Viewing by month: March 2011

There are good opportunities for first home buyers available in the market

The presence of first home buyers in the residential property market has done somewhat of a back flip over the past couple of years. 

In 2009 we saw a peak in first home buyer activity – according to RPData first home buyers made up 28.5 per cent of all owner occupier finance in May of that year.  This was a period where the effects of the Global Financial Crisis could still be seen in lowered interest rates and government stimulus efforts. 

2010 however was a different story.  With the reigning in of the various government grants, including the First Home Owners Grant Boost, as well as several interest rate increases over the course of the year, the number of first home owners in the market decreased substantially.  A recent report from RPData shows that first home buyer mortgage commitments dropped to their lowest level in six years during 2010. 

There is no doubt that purchasing any property is a big, capital intensive decision to make.  And this decision is amplified many times over when you are considering your first property.  Consumer sentiment, interest rate stability, employment prospects and future income growth are big factors that are inevitably taken into account, and as we saw through 2010 these same factors can affect the confidence of first home buyers, holding them back from making a purchase. 

Keeping these factors in mind, I am hopeful that 2011 will see the return of the first home buyer; I see the market in its current form to hold some excellent purchase opportunities for those who are in a position to buy a property. 

The market itself has been somewhat subdued of late, with median house values across every Australian capital city dropping slightly over the quarter to February 2011.  There is also some consensus that interest rates will stay on hold at 4.75 per cent for the foreseeable future. 

For those first time buyers who are considering taking the plunge, I think that now is a good time to look at your budget and perhaps sit down with professionals such as real estate agents and mortgage providers who can give you realistic advice about your purchase options.  I would definitely advise against pursuing high levels of debt, and I think it is important that all eventualities are planned for, including the possibility of interest rate rises later in 2011. 

For any first home buyers who are looking to sit down and talk to an agent, please feel free to pop into any CENTURY 21 office around the country.  Our real estate experts will be able to take you through the available properties in your area and talk to you about the buying process. 


0 comments | Posted by Charles Tarbey on 28/03/2011 at 8:41 AM | Categories: First Home Buyers -

Why it is important to attend an open house before buying a property

Although they can sometimes be a great deal of work, the open house is one of my favourite aspects of the real estate selling process.  In most cases, much preparation will have gone in to ensuring that the property shines on the day, and owners are proud of what they are offering to the public. 

With property being one of the largest purchases that the average person will make over a lifetime, I am usually quite surprised to hear of situations where acquisitions are made by people who haven’t seen the property previously.   To me, the open house is an ideal way for prospective buyers to get a feel for a property and to ask questions of agents face to face in an environment where answers can be instantly understood and applied. 

I came across an article to this effect on the Sydney Morning Herald website recently, entitled ‘Chance to get all facts on the table’ by the chief executive of the Real Estate Institute of Victoria, Enzo Raimondo. 

In the article, Mr Raimondo talks about the open house as an important and necessary part of the research needed to make what could be one of the most expensive purchases of your life, as they give you the opportunity to talk to agents and see a property of interest first hand. 

So how can buyers prepare for open homes and what should they be doing while attending?

Mr Raimondo suggests that before attending an open house buyers should make a checklist of important attributes and what they require from the property, such as architectural features or location. 

Upon arriving at an open house, Mr Raimondo recommends that buyers take the time to talk to the agents who are showing the house.  These people are experts, with both knowledge about the property and the local area, and even if the property in question turns out to not be what you are looking for, these agents can potentially keep you updated on other listings in their books that may be of interest. 

These agents can also keep you informed about the listing status of the property at hand, including letting you know when it sells or advising you of when to make an offer. 

In any case, properties can look very different in real life to how they appear in print or online.   Physically visiting a property before you purchase it will allow you to get a good feel for it, and to see whether or not you can envisage yourself living there. 


0 comments | Posted by Charles Tarbey on 21/03/2011 at 10:20 AM | Categories: Buying - First Home Buyers -

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 -

What to do if your property is passed in at Auction

It can be a very frustrating experience to have your property passed in at auction.  The lead up to and auction themselves are often emotion-charged experiences and after all of that it can be hugely anticlimactic if the property does not sell at all. 

Realistically, the possibility that your property may be passed in should be a consideration when you are initially choosing an agent - you need to feel confident in the agent’s ability to negotiate the best deal on your behalf should your auction be unsuccessful.

So, what are you to do if the possibility becomes a reality - your property is passed in at auction? 

The first step is not to worry – the result is not necessarily a bad one.  The good news is that the majority of homes will go on to be sold afterwards, if not in the hours immediately post-auction then usually in the days following.  Many prospective buyers will even increase their offering from what was bid at auction in order to secure the property, sometimes reaching the reserve price. 

It is therefore important to stay calm and focussed – you are still going to be called on to make decisions and to do so requires a clear head. 

It is usually the case, and the law in some Australian states, that the first right of negotiation after a property has been passed in rests with the highest bidder.  These discussions invariably start directly after the auction has finished with your agent acting on your behalf. 

It is important to go into these preliminary negotiations with somewhat of an understanding as to why your property did not sell.  For example, you may have set a reserve price that is deemed to be higher than market value, and thus buyers were not prepared to meet it.  Having a general idea (aided by your agent’s advice) should help you to better reach a settlement that is favourable to you as well as being realistic.     

Depending on your need to sell, it will also be important to go into these discussions prepared to negotiate.  You want the best price; however your property may also have been sitting on the market for a fair amount of time, or you could be financially committed to another property that requires funding to settle.  It is important that your agent is aware of your situation and the importance of achieving a sale, keeping these in mind throughout their negotiations with potential buyers. 

Remember that your agent is looking out for your interests and wants to achieve the best possible sale price for you.  Accept that your agent knows the area and market conditions, and try to take their advice in situations where you are unsure as to what will be the best action to take.   

In the end, it is a possibility that every auction could end with the property in question being passed in.    Just remember to stay calm and focused throughout the negotiations that take place afterwards and, with the help of your agent, you should be able to achieve a satisfactory sale. 

 


0 comments | Posted by Charles Tarbey on 07/03/2011 at 4:17 PM | Categories: Selling -

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 -