Better than expected Company profit reporting, continuing growth (although up and down) in the ASX and some record profit taking over the last week may be very positive indicators for the investor side of the residential and commercial property markets.

Profit taking results in funds available to reinvest in other areas such as property and given the volatility of the share market property looks very attractive for the medium to long term.

Savvy investors have already re-entered the market. Even though there has been some artificiality in the market caused by first home buyers there are still bargains out there.

Neil Fisher, chief executive of the Real Estate Institute of Australia, in an article in the Australian, said that investors re-entering the market should be aware that interest rates were likely to rise.

“Anecdotally, evidence suggests investors are starting to come back,” Mr Fisher said.

“That’s generally a result of low interest rates.

“A cautionary note though, we’ve seen the Reserve Bank governor say interest rates are at all-time lows and say there will be increases in interest rates, probably at the start of next year. The astute investor will take that into account.”

In the same article, Dan Molloy, managing director of the Real Estate Institute of Queensland, said that while early 2009 was dominated by the activity of first-home buyers, the past couple of months had seen a resurgence in investor involvement. “We are seeing investors looking at the marketplace again,” Mr Molloy said.

The challenge for the Real Estate professional is to use this knowledge to profile and identify investor attractive stock and to relentlessly prospect and then to prospect some more.  It can be easier to attain the listing if you can demontrate that you can market effectively to investors. It is important to develop good investor databases however remember that many households include investors.  The RBA identified that over 17% of general households include a property investor. Changed regulations on borrowing by self-managed Superannuation funds could also widen the market for investment buyers. Paul Newall, Raine & Horne Financial Services has developed some solid experience and expertise in this area.

Share This

Good news for the Australian property sector. In his announcement yesterday that interest rates would stay on hold, Governor of the Reserve Bank Glenn Stevens commented that while household spending is “likely to slow somewhat,” stronger dwelling activity and government spending “will start to provide more support to overall demand soon, and is likely to firm into 2010”.
Stevens is concerned that if the already record low interest rates are allowed to remain they may fuel a housing bubble and destabilize the economy.  The change has been largely due to improvements in Australia’s second largest export market, China.  
Paul Brennan, an economist at Citigroup Inc. in Sydney predicted “The next step will be for the Reserve Bank to begin to withdraw at least some of this accommodative setting,” starting in December with a quarter-point increase”.

Craig James, a senior economist with the Commonwealth Bank of Australia, suggests that Stevens is “certainly not suggesting that rate hikes are imminent.”  “The Reserve Bank will want to ensure the economy can stand on its own two feet — without being propped up by the government — before deciding to lift rates,” James said.
 Stevens also noted that home loan approvals had been solid, with housing prices rising over recent months indicated by increases in the median house price over the eight capitals. However, disturbingly, business borrowing was in decline as companies postponed investment plans in order to reduce debt financing.

Courier mail article. 

Share This