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

Paul Newall, Raine & Horne Financial Services, advised yesterday of some changes in Bank policies that may severely limit any upturn in the property resale market.

It is no secret that the current market is attempting a very slight upturn driven from the bottom end predominently fuelled by the First Home Buyer (FHB) boost. Approximately 40% of all sales last month were to FHB, with 12,500 subsidy applications received, by the Federal Government, in February. Investors accounted for approximately 10% of purchases.

Many FHB’s have taken advantage of lending policy that has allowed loans of 100% and 95% of valuation.  Last week RAMS removed the 100% loan leaving the St George Bank as the main lender still offering 100% loans.  The major banks who offer 95% loans are now insisting on proof of saving over a period of 3 to 6 months.  Further it is rumoured that some banks will reduce their lending policy to 90% of valuation.  This will effectively neutralise the FHB Boost and stop the market in its tracks.

The fact that the banks and many consumers do not take accout of is the very high cost of rent today.  After paying the highest rents Australia has ever seen there is not much left for many FHB to use to save.  The Banks have to recognise this and view a good rental payment history as a major contributor to the loan application.

The major Banks, who largely caused the Global Financial Meltdown, are now at risk of worsening the situation just so that they can improve their balance sheets and stock price and the Federal Government and Reserve Bank do not seem to be doing anything.

Share This

Share This

If any property professional is not sure, or hesitant about fully embracing Auctions as the most effective property marketing strategy for the current Queensland market… read Sharon Saul’s comments below.

Stephen…As you are aware we are holding an outside broadcast with Kevin Turner at our office on Saturday 6 December.  We have co-ordinated this with an auction event to be held on the day. To date we have 8 auctions happening on the day and also 1 on the Sunday(due to religion).  The entire team is very excited about this. 

By the way, yesterday we had an auction in Raby Bay – 42 Sommersea Dve – it sold under the hammer!  First home in Raby to sell in 8 weeks!  We had 8 registered bidders and it was great!

If any office in the network is in doubt as to how to handle this market–AUCTION!    

Congratulations to Sharon, Craig and Graham and the team at Cleveland… they really are gaining tremendous market share and have carved out a real place for Raine & Horne in the Redlands.  

 

If you have a great property story send it to me, as others are always interested ssharry@rhq.com.au

                       

         

     

   

     

   

  

 

 

Share This