getting in and buying.”
According to Collins the under $400,000 market, driven by first homebuyers and investors, is starting to pick up in some parts of Australia, particularly Perth and Sydney.
“It’s doing reasonably well because of the $21,000 grant and rates are down now to 5 per cent.
“There’s a lot more investor interest in property and some of those are getting taken up.”
He says Melbourne and Sydney are going to be a bit further behind and the under $400,000 market in these cities is likely to pick up in the second half of this year.
Meanwhile, Collins believes the $600,000-plus market won’t pick up until the middle half of next year.
He says it’s owner-occupier driven, less rate sensitive and is much more sensitive to business confidence.
“There will be a progressional start from the bottom and it will work its way up into the top end of the property market,” he says.
While Collins predicts property prices in the top end of the market could come back another 10 per cent, he doesn’t foresee they will fall any further in the under $400,000 segment of the market.
“We’re seeing in Perth and Sydney it’s slowly gone from a buyers’ market to a sellers’ market,” he says.
“It’s gone past that equilibrium to a bit of a sellers’ market, there’s been a little bit of price growth in that segment.”
Median price figures may drop, he says, but that doesn’t reflect individual property prices, rather it’s related to the fact that there are more properties selling in the lower end of the market.
Collins says interest rates are likely to fall again and with yields increasing, investors will be attracted to the opportunity to have a cash neutral or positively geared property from day one.

Home Ownership possible for more Australians

Housing affordability is the best it's been in five years and it’s expected to get even better.
The HIA-CBA First Home Buyer Affordability Index improved by 39.2 per cent in the December 2008 quarter.
Housing became more affordable in all capital cities and regional areas, but the largest improvements were in Perth, Brisbane and regional Western Australia.
Over the December 2008 quarter the average home loan repayment fell 26 per cent from $2796 to $2056.
Chris Lamont of the Housing Industry Association (HIA) says the improvement in housing affordability was due to big reductions in variable mortgage rates and the First Home Owners Boost.
"For would-be first homebuyers conditions have improved significantly and clearly many Australians are taking up the opportunity to get into homeownership," he says.
Based on HIA economic modelling, 135,000 households have come out of mortgage stress since December 2008.
"Previously a household would have to be earning in the order of $85,000 per annum to afford a modestly priced home without going into severe mortgage stress," says Lamont.
"The improvement in housing affordability means those on a more modest income can now contemplate a home of their own."
According to the HIA further interest rate cuts in the first quarter of this year are expected to show another improvement in housing affordability in the next report.
Australian Property Investor editor Eynas Brodie encourages prospective first homebuyers who are currently renting to seriously consider entering the market this year, before buying conditions change.
"With the gap closing between home loan repayments and rents, potential homeowners should crunch the numbers to see if they can afford to purchase their own place while interest rates are falling and the government incentives are being offered.
"Interest rates won't stay low forever and many expect property prices to rise as consumer confidence returns."

Termites on the rise with temperature

Termite attacks on Australian homes are on the rise, according to building advisory service Archicentre.
The hot weather and continuing drought are blamed for the increasing intensity of the attacks, estimated to cost homeowners $910 million each year.
As they look for more moist parts of the house, termites relocate from roof voids and wall cavities to subfloors, eating flooring and skirting boards more aggressively.
Queensland state manager of Archicentre Ron Tanton says it's important for homeowners to undertake regular termite and building inspections.
He says increasingly inspectors are finding houses with water leaks under showers and cracking of pipes due to the drought or lack of maintenance.
"The extreme dryness in roof voids because of very hot days is a less attractive environment for termites who are seeking the more moist areas such as under the house," he says.
"Homeowners need to be aware that these water leaks and moisture build-up in subfloors and around the home form a magnet for timber pests such as termites and borers.
"This means damage to flooring materials and structural timbers like joists is more severe than normal.
"Increased moisture will accelerate the development of termite colonies but increased ground moisture may reduce the possible structural damage to houses caused by drought induced drying."
According to Archicentre's research, this year the average cost of pest treatment is about $2500 and the average cost of repairs to damage is about $4500.
The cycle time - from the initial attack, to awareness, treatment and eradication - is about five years.

Stimulus Package to benefit housing industry

The Federal Government will invest in new housing as part of its $42 billion Nation Building and Jobs Plan.
The Housing Industry Association's (HIA) Ron Silberberg says the initiative will benefit the housing industry by creating jobs for more than 35,000 Australians, with the potential for another 50,000 jobs to be generated, and it will also help support low-income tenants.
"The measure could not have come at a more appropriate time," he says.
"A number of manufacturers have already made decisions to close plant or to lay off staff.
"This measure will require the industry to tool up and re-hiring is likely to occur as soon as this funding starts flowing."
HIA members from around Australia have shown overwhelming interest in building the 20,000 new houses outlined in the plan.
Silberberg says while the housing industry can deliver, it's important for the package to be dealt with effectively and efficiently.
"We need a flexible and timely process for assessing expressions of interest.
"This is a fiscal stimulus measure and practical measures are required at both the Federal and State Government levels to ensure a speedy and beneficial impact on jobs."

China's stimulus plan taking effect

China's economy is showing signs that a 4 trillion (A$900 billion) stimulus package is gathering momentum. Economists now expect the world's third biggest economy may expand 6.6 per cent in the second quarter after slowing to 6.3 per cent in the three months to March31, the weakest since 1999.
China is trying to reverse an economic slide that has already cost 20 million jobs, raising the risk of social unrest as exports plunge and the property market sags. Spending on roads, railways and housing has increased prices for iron ore, put a floor under industrial output and helped to drive a record $US237billion (A$367 billion) of new loans in January.
"China looks set to be the first major economy to recover from the current global meltdown" said Lu Ting, and economist with Merrill Lynch in Hong Kong.
"China is the only economy in the world to see significant growth in credit to corporate and household sectors after September 2008, when the financial crisis worsened to a near collapse"

Projects hire more hands

Two of Gold Coast's biggest highrise projects are set to hire more workers, defying the impact of the economic crisis which has led to lay-offs at Queensland construction sites.
About 500 workers are employed by builder Grocon on the Soul site at Surfers Paradise and the Oracle at Broadbeach.
Grocon Queensland's general manager, Neil Baxter, said a further 370 workers were expected to be hired across both projects next year.
"These two projects will not be completed until 2011 so employment will continue for some time", Mr Baxter said

Macquarie Research Economics Report

Australian economics
February interest rate outlook
Event
􀂃 We review the outlook for interest rates following the RBA’s decision to cut the
cash rate by 100bp and the release of its quarterly Statement on Monetary
Policy (SoMP).
Impact
􀂃 In the wake of an increasingly dire global economic outlook, Australian
policymakers have been very decisive and aggressive in attempting to
insulate the domestic economy. The RBA has lowered the official cash rate by
a substantial 400bp since September and the effectiveness of monetary policy
in Australia is highlighted throughout the SoMP. While the RBA are not about
to rest on their laurels, the tone of the quarterly Statement suggests that
interest rates are now approaching a trough, likely at 2.50% by mid-2009.
Analysis – rates decelerating towards their nadir
􀂃 The RBA cut interest rates by 100bp in February, bringing the official cash
rate down to 3.25%. The Board cited "a significant deterioration in world
economic conditions" and "a significant dampening effect on (domestic)
confidence" as reasoning behind the large reduction in interest rates.
􀂃 The capacity of monetary policy to impact on activity in Australia is evidenced
by the swift and full pass through of the rate cut by the major banks into
standard variable mortgage rate reductions. Importantly, credit card and
business lending rates have also been lowered, although not necessarily by
the full 100bp.
􀂃 Meanwhile, the Reserve Bank's quarterly SoMP has revealed a very cautious
outlook for domestic activity, driven by increasingly pessimistic views
surrounding the global economic outlook. In the three months since the
Bank's last SoMP, the global economy has deteriorated significantly further.
􀂃 That said, the Australian economy is still forecast to marginally side-step a
recession given that "the impact on domestic growth will be moderated by the
easings... in monetary and fiscal policy and by the significant depreciation in
the exchange rate".
􀂃 The RBA has significantly lowered their expectations for GDP, with growth set
to trough at 0.25% mid-way through 2009. This very small increase in growth
is due to a bounce in rural production, with non-farm GDP falling to 0%YoY
growth.
􀂃 A key reason behind the downgrades in the growth profile stems from the
Bank's increasingly pessimistic view on global economic conditions. The RBA
sees trading partner output contracting by 0.75% in 2009, down from annual
growth of 5.25% in 2006 and 2007. It is important to note that this represents
even weaker assumptions on global economic activity than suggested by the
IMF only two weeks ago.
􀂃 The weakness in domestic economic activity means that the bank now sees
employment falling over 2009, with "the unemployment rate rising materially
over the next year or so". While the bank does not provide a forecast for the
unemployment rate, a small decline in employment over the year is broadly consistent with an unemployment rate of above 6% by the end of the year.

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Opportunity beckons for first homebuyers
Posted on Feb 10, 2009 at 01:17 PM
Conditions are primed for first homebuyers to enter the market and those with job confidence will move ahead to take advantage of it, according to a mortgage broker.
Kristy Sheppard of Mortgage Choice says the pros of buying now include the grants on offer, less buyer competition, the rental squeeze, falling interest rates and property prices.
As the economic downturn continues, she says first homebuyers will weigh these up with the cons of buying, including job instability, falling property prices and availability of finance.
Loan applications by first homebuyers have clearly increased since the First Home Owners Boost was announced in October and Sheppard says it wouldn’t be surprising if the Federal Government extended it by another six months.


“Certainly there is a lot of call for it from a range of industry participants,” she says.
“First homebuyers are being targeted because they will be new entrants to the property market, providing greater stimulation to that sector and the economy than those who are already active participants in the property market.”
While Sheppard says now is the perfect time for first homebuyers to enter the market, it’s important for them to make sure they can service a mortgage a couple of years down the track.
“The boost and other incentives can better allow them to take out a mortgage but they also need to remember to allow for interest rate and fee rises over the longer term plus any changes to their financial circumstances in the future,” she says.
Last year Australians were mostly worried about interest rates but that is no longer the case according to a recent consumer sentiment survey conducted for Mortgage Choice.
It found the primary concern for Australians at the moment is job security.
Twenty per cent of respondents said employment was their main concern, followed by economic management at the Federal Government level and other costs of living.
Last year interest rates were the biggest concern, followed by Federal Government economic management, petrol prices, job security and a fall in housing prices.Order your copy of API’s First Homebuyers Guide ebook for information on how to make your first purchase at www.apimagazine.com.au/ebooks

Sales upbeat at Downs
February 7th, 2009
HUNTINGTON Downs has experienced a rush of inquiries and subsequent sales since releasing the 'acreage accessory' blocks of land to the market in December, with just three blocks remaining from the original seven.
The $41 million development released seven blocks with accessory offerings of a swimming pool, or tennis court, or stable or hobby shed, offering buyers the opportunity to save up to $50,000 on their selected blocks at a cost to the developer.
The three remaining blocks range in size from 4073 sq m to 4864 sq m with prices from $320,000.
Huntington Downs sales manager, Chris Restom, attributed the sales rush to forward thinking marketing and generous incentives. He also said that the very low interest rate levels offered the discerning buyer far more comfort in making the purchasing decision at Huntington Downs.
Nestled on the edge of the northern Gold Coast Hinterland and encompassing 174 hectares of forest reserve, Huntington Downs has achieved almost $10 million in sales.
Huntington Downs has views across the Hinterland and is surrounded by a bush environment with walking tracks, eco trails, pony trails, lakes and reserves.
Developer Hatia Property Corporation director, Faisal Hatia, said "We've had strong sales enquiries regarding this unique opportunity. Many buyers are looking to save money where they can in the current market and up to $50,000 worth of extra value when you purchase a block of premium acreage land is a great incentive for purchasers," he said.
Mr Hatia said Huntington Downs was developed to meet the demand for affordable, prestige acreage property.
Buyers also received a 12-month full golf membership at the Gold Coast Country Club, including lessons and a set of golf clubs.

Sellout a walk in The Parc
February 7th, 2009

THE first stage of The Parc, a lifestyle-focused Tugun townhouse community which developer the Sunland Group describes as 'a project for the times', has sold out ahead of its completion.
David McMahon, the Sunland general manager, said half of the 40 homes in the stage had sold to southern Gold Coast buyers.
"This is our debut project at that end of the Gold Coast and we've put a lot of work into it," he said.
"The sales show we've hit the right spot with people in the area."
Mr McMahon said Sunland had completed civil works for the 50-home second stage of The Parc and it was intended to start construction of the first 16 homes by the end of this month.
The Parc is being built on a near seven-hectare site adjacent to John Flynn Hospital and will eventually have 187 homes.
Mr McMahon said it was designed to meet the lifestyle aspirations of today's buyers.
"They want not only quality in designs and finishes, they also want space, privacy, tranquility, and recreation facilities on their doorstep," he said.
"We have come up with a masterplan that provides every owner with a private courtyard which in turn opens on to one of The Parc's six private parks.
"Some of the homes overlook a lake at The Parc's western end, with the lake circled by a walkway and cycle track."
Facilities for residents include a lap pool, swimming pool with jets, steam room, dual barbecue areas, and two lounge areas, one with kitchen facilities.
Mr McMahon said the quick sellout of stage one in part reflected a dire shortage of new townhouses at the southern end.
Prices of the stage-one homes ranged from $415,000 to $509,000.
Mr McMahon said the stage-two homes would carry tags of between $424,00 and $635,000.
"The opening of two display homes in stage one saw an acceleration in buyer interest, which translated into a sales run to both owner-occupiers and investors," he said.
"Many people like to see the finished product, so we expect that spurt in interest to carry over into the homes in the new stage."
The three-bedroom attached homes will all be double-storey, have air-conditioned living areas, and will provide parking for two vehicles.
Interiors will include stone benchtops, natural-gas cooktops, tiled living areas, walk-in wardrobes and ensuites in the master bedrooms, mirrored wardrobes in the second and third bedrooms, and roller blinds.
Sunland, which won Master Builders' Association awards in 2007 and 2008 for townhouse projects Northbridge Residences at Varsity Lakes and Greenvue at Pacific Pines, has another townhouse venture in the pipeline.
The company, subject to council development approvals, hopes to launch a 75-home community at Merrimac by June.

Thinking positively
February 7th, 2009
PROPERTIES under $500,000 will this year play a major role in an overall market recovery in 2010, according to Australian Mortgage Options managing director Robert Projeski.
"Indications are that we are likely to see further rate reductions, and, with that being the case, property sales in areas where the purchase price is up to $500,000 will see significant increases as a result of the government stimulus packages," he said.
"The bonuses for first home buyers, including a $14,000 lump sum for existing properties and an additional $7000 to acquire new properties were provisions that will hopefully be extended beyond June 30 deadline for contracts exchanged prior to that date.
"If there is an extension you will see continuing good demand for properties in the under $500,000 price bracket. This will be the start of the ripple effect when prices should start to move in an upward direction."
He said rental demand would still be very high, with vacancies very low.
"Unemployment concerns will pave the way for investors," he said.
"In addition to the properties under $500,000 are to be had in holiday homes regions.
"We believe investors will start coming back into the market with rent increases and lower borrowing costs creating positive cash flow," he said.