Monday, May 30, 2011
Mosman Remains Sydney's "Most Popular Prestige Suburb"
Great to hear some positive news - in Saturday's SMH Domain, APM analyst Andrew Wilson published an article "Sydney's prestige market shows some resilience" where our own Mosman got a mention as "the most popular prestige suburb." The complete article along with the weekly market figures are available online http://news.domain.com.au/domain/home-investor-centre/sydneys-prestige-market-not-all-grim-20110527-1f6wb.html.
Wednesday, May 25, 2011
How useful is Property Data?
An extract from Australian Property Investor Magazine's Deputy Editor Vanessa De Groot 25 May 2011:
The compilation of data related to the property market is now extremely comprehensive, with some companies dedicated solely to putting figures together and getting information out there.BY VANESSA DE GROOT
There are regular news stories about the increase or decrease in the median price of property and it’s widely used as an indicator of the overall state of the property market.
For instance, it was recently reported from figures released by one of the data compilation companies that over the March quarter home values fell by 2.1 per cent. That, in turn, saw a number of stories in the media that used the data to claim the housing market was in a bad state, with prices falling.
Many of us know well the arguments about house prices falling, one of the most important being that even though prices might fall across the board, that doesn’t mean that they’ve fallen in every suburb in Australia – in fact in some places they might go up. Similarly, it doesn’t mean prices have fallen for every property. It also doesn’t mean the property market is in dire straits.
So I pose the question – how important is this data? Is it an accurate reflection of what’s going on in the market and can we rely on it as such? Or should it just be used as a guide?
I think many property investors use the data to get an overall understanding of what’s going on in a particular market.
But we must be aware that the data needs to be carefully examined. If a median house price in a particular area has risen then you also need to look at things like the number of sales, because if there’s only a low number it might not be an accurate reflection, and whether there’s new housing development in the area, which might be pushing the median price up.
Investors shouldn’t look at median prices for an area and immediately assume that they can find something in that area for that price – many factors can throw the median off and hence, it may not be a 100 per cent accurate reflection of the market.
Similarly, if you have a property in a particular area and the median price has grown by a certain percentage, but yours hasn’t, it doesn’t necessarily mean the data is wrong. The percentage growth rate doesn’t necessarily apply to every single property. There are a lot of variables and your property may have characteristics that means it may grow more than the average growth rate, or less.
It may also be a good idea to look at data for a long period of time – that is, the growth rate over five or 10 years may more accurately reflect the growth in median price rather than looking at the past year, as that can be influenced by different, temporary factors.
As an example, if we look at the media reports now, with all the doom and gloom about property prices having fallen, we’d be misled about the property market.
Figures might indicate – rightly or wrongly – that the market has dropped a tad, but over time if we look at the growth rate of property prices it’s an entirely different story, with prices having risen exponentially over the years.
This is just a temporary slowdown and if we interpret the figures correctly, looking at growth over a longer period of time, we can see that.
While it’s a good idea for property investors to use data that looks at median prices, rents and even things like supply and demand and stock on market, it’s important to put it all in context. Thorough research of a particular area should be undertaken before buying solely on the figures.
That’s important too because even though there might have been growth in a particular area in the past, there’s no guarantee from that that there’ll be growth in the future. Future growth depends on things like whether there’s population growth and infrastructure being built, among many other things.
Don’t get me wrong – I think the property data provided by research houses is very worthwhile and is essential for investors to be familiar with and understand, but I also think we shouldn’t put too much reliance on it when buying or selling, or even setting a rental rate.
It’s just one part of the whole story.
Monday, May 16, 2011
Is winter a good time to sell?
It may be getting cold outside, but the winter property market is just warming up!
Year after year we get asked the same question by clients wanting to sell their property:
Is winter a good time to sell or should we wait for spring?
The answer: winter is a great time to sell.
Traditionally, the number of homes on the market decreases over the winter months, creating a huge opportunity for owners aiming to sell before the spring rush of properties for sale.
Fewer houses on the market means reduced choice for buyers, but there are still plenty of buyers around. We have found the level of buyer enquiry does not vary significantly based on the season. Whilst there are generally fewer transactions recorded during winter months, the prices tend to be a bit higher because of the increased competition.
Selling this winter may have an added benefit. With rate rises predicted to strike later this year, selling in the winter months may give owners a chance to beat the next rise. The past few rate rises have put dampers on buyer sentiment, so there is a definite advantage to getting your property on the market and sold as soon as possible.
I would be happy to discuss buying and selling in winter, and how it can affect your circumstances, please give me a call anytime.
Warm wishes,
Joshua Wygoda
Year after year we get asked the same question by clients wanting to sell their property:
Is winter a good time to sell or should we wait for spring?
The answer: winter is a great time to sell.
Traditionally, the number of homes on the market decreases over the winter months, creating a huge opportunity for owners aiming to sell before the spring rush of properties for sale.
Fewer houses on the market means reduced choice for buyers, but there are still plenty of buyers around. We have found the level of buyer enquiry does not vary significantly based on the season. Whilst there are generally fewer transactions recorded during winter months, the prices tend to be a bit higher because of the increased competition.
Selling this winter may have an added benefit. With rate rises predicted to strike later this year, selling in the winter months may give owners a chance to beat the next rise. The past few rate rises have put dampers on buyer sentiment, so there is a definite advantage to getting your property on the market and sold as soon as possible.
I would be happy to discuss buying and selling in winter, and how it can affect your circumstances, please give me a call anytime.
Warm wishes,
Joshua Wygoda
Wednesday, May 11, 2011
Rates on hold for now, but expect an increase soon.
Last week at its monthly meeting the Reserve Bank of Australia decided to keep the official cash rate on hold at 4.75 per cent. This decision is good news for the residential property market as it means that mortgage holders have at least another month without an increase to their repayments. Having said this, I do feel that buyers and home owners are going to need to prepare for a rate rise in the coming months.
In his statement following the rate hold announcement, the Governor of the RBA, Glenn Stevens, said that the RBA Board felt the current mildly restrictive stance of monetary policy remained appropriate, but that in future meetings the Board would continue to carefully assess the evolving outlook for Australia’s growth and inflation.
In terms of the global economy, the RBA felt despite other countries moving to tighten their monetary policy settings, financial conditions continue to remain accommodative. There has been some interpretation in the media post decision however that the RBA also recognises that the strong Australian dollar poses some risk to our economy.
An important consideration for the RBA has always been levels of inflation. The recent official inflation data for the first quarter released by the Australian Bureau of Statistics saw a surprise jump of 1.6 per cent in the CPI over the March quarter, which is the largest quarterly rise seen in the CPI in five years.
The RBA’s statement showed that it recognised the issue of increasing inflation. While the RBA expects inflation will be close to its target levels over the year ahead, Governor Stevens acknowledged that recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course. He said that over the longer term inflation can be expected to increase somewhat if economic conditions evolve as broadly as expected. We need to recognise that such an increase would strengthen the possibility of a rate rise.
Getting back to property, as a result of this rate hold CENTURY 21 continues to believe that the residential market is an attractive environment for property buyers, given the amount of stock that is currently available and the low clearance rates that we are seeing.
In approaching a property decision, buyers need to recognise the possibility of a rate rise and obtain an understanding about how this outcome could affect the viability of their purchase. Current owners with mortgages also need to practically prepare for the increased repayments that an interest rate rise would result in, and use this month’s rate rest to budget accordingly.
And so, for the sixth month in a row we wait to see what the next RBA decision will bring. While we cannot be sure when a rate increase will come, we can recognise that current economic indicators point to its eventual arrival. It is my view that the best action that residential property owners and purchasers can take is to prepare adequately.
In his statement following the rate hold announcement, the Governor of the RBA, Glenn Stevens, said that the RBA Board felt the current mildly restrictive stance of monetary policy remained appropriate, but that in future meetings the Board would continue to carefully assess the evolving outlook for Australia’s growth and inflation.
In terms of the global economy, the RBA felt despite other countries moving to tighten their monetary policy settings, financial conditions continue to remain accommodative. There has been some interpretation in the media post decision however that the RBA also recognises that the strong Australian dollar poses some risk to our economy.
An important consideration for the RBA has always been levels of inflation. The recent official inflation data for the first quarter released by the Australian Bureau of Statistics saw a surprise jump of 1.6 per cent in the CPI over the March quarter, which is the largest quarterly rise seen in the CPI in five years.
The RBA’s statement showed that it recognised the issue of increasing inflation. While the RBA expects inflation will be close to its target levels over the year ahead, Governor Stevens acknowledged that recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course. He said that over the longer term inflation can be expected to increase somewhat if economic conditions evolve as broadly as expected. We need to recognise that such an increase would strengthen the possibility of a rate rise.
Getting back to property, as a result of this rate hold CENTURY 21 continues to believe that the residential market is an attractive environment for property buyers, given the amount of stock that is currently available and the low clearance rates that we are seeing.
In approaching a property decision, buyers need to recognise the possibility of a rate rise and obtain an understanding about how this outcome could affect the viability of their purchase. Current owners with mortgages also need to practically prepare for the increased repayments that an interest rate rise would result in, and use this month’s rate rest to budget accordingly.
And so, for the sixth month in a row we wait to see what the next RBA decision will bring. While we cannot be sure when a rate increase will come, we can recognise that current economic indicators point to its eventual arrival. It is my view that the best action that residential property owners and purchasers can take is to prepare adequately.
Monday, May 9, 2011
Interesting SMH article - 7 May 2011
Prices are falling - some suburbs still hot
Dr Andrew Wilson
May 7, 2011
The ABS reports that prices for established houses in Sydney fell by 1.8 per cent during the quarter, containing the annual increase to just 0.8 per cent.
The ABS trend is broadly in line with the latest Australian Property Monitors' March quarter house price report that reveals Sydney median house prices fell by 0.4 per cent in the quarter and rose by 2 per cent during the year. It should be noted that APM models all house sales, not just established houses, as the ABS does.
Despite the recent decline in prices, Sydney remains the most expensive capital. With the median house price in the March quarter at $643,713, Sydney clearly leads its closest rivals, Darwin ($615,653), Canberra ($568,541) and Melbourne ($563,397).
These suburbs are in varied locations, with no clear regional trend in house price growth apparent. The annual median prices for these suburbs are also mixed, with four suburbs greater than $1 million and six less.
Dr Andrew Wilson is senior economist for Australian Property Monitors.
Wednesday, May 4, 2011
Glen Stevens' Reserve Bank Statement - 3 May 2011
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
The global economy is continuing its expansion, led by very strong growth in the Asian region. The recent disaster in Japan is having a major impact on Japanese production, and some effects on production of manufactured products further afield. Commodity prices, including oil prices, have generally continued to rise over recent months, pushing up measures of consumer price inflation in many countries. A number of countries have been moving to tighten their monetary policy settings. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty remains over the prospects for resolution of the banking and sovereign debt issues in Europe.
Australia's terms of trade are reaching higher levels than assumed a few months ago, and national income is growing strongly. Private investment is picking up, mainly in the resources sector, in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and a higher rate of saving out of current income.
The natural disasters over the summer have reduced output in some key sectors and the resumption of coal production in flooded mines is taking longer than initially expected. It is likely this caused a decline in real GDP in the March quarter. Production levels should, however, recover over the months ahead, and there will be a mild boost to demand from the rebuilding efforts as they get under way. Over the medium term, overall growth is likely to be at trend or higher.
Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest further growth in employment, though most likely at a slower pace than in 2010. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.
Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has resumed growth after a period of contraction. Growth in credit to households, on the other hand, has softened recently, as have housing prices in several cities. The exchange rate has risen further and, in real effective terms, is at its highest level in several decades. This, if sustained, could be expected to exert additional restraint on the traded sector.
Recent data on inflation show the effects of production losses due to the floods and Cyclone Yasi. The affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead.
Looking through these short-term movements, however, the recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course. While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected.
At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.
The global economy is continuing its expansion, led by very strong growth in the Asian region. The recent disaster in Japan is having a major impact on Japanese production, and some effects on production of manufactured products further afield. Commodity prices, including oil prices, have generally continued to rise over recent months, pushing up measures of consumer price inflation in many countries. A number of countries have been moving to tighten their monetary policy settings. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty remains over the prospects for resolution of the banking and sovereign debt issues in Europe.
Australia's terms of trade are reaching higher levels than assumed a few months ago, and national income is growing strongly. Private investment is picking up, mainly in the resources sector, in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and a higher rate of saving out of current income.
The natural disasters over the summer have reduced output in some key sectors and the resumption of coal production in flooded mines is taking longer than initially expected. It is likely this caused a decline in real GDP in the March quarter. Production levels should, however, recover over the months ahead, and there will be a mild boost to demand from the rebuilding efforts as they get under way. Over the medium term, overall growth is likely to be at trend or higher.
Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest further growth in employment, though most likely at a slower pace than in 2010. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.
Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has resumed growth after a period of contraction. Growth in credit to households, on the other hand, has softened recently, as have housing prices in several cities. The exchange rate has risen further and, in real effective terms, is at its highest level in several decades. This, if sustained, could be expected to exert additional restraint on the traded sector.
Recent data on inflation show the effects of production losses due to the floods and Cyclone Yasi. The affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead.
Looking through these short-term movements, however, the recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course. While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected.
At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.
Monday, May 2, 2011
JUST LISTED - 5/2 Upper Avenue Road, Mosman
JUST LISTED
5/2 Upper Avenue Road, Mosman
Offering expansive district views over Mosman Bay, city skyline and Harbour Bridge, this stylish and superbly presented top floor, strata-titled 2 bedroom apartment features light-filled north facing interiors and wide entertaining balcony.
For details:
Joshua Wygoda 0414 666 190
Emily Jessee Gordon 0404 721 546
Property profile:
http://www.century21.com.au/c21/propertysearch/Brochure.cfm?grplstno=NSW5725781
FIRST INSPECTION SATURDAY 7 MAY 11.00-11.45AM
5/2 Upper Avenue Road, Mosman
Offering expansive district views over Mosman Bay, city skyline and Harbour Bridge, this stylish and superbly presented top floor, strata-titled 2 bedroom apartment features light-filled north facing interiors and wide entertaining balcony.
For details:
Joshua Wygoda 0414 666 190
Emily Jessee Gordon 0404 721 546
Property profile:
http://www.century21.com.au/c21/propertysearch/Brochure.cfm?grplstno=NSW5725781
FIRST INSPECTION SATURDAY 7 MAY 11.00-11.45AM
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