Category: State of the Market

First quarter of the year sees home values stabilise

The recent release of the RP Data-Rismark Hedonic Daily Home Value Index results for March showed that national home values rose 0.2 per cent in March 2012 – a potential sign that the Australian housing market is stabilising.  The market has remained unchanged for the quarter ending 31 March 2012; this flat result is the strongest result since March 2011 when values increased by 0.7 per cent.  

According to the managing director of Rismark International, Ben Skilbeck: “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in the calendar year 2011.”

Over the month, the resource rich states delivered the strongest gains with Perth rising 1.4 per cent, Darwin up 1.1 per cent and Brisbane increasing by 0.8 per cent.  

The Index saw that the flat result seen over the March quarter was largely driven by the Sydney housing market which achieved the strongest gains over the quarter, with values rising 1.1 per cent.  Values were down across many of the other capital cities with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent.  

Rismark’s Ben Skilbeck points out a number of factors that indicate an improvement in housing market conditions may have occurred over the past few months.  

“The ratio of national house prices to household disposable incomes is currently below the decade average.  Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwellings are at levels not seen since November 2009.  First home buyers as a proportion of home loans approved are back to levels not seen for two years,” said Mr Skilbeck.  

Charles Tarbey, Owner and Chairman of CENTURY 21 Australia said of the results: “While we must note that much of the improvement seen in the housing market is due in part to the Sydney market which rose 1.1 per cent over the quarter, we are nonetheless seeing signs of a potential stabilisation of home values. 

“Other factors such as strengthening auction clearance rates and improving demand from first home buyers are certainly encouraging indicators of both the current state of the national housing market and the potential for continued improvements over the course of 2012,” concluded Mr Tarbey.  

For more information about available property purchase opportunities in your area, please contact your local CENTURY 21 agent. 


0 comments | Posted by Charles Tarbey on 10/04/2012 at 10:17 AM | Categories: Finance - Property Management - Investors - First Home Buyers - State of the Market -

RBA leaves rates on hold for the fourth consecutive metting

There was good news for the residential property market again last week as the Reserve Bank of Australia decided in its monthly meeting to leave the official cash rate on hold at 4.75 per cent.  This means that all mortgage holders can rest assured that interest repayments will remain the same for another month at least. 

In his statement that accompanied the decision, RBA Governor Glenn Stevens referenced various factors that had influenced the Board’s thought processes.  He said that:

• Although the global economy is continuing its expansion leading some countries to tighten their monetary policy settings, overall global financial conditions remain accommodative. 
• In the household sector there continues to be caution in spending and borrowing and a higher rate of saving out of current income.
• The Bank expects inflation over the year ahead to continue to be consistent with the 2 – 3 per cent target.  

On the back of these and the general macroeconomic outlook, the result of the meeting was that the Board judged its current mildly restrictive stance of monetary policy to remain appropriate for the time being.  

So what can the residential housing market take from this decision? Although predictably ambiguous, Governor Stevens’ statement gives little indication that the RBA has plans to move interest rates in the short term, thus it could appear that home owners will have reprieve from an increase to their mortgage rates for some time to come. 

Essentially, I think that this fourth consecutive rate hold will provide some short term stability for the housing market nationally, which to be frank is much needed.  Of late, the market has received some negative publicity and it seems as though people have been viewing purchase decisions with some caution since the decision in November to increase rates. 

With the significant levels of stock that are on the market at the moment and reduced transaction rates, the certainty that this rate hold brings could very well be the incentive that many prospective purchasers need to return to the market. 

It goes without saying however that prudent buyers and investors will still need to consider the very real possibility of future rate rises and how these will impact the viability of their property purchase.  As the year progresses, the RBA will continue to monitor the factors as described above and will act accordingly.  It could be that the outlook for inflation changes or that consumer spending picks up – if the RBA’s view that its current mildly restrictive stance is no longer appropriate and needs to tighten, rates could go up affecting mortgage repayments and budgets. 

But for the time being, we can all rest knowing that another month has passed with no rate change and that rates remain at attractive levels.  This makes now as good a time as any for prospective buyers to look at entering or returning to the property market. 

Remember that CENTURY 21 has thousands of real estate agents situated across Australia ready to help you with your property needs.  Please feel free to pop into any of our offices for a chat. 


0 comments | Posted by Charles Tarbey on 08/04/2011 at 11:26 AM | Categories: State of the Market -

A good time for buyers in the housing market

The residential property market can sometimes be a confusing space to navigate, especially with the media attention it often generates and receives.  The views of property commentators, as well as the constant flow of data released, often appear to be conflicting, with the media conveying sometimes contradictory signals to buy, sell, or hold. 

I consider myself fortunate to be in the position I am, as I have access to our internal company data as well as the experience and opinions of the thousands of real estate agents in the Century 21 network, who are spread right across the entire country.  Having contact with such sources allows me to keep a firm grip on what’s happening in the market, in both capital cities and rural areas. 

At the moment, with the conditions that we’re seeing across the national market, it is my feeling that those who are ready to buy are positioned quite nicely.  According to internal CENTURY 21 data, which is a reflection of all CENTURY 21 offices across Australia, residential sales volumes are down of late – we have seen a decrease of 30 per cent from where they were around this time last year. 

And with transactions down, there are still significant levels of stock on the market; our figures indicate that there are approximately 67 per cent more properties for sale across the national CENTURY 21 network than there were at around the same time last year. 

Add to these figures the findings of the recently released RPData-Rismark Home Value Index, which saw a national decline of 1.3 per cent in capital city home values over the quarter to February 2011. 

So what does all of this mean for buyers? The fact that property transaction volumes are down could suggest that the market is currently wary and approaching purchase decisions with some trepidation.  If this is the case, then we are looking at a period where demand is low, which ironically can help to create favourable conditions for buyers.  The levels of competition that would otherwise need to be contended with are lower, which allows for some breathing space when it comes to making a decision, as well as giving you room to negotiate on price. 

And with the Reserve Bank of Australia deciding last week to keep interest rates on hold for the next month at least, buyers who require financing have another window of opportunity to obtain mortgages with favourable interest rates. 

It would appear therefore, that the property market in its current state may hold some good opportunities for those who are in a position to make a purchase.  I would suggest that these people make the most of this period and devote some time to researching and comparing the various properties and financing opportunities that are available.

Remember that our CENTURY 21 real estate agents all over the country are happy to answer any questions you may have about the properties that are available for purchase and general market conditions in your specific area. 


0 comments | Posted by Charles Tarbey on 08/04/2011 at 11:25 AM | Categories: Finance - Investors - First Home Buyers - State of the Market -

How to Be a Green Renter

There is a lot of talk at the moment about how home owners can make their homes more environmentally sustainable, with governments and companies offering financial incentives for various green initiatives (such as the installation of solar panels and water heaters) that people are encouraged to take advantage of. 

But what about the renters who are environmentally conscious but cannot action such projects because they do not own the property they live in? With growing numbers of potential first home buyers who are choosing to put off making a property purchase and continue to rent, this is an issue that may grow in importance. 

In my search to provide an answer for the renters in our community, I came across a website called Green Renters which, according to the site, is a not-for-profit providing sustainable living advice specifically for those living in rental property.  The organisation runs workshops, hosts events and runs projects aimed at educating Australian renters on how they can be more environmentally friendly.    

Helpfully the website segments the home into rooms, providing green tips, product reviews and relevant pieces of news that relate to each area of a property.  These pieces of advice always keep the focus on the site’s rental audience, however can of course be implemented by home owners as well.The lounge room for instance has news about the Tricklestar – a master-slave simple powerboard designed to ensure that your television does not draw power when it is turned off, or even when it is on standby.  Meanwhile, over in the kitchen the site provides advice as to how people can make the best choices when shopping for food at the supermarket. 

Green Renters definitely has practical recommendations that renters can easily put into place to limit the environmental impact of their day to day activities.  But things can get a little bit tricker for those renters who wish to implement larger-scale projects such as solar panel installations.  Such ventures can be expensive and ultimately the owner of the property will have give their approval and bear the cost – unless you are willing to pay for the installation yourself and shoulder the loss when you move on. 

Such arrangements can be difficult to organise, but could be worth it if you know you are to be a long term tenant of a property.  One idea is to sit down with your property manager and explain the situation, even presenting a business case exhibiting the financial benefits of the project (seen through the property’s reduced operating costs), as well as the reduced environmental impact, that can be passed on to the owner.

There is no doubt that as a renter it can be difficult to maintain environmental vigilance when you have limited control over the property in which you reside.  However there are definitely practical, everyday actions that can be taken.  For larger green projects it may be a worthwhile exercise to approach the owner/manager of your property to suggest initiatives that could be applicable and cost effective for both of you.   


0 comments | Posted by Charles Tarbey on 04/04/2011 at 9:24 AM | Categories: State of the Market -

It's time to get serious about going green

From a real estate point of view, I think we can definitely say that the benefits of including green features in a property certainly go beyond the aspiration of owners to be environmentally friendly. 

From the data that has been coming out for a couple of years now, as well as the attitudes of buyers that our agents are seeing in the marketplace, I am becoming firmer in my stance that the inclusion of environmentally sustainable features in new buildings or renovation projects is increasingly necessary for property owners looking to attract as many buyers as possible when selling.    

Putting aside for a moment the positive feelings you may get from doing your bit for the environment, it really doesn’t make financial sense for green features to be ignored, especially if you are renovating or building from scratch.  Not only can such features assist with reducing the costs of operating your property, without them you may actually find its value suffers. 

For example, solar (including hot water systems and roof panels) and LED lights are two proven green technologies that can both save you money and make your property more attractive to buyers. 

A recent survey suggests that Victorians are leaning towards green features in their homes.  According to the 2010 pulse practitioner and consumer survey released by the Victorian Building Commission, Victorian building consumers are placing increased value on environmental sustainable building, with 85 per cent of respondents rating it as important. 

These findings echo the conclusions of the 2008 report Energy Efficiency Rating and House Price in the ACT, published by the Department of the Environment, Water, Heritage and the Arts.  The study, which was the first of its kind in Australia, found that a significant relationship exists between house price and energy efficiency rating, evidence that the residential market values the energy performance of a property. 

I don’t think it’s surprising that such a value is placed on green features in a property, especially given the recent increases in the cost of living and expectations that it will continue to rise.  People will be searching for innovative ways to cut costs, and what better place to start than in your own home? What this means is that buyers will and are starting to lean more toward properties that are energy efficient when making decisions about a real estate purchase. 

Thus, when it comes time to sell, the presence of green features in your property will ensure that it appeals to both those who wish to be environmentally responsible and others who recognise the cost savings that accompany reduced energy use. 

Although individual circumstances differ, I strongly encourage all readers, especially those who are building from scratch or renovating, to consider including environmentally sustainable features in their plans.  Not only will you be having a positive impact on the environment, you could be improving the value of your home.


0 comments | Posted by Charles Tarbey on 21/03/2011 at 10:05 AM | Categories: Investors - State of the Market -

Home intelligence could add value to your property

It’s pretty hard to ignore the speeding train that is technology these days.  And I’m the first to acknowledge the opportunities for business that technology offers – over the years CENTURY 21 Australia has been able to utilise and embrace various innovations to achieve considerable success in the Australian real estate market. 

Beyond the office though – what types of technology do people wish to incorporate into their homes? As real estate agents we definitely focus a lot on beautifying, styling and readying a home for sale, and considering the value add potential of any cosmetic improvements that are made during a renovation or rebuilding process. 

But over recent years it is becoming apparent that people are increasingly placing value on the existence of technology in their homes.  And I’m not just talking about an entertainment system that ensures your DVD player is connected to your television, I’m referring to an entirely interconnected network that pretty much allows you to wire your home to respond to your every whim. 

An article by Paul Best recently appeared on the Sydney Morning Herald website, entitled ‘Unlimited control of your life’, which considered the ways that average suburban homes around Australia are turning into ‘smart homes’.

According to the article, processes of automation including controlling lighting, security, access to the house, communications and media distribution are usually what people first imagine when they think of technology in the home.  Recent advances however, as explained by Michael Staindl of Smart Systems, means that these intelligent systems are integrated, and your property’s lighting, security, heating/cooling, entertainment and communications all work harmoniously. 

The article uses the example of a security system which lets your cleaners in at prescribed times each week, and sends you an SMS when they come and go. 

The article surmises that the advent of such technological innovation in homes has been driven by the iPhone and iPad.  The apps available on these devices have given users a large amount of intuitive functionality and have started people thinking about what else is possible. 

The article leaves us with the message that smart homes are becoming increasingly standard, which gives home owners something to think about, even those who do not consider themselves to be all that technologically savvy. 

Incorporating technology into your home could be worth considering when renovating or building from scratch, as it seems to have the potential to not only make your life easier in the short term, but also could also add value to your property when it comes time to sell. 

 


1 comments | Posted by Charles Tarbey on 15/03/2011 at 11:30 AM | Categories: Buying - Investors - State of the Market -

Good news for the rural housing market

It is no secret that rural Australia has had a tough time of late.  With the plethora of flash natural disasters experienced across the nation over the past few years, as well as extended periods of ongoing drought, it has been hard for our farmers to catch a break, as well as to encourage city-dwellers to consider a move inland. 

Australia is an incredibly urbanised country, with approximately 82% of the Australian population living in major metropolitan regions (Source: Federalism and Regionalism in Australia – Rural Australia and the need for reform). 

And with Australia’s growing housing shortage and worsening affordability in our cities, our rural communities could be good options for people looking to relocate out of Australia’s urban centres. 

The attractiveness of these options was reinforced with the recent release of the Australian Commodities report by the Australian Bureau of Agricultural and Resource Economics and Sciences which revealed that earnings from Australia’s commodity exports are expected to rise by 14 per cent to a record $251 billion in 2011 – 12.

This is excellent news for the residential property market in rural Australia, where such strong expectations for our commodity markets could very well translate to solid growth in rural property prices and an increased demand for many rural homes. 

It is my prediction that properties or rural homes that are in, or positioned close to, the areas that benefit the most from increased prices on world markets and bumper harvests, can expect to see the strongest growth in values. 

There is a good possibility that the strength of Australia’s commodity markets will see rising demand for rural real estate over the coming years, with farmers enlarging their current holdings, ex-rural based Australians returning to the country, and new players entering the market. 

There is no doubt that most Australians appreciate the beauty of rural Australia.  And with the state of housing affordability in our capital cities, it wouldn’t surprise me at all if some people start to consider a move to the country.  If commodity prices continue to improve, as we have seen predicted, they will act as further incentive for people to relocate to the fresh air and open spaces of rural Australia. 

 


0 comments | Posted by Charles Tarbey on 15/03/2011 at 11:28 AM | Categories: Buying - Investors - State of the Market -

Relief as RBA keeps interest rates on hold

In a move that was not too surprising, the Reserve Bank of Australia decided to leave the official cash rate on hold at 4.75 per cent when it met last week.  This was the third meeting in a row that the decision to keep rates steady has been made.

In his statement following the announcement, the RBA Governor Glenn Stevens seemed to indicate that rates would remain at current levels for awhile yet, saying the Board judged that the mildly restrictive stance of monetary policy remained appropriate in view of the general macroeconomic outlook.  He also referred to the bank’s expectation that inflation over the year ahead will continue to be within the 2 – 3 per cent medium term target.

For the residential property market, this decision is excellent news and one that I think will provide relief for many homeowners, prospective buyers and investors. 

The decision has come at a good time as over recent months the release of data regarding the housing market has been a mixed bag, with some pieces of news putting a bit of a dent in market confidence. 

One such piece was the release of the Housing Industry Association/Commonwealth Bank housing affordability index, in which worsening housing affordability was evident at a national level.  The index decreased by 1.8 per cent in the final quarter of 2010, ending the year ten per cent lower than the same point in 2009. 

Additionally, residential construction activity seemed to exhibit subdued growth in the last three months of 2010, with figures from the Australian Bureau of Statistics showing that the value of residential building work fell by 1.1 per cent in the December quarter. 

It is evident that for many Australians the goal of home ownership, and then actually holding on to that property, is becoming more challenging.   Therefore, news that interest rates have been kept on hold for another month should help to alleviate some of the pressures felt in the housing market, at least for the short term.  At the very least, this reprieve allows people to prepare for future rises which are expected at some point in 2011.     

I would definitely advise anyone with a mortgage to be practical in their assessment of rates – there is a strong possibility that the RBA will decide to increase them at some point before the end of 2011.  Any change in rates will have an effect on your monthly interest repayments, and thus need to be factored into your budget.  The further ahead you can plan for these changes and prepare, the better placed you will be.


0 comments | Posted by Charles Tarbey on 07/03/2011 at 4:14 PM | Categories: Finance - State of the Market -

Housing supply remains an issue

The issue of housing supply is contentious at the best of times.  It is not unusual for seemingly conflicting data and reports to be released almost concurrently – sometimes we are told that there is too much stock on the market and people aren’t buying, at other times it is that there are not enough homes and prices are skyrocketing. 

It is important to understand that the residential property market has both a short term and long term outlook, both of which can be affected by different factors.  Interest rate rises, for example, often act to cool the market a little bit, as prospective buyers absorb the prospect of an increased mortgage rate and wait to see the general impact of the news on the market.  Hence, we often see periods of reduced auction clearance rates, even when supply is thought to be a larger issue. 

The concept of Australia’s supply issue therefore, is something which must be considered both in today’s terms, as well as in the context of Australia’s future population and accommodation needs.  

An article appeared in the Australian Financial Review on January 28, entitled ‘Housing supply plans suffer’.  I found that the article highlighted some very interesting points regarding Australia’s housing supply and affordability issues and so I thought I would draw your attention to it. 

The most concerning aspect raised by the article was its discussion of the Australian Government – questioning Labor’s commitment to tackle worsening home affordability.  As shelter is one of the most important needs of individuals and families, it is problematic to be facing a housing supply shortage while having a government who are not instigating the necessary reforms so that a reversal in the situation can be achieved. 

The article refers to concerns regarding the future of the National Housing Supply Council, created after the Labor party came into power in 2007.  The Council has produced two annual State of Supply reports, which so far forecast that Australia’s national housing shortfall will exceed 300,000 by 2014 – quite an alarming figure. 

With the appointments of its nine committee members having lapsed midway through last year (except for its Chair), combined with a restructure of governmental responsibilities, the Council’s work has been understandably affected.  The article quotes Population Minister Tony Bourke as saying that the Gillard Government is committed to continuing the council’s work, however it is of concern that new members have not yet been appointed. 

It remains to be seen what the fate of the Council will be.  Having said that, I think that it is imperative for such an organisation to exist, if only to shed light on a situation that will continue to of concern.  It has once again become seen that the Government may need some policy emphasis with regards to housing – or the shortage numbers that are already evident will continue to grow. 


0 comments | Posted by Charles Tarbey on 14/02/2011 at 12:27 PM | Categories: First Home Buyers - State of the Market -

Interest rates on hold over Christmas

I think we all breathed a sigh of relief last Tuesday when the Reserve Bank of Australia decided to leave interest rates unchanged for the month of December after raising them to 4.75 per cent from 4.5 per cent last month. 

In his statement after the announcement, RBA governor Glenn Stevens commented that the board saw the current monetary policy setting as appropriate for the economic outlook.  He also noted inflation is expected to see little change over the next few quarters, which suggests that the RBA may just leave rates on hold for a little while yet. 

In any case, the RBA does not meet in January unless under exceptional circumstances, so it seems borrowers and prospective buyers are safe until February at least. 

For mortgage holders the decision is a welcome one and means we don’t have to worry about finding the extra money needed to meet increased mortgage repayments for the time being; instead we can relax and focus on enjoying Christmas and the upcoming holiday period. 

For those who are looking to take on a mortgage to buy a property, hopefully this hold on rates will afford a little bit more certainty about making a purchase and committing to a loan.  

Good news aside, as I have said in other blogs regarding interest rate holds, this RBA decision provides an excellent opportunity for current and soon-to-be mortgage holders to prepare for future rate increases.  Economists are already predicting that the RBA may see a need to tighten monetary policy by the second quarter of next year. 

Try to use this time to plan for interest rate increases.  Consider your budget and look at where you can afford to put little bits away here and there so that if your monthly repayments get larger, your household resources will not be strained too much. 

For example, if one month a bill is less than expected, instead of spending, save the extra amount that you had allocated to the expense.  It is definitely true that a little can go a long way, and you will appreciate having a pool of savings to help lessen the impact of larger mortgage repayments if they arise. 

But for the meantime, you’ve now got at least another month where you don’t have to worry about interest rate rises, so enjoy! 


0 comments | Posted by Charles Tarbey on 13/12/2010 at 9:37 AM | Categories: Finance - State of the Market -