Buying in Today’s Market

We know there have been a lot of conflicting reports in the media about the market, and it seems like we should weigh-in on why we think it’s still a great time to buy this winter.

•  First of all there’s lots of choice. RP data reports that there is approximately 30% more properties on the market than there were at this same time last year. As this supply dries up, prices also tend to increase.

• Banks seem to be lending again. There are good deals on 3-year fixed rates, which suggests the banks have confidence in residential property in the medium term.

• Despite all the media reports about interest rates, they actually have not gone up since November last year. However, rates will inevitably go up in the next few months, so this is a great time to beat the rise and lock in a loan at a favourable low rate.

• Rents are high, rental yields are on the rise, and the Lower North Shore continues to be an incredibly desirable area for professional singles and couples, and families of all sizes. This is good news for both investors and self managed super funds. 

Our key recommendation is not to miss out by sitting on your hands. You may find that by trying to read or anticipate the market, you may miss opportunities. No one has a crystal ball to tell us what will happen next month, so be sure to keep a long-term perspective and don’t miss out on properties that suit your lifestyle today.

JUST LISTED - 25/102 Spit Road, Mosman

Renovated 3-Bedroom Apartment with Breathtaking Views

With elevated views sweeping from north of Manly across Grotto Point and North Head to the ocean, Balmoral, Georges Heights and beyond to the Sydney CBD, this stunning apartment takes in one of the most exceptional vistas in Sydney.

For more details, contact Joshua Wygoda 0414 666 190 or Emily Gordon 0404 721 546

http://www.century21.com.au/c21/propertySearch/brochure.cfm?grplstno=NSW5725956

Property Market Review - June 2011

Recently, we have noticed that conflicting and confusing media reports have left both buyers and sellers feeling unsure about the current state of the property market. We thought it may be useful for our clients to share some of our observations about the current Lower North Shore market, as well as giving our predictions about what is going to happen in both the short- and longer-term.

What’s happening now:

From late last year to early this year we experienced what seemed to be the beginning of a market recovery after a slow start to 2010, but growth in our area seems to be on pause for the moment. Our best guess is that this is due to global economic uncertainly, fear of interest rate rises and a number of natural disasters both abroad and closer to home.

The market generally is slightly softer than it was 6 months ago. Auction clearance rates are hovering around 50% to 60% and according to RPData there is approximately 30% more property on the market compared with the same time last year. However, the stock levels are not expected to remain so high, as traditionally there is a drop in winter and this year seems to be no different. 

The luxury segment of the market seems to be most impacted market segment at present. This is certainly true in the Lower North Shore and according to our Century 21 colleagues, every capital city appears to experiencing the same conditions. Past precedent suggests that the top-end is the segment of the market that will most dramatically rise once economic confidence returns.

Buyers are also acting with a great deal of caution. From our property enquiry we can tell there are lots of people wanting to buy property, but it seems that there are plenty who are waiting to see what the market does. There seems to be greater hesitation in some segments of the market, whereas in others buyer activity is still quite strong. We are still experiencing strong demand under $2million, whilst much less demand for properties over $2million.

We constantly hear from buyers that they are waiting for prices to hit the “bottom” before buying. The problem with this methodology is that the only way you can determine the bottom of the market is once prices have already begun to rise. Over the last 20 years, each time the market has risen after a correction, buyers always lament “missing the bottom” and wish they had bought 3 months previously.

Given that rents are on the rise and prices are slightly softer at present, it is an excellent environment for investors. One and two bedroom apartments are extremely popular at the moment and there is increasing demand from Self-Managed Super Funds investing in residential property.

Our best recommendation to buyers is to make property decisions based on what best suits your lifestyle, versus gambling on what may or may not happen with the “market.” It is so critical to keep in mind that for most of us, purchasing a property is a long term proposition!

Predictions for the short-term:

Interest rate uncertainty for the months to come is causing concern for some buyers; however, we interpret the major banks’ actions to mean that rate rise woes may be limited. Banks are offering reasonably low 3-year fixed term rates at present, which indicates the banks are fairly confident that we won't see too much upward movement in rates in the coming months.

Banks are also starting to lend again: it’s been awhile since we have seen a bank lend 95%, but we have just sold a handful of properties where the purchasers have in fact borrowed 95% without any difficulty. This suggests that the banking sector has confidence in the property market and anticipates longer-term capital growth.

In regards to recent headlines claiming that Sydney property prices are 40% overvalued, we would not recommend putting too much credence in these “experts”. These headlines appear in the media every couple of years. Over the last 20 years, we have not had a market drop by anywhere near this figure. If memory serves, the biggest drop was about 20% and within about 9 months these losses had been made up.

Our house prices are underpinned by a strong demand at the entry level of the market, which trickles up to the higher end through a knock-on effect. First home buyers continue to represent a large segment of the market, reportedly as high as 17% of the market in Sydney. As rents in Sydney continue to escalate and the government continues to incentivise buyers, tenants are more than ever trying to break the renting cycle in favour of purchasing a place to live.

Predictions for the medium- to long-term:

Sydney’s housing shortage and record low building approvals remain unresolved, which means the property supply will not be able to keep up with immigration and population growth in the years to come. This will continue to drive the market in the medium to longer term.

We are predicting an adjustment somewhere between 5 and 10% over the next 12 months, followed by a period of relative stability over the next 3 to 5 years with nominal growth. Before there is any real upward pressure on house prices, there needs to be some absorption of the extra stock on the market, as well as a return to sustained buyer confidence.

Unfortunately no one can know for sure what the next 12 years or even the next 12 months will bring, but we are certainly committed to keeping you up –to-date with the latest developments in the market as we see change. We are committed to assisting our clients to make the most of any market, and would be happy to discuss your buying or selling plans further, please contact us anytime.

Best regards,

Joshua Wygoda

JUST LISTED - Renovated Beauty Point Home

Renovated Beauty Point Home with Postcard-Perfect Middle Harbour Views


Capturing stunning Middle Harbour views over 2 levels, this recently renovated Beauty Point home is ideally designed for entertaining or quiet family living. The views take centre-stage in the spacious, high-ceilinged open plan formal living and dining room, flowing onto a large covered verandah that wraps around the front of the home. There is also a separate informal lounge and family meals room providing for flexible living.

 

 
To register your interest or request an appointment, please contact Joshua Wygoda 0414 666 190 or Emily Gordon 0404 721 546.

JUST LISTED - Fantastic 2-bedroom Cremorne Point apartment

9/1A Murdoch Street Cremorne Point


FOR SALE $650,000


Enjoy the twinkle of the city lights and the Harbour Bridge from this delightfully presented art deco apartment located in a quiet and exclusive, well-maintained security block. The generous floorplan features a bright north-facing aspect and has been completely renovated with quality inclusions and finishes throughout.

First inspection this Saturday 12.00-12.45pm

Call  Joshua Wygoda 0414 666 190 or Emily Gordon 0404 721 546 for more details.

SOLD - 302/56 SPIT ROAD, MOSMAN

Another sold using the power of the Century 21 Global Network


Fantastic 1 bedroom apartment sold for $500,000 by Joshua Wygoda and Emily Gordon of Century 21 Mosman.

Through our Century 21 Database we were able to match a buyer with the property and negotiate a record price for the building... without the need for marketing!

For more details on how we can do the same for you, please contact Joshua Wygoda 0414 666 190 or Emily Gordon 0404 721 546.

Statement by RBA governor Glenn Stevens

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, though the recent disaster in Japan is having a major impact on Japanese production, and significant effects on production of some manufactured products further afield. Commodity prices have generally softened a little of late, but they remain at very high levels, which is weighing on income and demand in major countries and also pushing up measures of consumer price inflation. In response, a number of the countries with stronger expansions have been moving to tighten their monetary policy settings over recent months. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility.

Australia's terms of trade are reaching very high levels and national income has been growing strongly. Private investment is picking up, led by very large capital spending programs in the resources sector, in response to high levels of commodity prices. Outside the resources sector, investment intentions have been revised lower recently. In the household sector thus far, there continues to be a degree of caution in spending and borrowing and a higher rate of saving out of current income. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.

The floods and cyclones over the summer have reduced output in some key sectors. As a result there was a sharp fall in real GDP in the March quarter, despite a solid increase in aggregate demand. The resumption of coal production in flooded mines is taking longer than initially expected, but production levels are now increasing again and there will be a mild boost to demand from the broader 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 that this slower pace of employment growth is likely to continue in the near term. 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 expanded this year after a period of contraction. Growth in credit to households, on the other hand, has softened, as have housing prices. The exchange rate remains, in real effective terms, close to its highest level in several decades. If sustained, this could be expected to exert continued restraint on the traded sector.
CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset. The weather-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 next 12 months.

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.