Viewing by month: September 2011

Things to consider when selling in spring

The spring selling season often proves to be quite a busy period for real estate agents.  The warmer weather seems to draw prospective buyers out of the gloom of winter and reinvigorate their search efforts for a property to purchase, while many sellers will have used the colder months to prepare their properties for a September sale, in order to successfully relocate by Christmas time. 

I think it is fair to say that the residential property market across Australia has been somewhat subdued over the course of 2011.  However, a couple of factors may well see a flurry of activity in real estate sales across spring.   Interest rates were left on hold for September and at this point economic conditions don’t suggest that the Reserve Bank will elect to lift them when they meet in October and perhaps not in November either. 

A tight rental market and rising rents may also see first home buyers looking to re-enter the market this spring.  And for New South Wales, add to this the decision by the state government to remove first home buyer stamp duty exemptions as of 1 January 2012 (with the exception of new properties), which may likely see first-time buyers move to take advantage of the scheme before it ends.

Despite the potential for increased buyer numbers, it is also common for spring to see an influx of properties placed on the market.  This means that vendors need to put every effort into ensuring their property stands out from the competition.

While many sellers will spend significant amounts when preparing a property for sale, such an investment may not be necessary.  There are various ways to improve your property fairly cost-effectively, including with a fresh coat of paint, bringing your tired winter garden back to life by planting colourful flowers and greenery, and giving your property a thorough spring clean, both inside and out. 

With a considerable number of properties on the market in spring, vendors must also be prepared for the possibility that they will need to negotiate on price in order to achieve a sale.  To form an educated expectation about the price your property may be likely to achieve either through auction or private offer, buyers should look at data regarding comparable sales in the area, which can be readily obtained from sources such as RP Data.  Your agent should also provide reliable information and work with you to set a reasonable price that the market will comfortably rise to meet. 

If you do have to settle for a final price that is lower than your expectations, this may not be too much of an issue if you subsequently go on to buy a property yourself in the same market. 

For all of those vendors out there preparing to sell, I wish you the very best of luck.  In my experience, the vendors that achieve the best result in a timely fashion are those who list with agents they feel able to trust and listen to the advice of that agent about how the market is responding to their property. 

For further advice about selling your property this spring, please don’t hesitate to drop into any of the hundreds of CENTURY 21 offices around Australia to talk to an experienced property professional. 


0 comments | Posted by Charles Tarbey on 27/09/2011 at 9:35 AM | Categories:

The mortgage conundrum – fixed or variable?

When the Reserve Bank of Australia elected to keep the official cash rate on hold at 4.75 per cent at the beginning of the month, it was the tenth consecutive month that the same decision had been made and marked the longest period that rates have been on hold for five years.   

 

As opposed to being able to enjoy this extended period of steadiness, the market has experienced fairly volatile interest rate expectations, creating uncertainty and likely playing a role in the dampening of buyer activity in the residential property market. 

 

Only a short time ago economists were warning consumers to prepare not for if, but when, rates would rise.  But with the heightened concerns for global financial conditions that we have seen of late, expectations now look to be that rates will continue to be held, or even dropped.   

 

Understandably, such ambiguity surrounding the future direction of the official cash rate creates somewhat of a dilemma for home buyers looking to secure housing finance and raises the illustrious question – is a fixed or variable rate the better option? 

 

Traditionally, when rates have looked to track upwards, borrowers would seek to lock in an attractive fixed rate, even refinancing to do so, to protect themselves from potentially higher rates and thus more expensive interest repayments. 

 

Alternatively, in past periods where conditions have seen rates come down, many borrowers would choose to go with variable rates, positioning themselves to take advantage of the possibility of a lower mortgage rate. 

 

As we have seen in the years gone by, for buyers in the current climate, uncertainty surrounding interest rate movements have made the ability to decide on a fixed or variable rate quite difficult.  However, an article in the October 2011 issue of Your Investment Property magazine prompts borrowers to think about mortgages a little differently. 

 

Michael Lee, author of Mortgage Free Debt Free* encourages buyers to recognise that variable and fixed mortgage rates are both a gamble.  Fixing, he says, “is like betting against the bank because they know what interest rates are likely to do and always set their rates to come out ahead.”

 

In my opinion, this situation highlights not only the importance of making the best decision with regards to choosing a fixed or variable mortgage rate, but rather how necessary it is to work with a mortgage professional to cater a finance solution that is specific to your situation.  Borrowing isn’t just about the mechanics behind your rate, but rather the features that are built into your package and the flexibility these entail.

 

Every lending institution offers something different – with varying advantages and drawbacks.   Choosing to sit down with a lending professional who understands the ins and outs of a large number of different mortgage products is probably the safest ‘bet’ you can make to ensure you obtain the best possible financing solution at your time of purchase.  

 

If you would like to speak further to a mortgage professional about your borrowing options, please visit www.century21homeloans.com.au to find a CENTURY 21 Home Loans broker near you. 

*Michael Lee is the author of ‘Mortgage Free Debt Free’ and the managing director of independent finance research company KeyFacts.  


1 comments | Posted by Charles Tarbey on 26/09/2011 at 9:46 AM | Categories:

Beyond the view – the importance of windows


I must admit, for features that provide me with an enjoyable outlook daily, I give little conscious consideration to the windows in both my office and home.  Yet, the very presence of them discreetly assists in day to day activities.  They provide natural light, which helps to wake me up in the morning and get me through the day, they can be opened to allow in fresh air, and they can make a house/office/room seem more spacious. 

I was prompted to think about the role that windows play in our lives when I came across an article on the Domain blog MyPad recently entitled ‘“A Room with a View” and the design of windows’ (16 August, 2011) written by architect and designer Jon King.

In the article King muses about the multiple, often conflicting, functions and roles that windows play in the overall design of a building. Windows are essential for ventilation, capturing outside warmth, connecting the inside to the outside, privacy and security – all at the same time.   

While performing these roles, windows must also be functional, opening and closing easily, locking practically and efficiently. 

The author notes that window design seems to be a continuing exercise in which these various roles and functions are not quite truly resolved, despite having been a building consideration for thousands of years. 

Reading this article impelled me to consider the importance of windows in Australian homes, and what home buyers may seek (perhaps subconsciously) to gain from the windows in properties they purchase. 

Many people that I come across wish to buy homes that are light-filled, which is usually a result of the number and size of windows in the property, as well as the direction it faces. 

Windows are also playing a more prominent role as we move to ensure our properties have increased levels of energy efficiency.   Various types of advanced glass can help to both capture and repel heat, ensuring that rooms are kept warm in winter and cool in summer, thereby reducing reliance on air-conditioners and heating systems and as a result, energy costs. 

In addition, Australian families definitely enjoy their time outdoors, and many home buyers will look for well-placed windows and doors that minimise the disconnect between inside and outside.

Ironically, for a feature of a home that you look straight through, windows are certainly important to the design of a home, and have the potential to affect your enjoyment of your property.  You may find that window design and placement are integral when you consider the various aspects of a property that are important to you. 


2 comments | Posted by Charles Tarbey on 19/09/2011 at 2:13 PM | Categories:

Making wise property investment decisions


For all intents and purposes, the theory behind property investment is fairly simple.  You purchase a piece of real estate for an affordable, even undervalued, price in an area where both demand and values are set to increase and rent it out to generate an income.  After holding it for a period of time, you go on to sell the property for more than you bought it for, making yourself a tidy profit. 

While numerous other more complex issues can come into play, very generally this is ideally how investing in property should work.  Having said this, the legions of people who have made poor investment decisions losing considerable sums of money can attest to the fact that there are many opportunities for the process to go wrong. 

So how can investors avoid the pitfalls of property investment? Essentially it comes down to being smart with your purchases, avoiding borrowing too much and doing as much research as possible about the state of the market and where to buy. 

Most properties ideal for investor purposes will be affordable in the first instance, but also set to grow in value over time, so that they can eventually be sold and gains made.  For such value growth to be achieved, a property will most likely be located in an area that is also set to increase in value, which could be for a variety of reasons such as:
• Expected, sustained population growth
• Planned government investment in infrastructure and transportation
• A local economy that is set to boom

Factors like these and others will see the demand for homes in an area increase, usually driving up both property values and rental rates. 

An area’s rental vacancy levels are another important consideration for investors.  While it is obviously ideal to secure an affordable property, you won’t be able to generate an income unless there is rental demand in the area.  And the lower the vacancy rate is, the stronger the upwards pressure on rents will be. 

With careful research and planning, investors should be well placed to secure a property that consistently generates a pleasing income and can eventually be sold for profit.  Remember that property investing isn’t generally a ‘get rich quick’ scheme, rather the most capital growth will usually occur when properties are held over extended periods. 

For more information regarding attractive investment opportunities around the country, please drop into your nearest CENTURY 21 office to talk to a real estate professional. 


1 comments | Posted by Charles Tarbey on 19/09/2011 at 2:12 PM | Categories:

To renovate or buy?

There are usually a couple of different camps when it comes to deciding whether to renovate or relocate to a more suitable property when the needs of the occupants change, for example, when more space is needed to accommodate growing families. 

While some people like to be able to design and construct a property to their exact specifications, others prefer to move to a different home that is already suitable, with no, or minimal improvements needed. 

There are certainly advantages and drawbacks involved with either method of pursuing your ideal home, and the best avenue will ultimately depend upon your individual circumstances, budget and time constraints.  

Location
Location is one of the most important considerations when it comes to deciding upon where to live or have an investment property.  Should you currently reside in a property that is ideally located with no purchase options that are in similarly desired locations, you may consider renovating so that the property itself becomes better suited to your needs. 

Time
While the property sale and purchase process can take time, so too can renovations – many of which can become drawn out if not managed diligently or if the renovation is a do-it-yourself project occurring concurrently with the owners’ everyday jobs and routine.  It is worth setting a timeframe within which you need your changes to be finished by, and considering which option will allow you to achieve this.   

Budget considerations
Moving and renovating both have expenses which need to be taken into account.  Purchasing an alternative property will involve stamp duty and other legal costs, as well as the cost of the property itself – which may be more than the price you received when selling your previous property, particularly if your new home is larger. 

Renovating too, however, can be pricey, with the preparation of various council submissions and application fees, and the cost of labour and materials.  To ensure you are making the most cost effective decision for your situation, careful budgets should be drawn up before making a decision, with room for contingencies should costs increase unexpectedly. 

Room to make improvements
Before renovating, professional opinion must be sought about your intended renovations and whether the size of your property (both the physical building and block size) will accommodate them easily.  A renovation may not be easy, or possible, if there is not adequate space. 

While there is a lot that can be said for renovating a property to your exact wants and needs, it may also be preferable to move straight in to a home that requires no further work.  The choice of whether to renovate a property or move elsewhere when your requirements/preferences change is very much a personal decision and will depend upon your individual circumstances. 


0 comments | Posted by Charles Tarbey on 12/09/2011 at 11:49 AM | Categories:

Spring selling season starts on good note as interest rates are left on hold

I don’t think it surprised anybody when the Reserve Bank of Australia elected to keep September interest rates steady at 4.75 per cent last week.  With heightened concerns for the global economy and continuing low consumer sentiment, an interest rate rise certainly seemed unlikely, and at this stage may not even be on the cards for another few months at least.   

Setting interest rates for September saw the Reserve Bank continue to monitor “very unsettled” conditions in global financial markets, which according to Reserve Bank Governor Glenn Stevens are “reducing confidence and may result in more cautious behaviour by firms and households in major countries”. 

Meanwhile, on the domestic front, increasing measures of underlying inflation remain an issue for the Board.  According to Governor Stevens, “while they have, to date, remained consistent with the 2 – 3 per cent target on a year-ended basis, the Board remains concerned about the medium-term outlook for inflation.”  

In terms of what to expect regarding interest rate movements over the coming months, Governor Stevens indicated that the Board would continue to monitor how inflation is contained by softer domestic and international conditions, as well as the outlook for growth.   However, expectations are very different from where we were even just a few months ago when it was widely thought that an interest rate rise was imminent. 

Instead, rates have now been kept on hold for the longest period in five years with some economists even entertaining the possibility of a cut over the next few months.

The RBA’s decision marks a positive start for real estate in spring – traditionally a very busy season for residential property with the warmer weather often reinvigorating those would-be buyers who held off from making a purchase during winter.  The expectation that rates will continue to be held at 4.75 per cent for a little while at least should provide some added motivation for buyers to have a look at what’s on the market and take advantage of generally optimistic conditions – provided they are in the financial position to do so and have sought the appropriate financial advice. 

And with market activity somewhat subdued of late, those looking to make a property purchase may well have added buying power on their side. 

For those who would like further advice regarding the sale or purchase of property this spring, please don’t hesitate to drop into any one of the CENTURY 21 real estate agents across Australia to talk to one of our property experts.  


0 comments | Posted by Charles Tarbey on 12/09/2011 at 11:49 AM | Categories:

Trust a truthful agent when selling your property

I imagine the prospect of selling a home at the moment must be somewhat daunting.  Never before have vendors had access to such vast amounts of information about market conditions, and while knowledge is definitely powerful, it can also be confusing. 

Add to this the continuing contradictory media speculation about the state of the market.  Some weeks it looks as though interest rates are set to go up and there is an undersupply of properties, the next the commentators may be reporting that there are affordability and supply concerns.  Buyers can definitely be excused for being perplexed!

When hiring a real estate agent, vendors are essentially trusting the person that sells their home to provide them with the most accurate market information.  This will enable them to make an educated decision about various aspects of the sale, including the price to accept, whether to take a property to auction, and how to best negotiate on price if the auction is not successful. 

In conditions where the market outlook is somewhat uncertain, good agents will be frank and honest with you as their client, both through the stages of securing your business and as your property is taken to the market. 

I have no doubt that when pitching for your business, less credible agents will give you positive information regarding price expectations and the like, that may not necessarily be reflective of the true state of affairs.  However, it could very well be what you want to hear, and thus it is tempting to believe them. 

Good agents will refrain from over-exaggerating the positive state of the market to obtain your listing.  While you may not like to hear it at the time, receiving an honest assessment about market conditions from the beginning should help to make your selling process a lot easier to handle. 

As a vendor you will also need to trust your agent to guide you through the price reduction process; that is, if your property has not yet sold, lowering its price to a level that meets buyers’ expectations.  Believe me, this won’t be an easy conversation for your agent to have with you, however a good agent will approach you respectfully and should display an understanding of your situation.  They know you don’t want to hear that your expected price may not be attainable, and will attempt to deliver the disappointing news in a truthful way. 

Working with an agent that you trust and whose professional opinion you believe, is incredibly important when selling a property.  It is an agent’s job to educate you and prepare you to be able to make the best decision for your individual circumstances – try to appoint your business to an agent who is truthful and realistic with you from the outset of your sales process. 


2 comments | Posted by Charles Tarbey on 05/09/2011 at 9:09 AM | Categories:

Housing affordability improves

In some good news for the residential property industry, the recent release of the Housing Industry Association-Commonwealth Bank Housing Affordability Index showed an improvement in housing affordability levels, which my colleagues and I at CENTURY 21 hope will help to deliver a much needed boost to Australia’s residential real estate market.  

The June 2011 quarter saw the Index rise by 0.8 per cent, a result that sees it sit 7.2 per cent above where it was at the same time a year ago.   

While no improvement was seen in Brisbane, the Index showed that housing affordability picked up across all other Australian capital cities over the quarter, as well as in the non-metropolitan regions of New South Wales, Victoria and Western Australia. 

I am hopeful that this increase in affordability is reflective of a bettering of market conditions. 

Despite a historically long period of steady interest rates, up until recently there has been continuing uncertainty about when/if the Reserve Bank would move to increase rates.  The heightened concerns about global financial markets more recently has seen this fear of a rate rise abate somewhat, with a number of economists even predicting that the RBA will cut rates. 

Nevertheless, over the course of 2011 such uncertainty certainly seems to have contributed to the trepidation displayed by prospective buyers about entering  the market, which has been reflected in lower auction clearance rates and larger amounts of stock remaining on the market for longer periods. 

According to CENTURY 21 Chairman and Owner, Charles Tarbey, this recorded affordability increase should go some way to ease this hesitation displayed by potential buyers of late, and will hopefully help to restore sentiment in the market. 

Charles notes that it has been a confusing year for the property market, however hopes that this increased affordability should make the buying process easier for those people who are financially able and have sought the appropriate professional guidance.  

For expert information about the most suitable property purchase options available to you, please visit your nearest CENTURY 21 office to talk to an experienced real estate professional. 


3 comments | Posted by Charles Tarbey on 05/09/2011 at 9:08 AM | Categories: