Market Update - 9 February 2012

RP Data Press Release 31 January 2012. Sydney’s housing pushes ahead...

...while other markets remain soft

RP Data – Rismark Home Value Index Release

The preliminary capital city dwelling value index result for December was -0.2% (s.a.) following an upwardly revised +0.4% rise in dwelling values in November (was +0.1%). Revised regional house values for November increased from +0.3% to +0.5%. Sydney housing has been the nation’s best performer with dwelling values up 0.4% in December and by 0.7% over the quarter (s.a.). 

In the generally seasonally weak month of December, the preliminary RP Data-Rismark Home Value Index result for capital city dwelling values was -0.2 per cent (s.a.). Low sales volumes in December mean that this number will likely see a more significant revision than normal.

The November result from the RP Data-Rismark index for dwellings in capital cities has revised up from +0.1 per cent (s.a.) to +0.4 per cent (s.a.) based on additional sales information. This marks the largest month-on-month improvement in Australian home values since May 2010.

The RP Data-Rismark ‘rest-of-state’ index, which covers Australia’s regional markets, has also revised up in November from +0.3 per cent to +0.5 per cent (s.a.). This is the most significant increase in regional house values since November 2010.

Over the December quarter, Australia’s capital city home values declined by -0.5 per cent (s.a.).

RP Data’s director of research Tim Lawless, said, “The December quarter was the year’s smallest quarterly decline. According to our index, capital city home values fell by -1.5 per cent (s.a.) in the March quarter, and by a further -0.8 per cent (s.a.) in each of the June and September quarters. This rate of decline had decelerated to -0.5% by the final quarter of 2011.”

In 2011, Australian capital city dwelling values experienced a capital loss of about three and a half per cent. Regional house values fared a little better, correcting by around three per cent. This compared to the 14-15 per cent decline in Australian shares. Adding in rents, the gross total return to Australian property investors was slightly less than one per cent over 2011. 

Rismark’s managing director Ben Skilbeck said, “The month of December is characterised by a significant lull in activity and the preliminary index results have likely been influenced by some more volatile Melbourne and Perth estimates. We expect to get better clarity on the monthly movements as more information is reported.”

“Sydney currently has the largest volume of reported sales in December. In seasonally-adjusted terms, Sydney dwelling values rose by 0.4 per cent in the month of December. In the December quarter, Sydney dwelling values are up a total of 0.7 per cent (s.a.)” Mr Skilbeck said.

RP Data’s Tim Lawless observed that rental markets continued to strengthen in December.

“Weekly rents across the capital cities were up 1.0 per cent over the December quarter and are now 6.3 per cent higher than at the same time last year.”

“These higher rental rates combined with the slide in property values have improved investors’ yields. The average capital city dwelling is now offering a gross rental return of 4.6 per cent after a consistent trend upwards since mid-2010 when the typical capital city dwelling was yielding just 4.1 per cent. Darwin and Canberra are the highest yielding locations for property investors while Hobart, Brisbane, and Sydney provide gross yields that are better than average,” Mr Lawless said.

On the outlook for the year ahead, Rismark’s Ben Skilbeck commented, “We expect that the RBA’s interest rate cuts in the final two months of 2011 will lend further momentum to housing activity as transaction volumes pick up over February and March after the seasonally slow months of December and January. If financial market pricing for substantial additional RBA rate cuts proves accurate, we could see a stronger-than-expected bounce-back in housing conditions.”

“Housing affordability in Australia has experienced a striking improvement in recent times. While disposable household incomes on a per household basis rose by five per cent over the year to September 2011, Australian dwelling values have declined by 3.4 per cent since September 2010. As a result of the RBA’s rate cuts borrowers can now get fixed- and variable-rate home loans as low as 5.9 per cent and 6.14 per cent. Rismark’s research shows that disposable incomes per household have risen about 15 per cent further than Australian dwelling values since the end of 2003. This helps account for the decline in Rismark’s national dwelling price-to-income ratio, which is as low as its been since 2003” Mr Skilbeck said.

RP Data’s Tim Lawless added, “While global uncertainty and a stagnant local labour market could weigh on the consumer’s mindset, we are nevertheless observing improvements in monthly housing finance commitments. RP Data’s leading indicators on average selling times and vendor discounts are also starting to look healthier. There is no doubt that additional interest rate relief in 2012 would afford a very welcome cushion to the housing market.”

Tips for Selling Real Estate - Presenting your Home

Tips for Selling Real Estate - Choosing a Method of Sale

Tips for Selling Real Estate - Choosing and Agent

Are you thinking of Selling before winter?

Who can believe how quickly this year has started? One minute it feels like everyone is going on their merry way for Christmas, and the next we’re already into the final week of January – with only one month left of summer!

If you are thinking of selling your home before the winter months are upon us, I would suggest that now is an ideal time to start the process.  You will need to appoint an agent to represent you, choose a method of sale, allow time to arrange advertising and editorial and last but not least the preparation of your property itself... there is much to be done before most of you will be ready to go to market.

The first step is obviously to appoint a sales agent with which to list your property. My Tips for Selling Property video below may assist you with choosing the best agent to represent you.  

In choosing the best agent for your circumstances, don't simply choose someone with whom you feel comfortable, they also need to be honest with you regarding price expectations to allow you to make informed decisions. But probably the most important aspect to look for in an agent is their Negotiation ability. Remember, you are employing an agent to get you the best possible price.

It is also not uncommon for many properties to require a bit of a ‘sprucing up’ so to speak before being officially offered to the market.  It is entirely up to you to decide the quantity of funds that will be dedicated to the endeavour; however a general rule is that you should follow the rules of a cost-benefit analysis. My Tips for Selling Property video below may also give you some tips on how to present your home for sale.

It is often the case that extensive renovations are unnecessary as many people like to move into a new property and integrate their own touch and preferences.  You could find that you spend a large amount on repainting and reflooring, etc, only to have new owners move in and start again.  

With this in mind, many properties will benefit immensely from just a coat of fresh paint and a decluttering of all personal items.  When painting, light colours are often best as they can help to create a sense of spaciousness and light – often improving the appeal of the property to prospective buyers.  

Although the steps to prepare a property for sale will differ from dwelling to dwelling, with an agent in place and slight visual changes complete, many properties will now be ready to take to market.  

For more information or if you have any questions about selling or buying please do not hesitate to contact me. Even if you are not in my area of expertise I am more than happy to point you in the right direction.

Market Update - 28 January 2012