Property Prices and Clearance Rates Defy Doomsayers

A clearance rate of 74 per cent was recorded this weekend compared to 76 per cent last weekend and 70 per cent this weekend last year. There were 1041 auctions reported to the REIV, with 775 selling and 266 being passed in, 140 of those on a vendor bid. The overall clearance rate in the year to date for 2016 is 75 per cent, up one per cent on the same period in 2015.

Property Prices and Clearance Rates Defy Doomsayers

Last week I wrote about the sensationalistic style journalism which showed distressed property investors and purported international expert Jonathan Tepper who up until last week was unknown to me.

Basically as Christopher Joye so eloquently put it we saw “fact triumphing over the hedge fund’s book-spruiking fiction”.

Adding further insult to recent property market crash predictions, research house CoreLogic reported a rise of 0.5% in Australian house prices for the month of February and a rise of 1.4% over the past three months or 7.6% year on year, no cliff here yet!

The RBA announced last Tuesday a “no change” on rates yet again, leaving them at a 2% cash rate. But the numbers I was most please to see which had very few headlines, as expected, were our GDP or Growth Domestic Product figures which were at 3% for the year for the 12 months to December.

Why is GDP so important? Well this number measures the health of our economy. The latest figures smashed economic forecasts of 2.5%, highlighting the strength of our economy.

So impressive was the growth that it nearly doubled that of the G7 countries in the past year. Australia is successfully transitioning, yet again but this time into the services sector which makes up three quarters of our overall economy, according to economist Stephen Koukoulas.

So if as has been touted there is to be a downturn in the strongest economies in Australia – Sydney and Melbourne, we would expect negative GDP growth, job, losses and a rise in unemployment. Other indicators which would hurt the property market and therefore prices are interest rate hikes and consistent fall in consumer confidence.

My feeling is the average consumer is pretty comfortable with how our country is being governed and our how our economy tracking, there’s a sense of confidence which is reflected through consumer spending. With a July election imminent and the Coalition government strong favourites to win, I expect a continued stability and more balanced economy focused on growth.

What’s happening in the property market?

As far as the market over the weekend it was steady as she goes with a (74%) clearance rate. In fact if anything I’m beginning to see more people turning out to auctions and more bidders. Despite this, the actual auction process is more of a teeth-pulling affair rather than free-flowing and exuberant one, witnessed last year.

Further consolidation and stability is on the cards as negative gearing becomes a distant memory and banished off the political agenda for the Coalition.

Over the weekend Jellis Craig’s 76% clearance rate result from over 50 sales in Boroondara appeared to reflect market sentiment. And typical of what we are seeing, demand for inner city cottages and single level villa units are on the rise from those looking to downsize.

The inner east, north and north east recorded the strongest clearance rates, above 80% for the weekend.

Moomba weekend and Easter school holidays in March will put pressure on stock levels and ensure a stable market.

Due to the long weekend, there won’t be a market wrap next week.

Big changes to quoting prices are coming

Also announced this week, yes it been a busy one, was the crackdown on underquoting by Consumer Affairs Victoria. New laws are being proposed which would see a radical change in the way real estate agents do business, coming to you very soon!

Under the new proposal announced on Friday, agents must provide potential buyers a fact sheet for any advertised property which will show three comparable sales in the area, the suburb’s median price and how the advertised price range has been estimated.

According to Consumer Affairs only a 10% price range will be allowed to be advertised under the new proposed changes, certain to cause quite a few headaches for those agents who have been flouting with the law and obviously the quoted bait price.

Proposed new penalties for breaches of the rules will see agents paying up to $30,000 and risk losing commissions, according to Consumer Affairs Minister Jane Garrett.

Street Advocate, U1/7 Hillboro Crt, Watsonia

We were on the hunt over the weekend for our savvy investor who was out to find a good buy in a great location. Our brief was to buy an investment with capital growth potential, good rental return and all at fair market value.

And so it was, we found a dual occupancy house located in a quiet Watsonia court.

Immaculately presented this 3 bedroom home was perfect for an investor, first home buyer or downsizer, three different markets.Close to the train station, shops, public and private schools as well as the western Ring Rd the location was ideal for rental and capital growth.Quoted over $450,000 our due diligence showed the property was always going to bring closer to $600,000 than $500,000.

The bidding started at $500,000 from a local real estate agent bidding for himself, another bidder chimed in at $510,000 then blows between 4 parties took the property all the way to $585,000 before the agent went in for the obligatory half time then announced the property on the market.

At this level we were already very close to our maximum estimate on price and as such stayed out of the competition. Bids were cut back to $5,000 and the price sailed past $600,000 with plenty more to go.

The final two bidders, the real estate agent against the downsizer continued to try and outbid each other with $5,000 and $10,000 bids until at $620,000 the property was called once twice and three times before being knocked down to the lady downsizer.

Not sure whether we bought really well last year or someone overpaid on this property, but our December purchase of a brand new off market 2 bedroom villa unit for $512,000 for another client certainly now looks very cheap!

It pays to know the market!

What our Clients Are Saying?

We would like to thank you for all your hard work, your advice and your attention helping us to secure an excellent investment property.  Being first time investors, you were happy to spend time with us explaining how it all works and always happy to answer our many questions. You sorted through lots of properties according to our brief to finally secure a fantastic place in a great location and at an excellent price. You made negotiating with the vendor’s agent a breeze and your knowledge of the industry and players was a huge advantage.  All in all, we are so glad we had you as our advocate for this purchase and we hope that we can work with you again in the future. Peter and Jenny.

Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.

For a basic snapshot of your suburb’s performance or a property report customised for your property, request a Free Market Report.

If you are thinking of buying, selling or investing and would like a FREE 5 minute chat with Street News Director Peter Sarmas, please contact him on 0418 740 606 
or via email at [email protected]