Well finally today the Reserve Bank lowered the interest rates. Many were predicting that the rates would be lowered by 25 basis points but, in fact, the Reserve Bank lowered the rates by 50 basis points. We hope that the banks pass this saving on to their clients. If they do then this will be good news for all home owners and property investors. For home owners not only will they see their monthly loan repayments decrease but this should stop the downward spiral in property prices that we saw commence last year. In fact, with most property experts saying that Sydney has reached the bottom of the market now is a good time to buy.
Buyer’s beware of buying investment properties with rental yields of more than $900 per week as this market has softened. Even if what you are buying was previously rented for a weekly rental of more than $900 per week do not assume that you will be able to secure the same amount from a tenant. We see a stream of emails from managing agents with executive rental properties that previously were easy to let and are now sitting on the books for longer. We also see the same properties having to be advertised for reduced rentals.
With selling agents and the general population now back from holidays listings are on the rise and more properties are becoming available. The market is actually quite buoyant in certain price ranges in some areas yet continues to stagnate in others. For those looking to make a quick profit look for properties in areas that are being proposed for rezoning and either buy outright or negotiate an option. If you need help with negotiating an option or a conditional contract, we have the experience and knowledge you need.
We will be looking with interest at the Reserve Bank’s decision on interest rates this month. Despite all of the doom and gloom forecasts for the property market the bottom has not fallen out of the market nor will it do so. In an article by Ian Verrender in today’s Sydney Morning Herald entitled “A Property Crash? Don’t bet on it”, he expounds some common sense in reaching the conclusion that Australia is unlikely to go the way of the United States in terms of property prices crashing. We are where we have always been- a short roller coaster ride down with a high roller coaster rise in a few year’s time.
Well here we are in 2012 so what’s going to happen in the property market? If you believe some economists the Reserve Bank will continue to lower interest rates and the major banks may or may not follow. However, because a move by the Reserve Bank to lower rates is intended to boost the economy if the banks don’t follow immediately then the Reserve Bank will have no option other than to continue to lower the rate until the banks feel comfortable with passing on the lower rates to their customers.
We see the first half of 2012 as a year of continuing global uncertainty and a time when property prices will continue to stagnate. This should start to change towards the middle of 2012 with an even greater upward swing in 2013 and beyond.
Wishing all of our clients the very best for Christmas and the New Year.
From Monique and the staff at A1 Property Finders
With talk of reductions in interest rates in December and then again in the New Year things are looking up for both buyers and sellers. At the moment there is not much good stock on the market due to some Vendors wanting to hold off and wait to see if prices rise again with the talked about interest rate reductions. Luckily for our clients we are still getting access to properties that have not been advertised for sale (called silent listings) so we do have an edge.
Everyone who knows the Sydney property market knows that this slight slump in property prices won’t last forever. Prices will again rise simply because of lack of supply. The best time to buy is now and not when prices start rising. A lot of savvy investors are doing just that particularly in the high end where bargains are available.
The state of the global economy seems to be going from bad to worse as are many industries in Australia. The manufacturing sector is almost dead and the retail sector is struggling. Unemployment continues to be high. In light of this I believe that there will be an interest rate rise during this calendar year. If that happens then, when it is combined with the fact that first home buyers going back into the market to buy before their concessions expire, prices should start to move again though slowly at first.
At the moment there are few quality properties under $800,000 on the market in the Lower North Shore, the Inner West and the Eastern Suburbs. We believe that will change after the school holiday period in October ends.
September is the beginning of Spring which generally means that there will be more properties on the market to choose from. However, I hear from selling agents that many prospective Vendors are enquiring about selling their homes but not all have signed on the dotted line to list their properties. Some are playing wait and see to first look, not only at what they can find for the property they plan to buy when they sell but also, to see what Spring will do to the real estate sales market. This tells me that October may well have more listings than September.
With talk in the press one week about interest rates being expected to fall and in later weeks about interest rates being expected to rise and it is no wonder many people don’t know what to do and are just waiting to see. The smart ones, however, are out there buying because no matter what happens they know that in the long term they are buying in a cool market which, if the property is held for the long term, can only have upside potential.
Whoever says the property prices in Sydney have dropped does not know what he or she is talking about. No one with any knowledge of the property market would categorise Sydney as one market. Sydney is a series of different markets some of which have dropped while others have stabilised or even decreased. We have been involved with a number of buyers recently looking in the lower North Shore. We have seen numerous examples of recent sales in some suburbs of the lower North Shore actually demonstrating that the market for units under $800,000 in those areas is still quite bouyant. In fact, recent sale prices in those areas show a significant increase in prices and not a decrease.
