Trump’s Affect on Property

Source:REIV

Melbourne Market Wrap November 20th, 2016

A clearance rate of 80 per cent was recorded this weekend compared to 75 per cent last weekend and 65 per cent this weekend last year. There were 976 auctions reported to the REIV, with 778 selling and 198 being passed in, 78 of those on a vendor bid. The outer north and west continue to grow in popularity – with Thomastown and Hoppers Crossing recording a perfect (100 per cent) clearance rate in October.

As we predicted in our last post the Christmas late run has happened. Over the past few weeks vendors have rushed to get their property on the market for a sale before the New Year’s end.

Lower stock levels this year has meant higher clearance rates, this is eveident when we compare this weekend’s result of 80 per cent to last year’s 65 per cent for the same time.

Although not reflective in the REIV figures there is a significant number of homes being negotiated after auction due to low interest or higher vendor expectations.

If you are thinking of selling, pricing, presenting and marketing the property is absolutely critical in this market. Conversely when buying a good negotiater and market knowledge is key.

Source: PIXABAY

Trump’s Affect on Property

It looks like the dust has settled for now as the unthinkable has happened again and Donald Trump become president of the USA. The funny thing about this statement is that it all sounds so familiar, I recall writing almost verbatim when the Brits voted and won to exit the Eurozone.

It’s certainly the year for antiestablishment, leaders around the westernised world should be very worried. I see this uprising as a backlash from Mr and Mrs Average struggling to make ends meet post the GFC. The divide between the haves and the have the have nots is growing at an alarming rate, these people had no other choice but to vote for change.

Trumps’ presidency was predicted to be the downfall of Wall Street and global financial markets but as with Brexit this did not happen. In fact global equity markets soared on the back of Trump’s proposed stimulus measures for the US economy.

Trump’s economic plan is to spend his way out of the doldrums on school programs, roads and hospitals which for a country the size of America means jobs and lots of them. As part of his plan Trump also proposes to cut corporate and personal tax as well as relaxing tougher lending regulations. All in all, this planned stimulus should benefit the US in the short term and with control of the Whitehouse and both houses of congress, should be implemented quickly.

The US dollar is expected to rise against the Aussie which is good news for our education and tourism industries but Trump has taken aim at off shore cheap labour in countries like Mexico and China which could hurt Australia. If Trump adopts a more protectionist approach to trade as touted in his policy speeches this could impact Australia’s international exporters. How Mr Trump plays his cards when he is eventually in power will no doubt impact our economy.

Where Are Interest Rates and Housing Heading?

This leads me onto the next important point, the direction of interest rates and housing. Global bond rates have surged over the past two weeks. Comments by the head of the US Fed Reserve Janet Yellen as late as Saturday our time, increased the chance of an American rate hike next month pushing the Aussie dollar to a five month low of US73.90 cents.

What this means for would-be first time home buyers and investors is that the interest rate party is over! Interest rates have bottomed out to a cash rate of 1.5% and lending regulations have continued to tighten. Although property prices have skyrocketed in Melbourne and Sydney due to these low rates, property buyers have continued to pile into the market, but this is looks like changing. For those reading this please don’t take it as a signal for a property crash!

Over the weekend Financial Review property writer Robert Harley discussed the housing boom and crash scenarios since 1988. My take out from the whole article is simple, despite the 90’s recession, the 2000 tech bubble and GFC, median house prices rose in Sydney from $100,000 in 1988 to $890,000 in 2016. More intriguing though is how housing affordability is nowhere near the levels of 1988 and in fact has been improving over the past 12 months, I expect this will continue. The fate of real estate prices especially in Melbourne and Sydney is very much dependent on the influence of “Chinese Money”, employment and population growth.

Economic growth is the big driver for both these major cities. However a weaker Aussie dollar and further population growth could see more upside for property prices in 2017, especially in Melbourne.

Street Advocate – Property Results a Mixed Bag

We’ve had quite a busy couple of months buying and selling property for clients. Over the weekend we sold two properties at auction in what I consider “hot areas”, Box Hill and Oakleigh Sth. Worth noting is both these properties were original and bought buy buyers for their potential development aspect.

Stock levels have risen considerably with many agents seeing a last minute rush from vendors. However these new levels are significantly lower when compared to the same period over the past three years. This means pent up buyer demand has continued to help keep clearance rates at strong levels in Melbourne, something that should continue into the New Year.

Results are a bit of a hit and miss at the moment with some auctions seeing runaway results while others really struggling. Much of this is as a result of the type of property being sold; vendors with new apartments are under siege as thousands of new builds are completed. For those who are in a position to do so, it may be a case of holding on to these assets until all the supply is absorbed and prices stabilise.

Street Advocate Client Reviews

Peter,

Just a short note to thank you once again for your help in selling the property.

Dealing with you Peter was a pleasant experience, you were very professional with all aspects of the sale including:

·         Your knowledge of the real estate industry

·         Negotiating down the agents fee.

·         You understanding what marketing campaign was needed and directed the agent accordingly

·         Keeping me up to date by communicating via phone, text , email and weekly meetings

Not only will I use you in the future but I would have no problem recommending other vendors to you.

Thanks once again, Arnie Nuzzo

6 Highett Rd, Hampton

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.