Before I launch into my market commentary for the month I would like to make a couple of small announcements. I have just launched my new website www.joshuawygoda.com. Please check it out and let me know what you think. On this page you will find links to my Blog, my Facebook page, my Twitter page and my YouTube channel. In addition to this monthly update I regularly post property related information to these other portals. Please feel free to subscribe to any or all of them.
Onto the market. . .
Much has happened since my last newsletter but probably the biggest news that is relevant to my world is what has happened with interest rates.... The Reserve Bank left rates on hold and the banks have independently of the RBA increased their standard variable home loan rates. There has been a lot of negative press recently and everyone is asking the question: What is going to happen to the property market?
Let's look at the positive signs which are applicable to the Sydney market:
1. Transactions are up on last year. As you all know the year started off extremely well with more enquiry and more properties being sold than this time last year. In fact transactions are up by some 25% compared with the same period last year.
2. More cashed up qualified buyers. There is little doubt that a rate cut would have helped but I do not think it will stop people from buying. Furthermore I haven't really noticed any drop in buyer numbers at Open House Inspections or the level of enquiry over the last week. There still seems to be more genuine buyers around than last year.
3. RBA dropped Interest Rates in November and December last year. Everyone seems to have forgotten about this but I am still seeing the impact of these rate cuts. The demand for home loans across Australia reached an eight-month high in December, new figures have revealed.
According to the Australian Bureau of Statistics, the number of property loans taken out during the month stood at 48,453 – a month-on-month rise of 2.3 per cent.
4. Good deals on fixed rate loans. Some economists are still predicting further rate drops this year and although the banks increased their standard variable rates, 3 year fixed rates are still extremely attractive. In fact, at the same time as the ANZ increased their variable rate they actually dropped their 3 year fixed rate to 5.99%. I also noticed Citibank advertising 1, 2 and 3 year fixed rates at 5.99%.
5. “Sydney's housing pushes ahead...” This was the title of RP Data's latest press release on 31 January (Click HERE to see the full release) . In short Sydney was the best performing capital city in December 2011 and also the best performer for the last quarter of 2011.
6. Rents are up and vacancy rates are low. Rents in Sydney have increased over the past 12 months by an average of 7.4% with suburbs such as Cremorne increasing by a reported 11.7%. This is great news for investors. I also read a report that because of rising rents and a shortage of rental accommodation, renters are deciding to buy, increasing the number of buyers in the market place.
7. Unemployment rate has fallen. Australia's unemployment rate has fallen to 5.1% for the second month running on the back of very strong total jobs growth of 46,300 persons and, importantly, an unchanged participation rate. This is clearly a positive for buyer confidence
8. Positive signs for the US economy. Unemployment levels have fallen to their lowest level since March 2008 and data on January housing construction confirming a pickup in that sector with an acceleration in the number of homes under construction.
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