buyers market

[Jacque]

When vendors see that they can't achieve their expected price
they will either drop their selling price or will take their property off the market.

Both actions result in less properties on the market so as a buyer
you could end up with less choice than before.

Cheers

This is such an excellent point and I agree 100% BV. Exactly my line of thinking- listings are already dropping this quarter as stock just isn't selling. In fact RP alluded to this in their latest Pulse Report:

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Slow market conditions = less competition in the marketplace

Buyers have been slow to capitalise on the prime buying conditions the residential real estate market is currently providing. Sales volumes for residential property across Australia’s mainland capital cities fell by 24% during the first three months of 2008 as more and more buyers choose to wait on the side lines.

The volume of residential property sales peaked during the second quarter of 2007 when 28,550 houses and units sold across Australia’s mainland capital cities. Since this time market activity has been falling. The drops in volume were relatively subtle during the second and third quarters of 2007, however the first three months of 2008 saw many buyers abandon the market resulting in the total sales volume falling 30% below the June peak.


The slow down in market activity comes as no surprise considering factors such as the US sub-prime meltdown, the share market collapse, and ongoing domestic inflationary pressures have largely eroded consumer and business confidence. The key measures of both consumer and business confidence are now at long term lows. Consumer confidence hasn’t been this low since January 2002 and Business confidence is at its lowest level since the September 11 terrorist attacks.

The slow down is further evident in housing finance figures released by the ABS recently. Just 52,000 new mortgages were recorded during May, the lowest number since the post boom slow down of 2004. The total value of housing finance commitments during May was just $18.1 billion, down $6.5 billion from the June 2007 peak.


On a more positive note, it appears that interest rates may be on hold for the time being. Recent statements from the Reserve Bank suggest the economy is slowing and domestic demand is being reigned in. The minutes from the Reserve Bank’s July board meeting reinforce the notion that domestic demand is slowing. Quoting the most recent RBA minutes:

"On balance, while members remained concerned about the current rate of inflation and the uncertainties about the outlook, the increasing signs that demand was slowing suggested that the existing policy setting was exerting the appropriate degree of restraint.‘’

Borrowers appear to be reacting to this view, with the proportion of new housing loans on a fixed interest rate falling dramatically over the last two months. The proportion of new housing loans on a fixed interest rate fell from 24% in March down to 13% in May. It appears that more borrowers are selecting a variable rate of interest, a sign of improving confidence that rates are stabilizing.


We don’t expect a mass return of buyers to the market anytime soon however. For this to happen there needs to be a dramatic improvement in market confidence and economic conditions. Most importantly, we need to see a leveling in inflation which will in turn give some certainty as to the direction of interest rates. In the meantime, for those buyers who are confident enough to stray from the pack, the current conditions can provide some great buying opportunities. We can safely say this is a buyers market where buyers hold most of the cards. Buyers can take their time to locate the most appropriate property and undertake all the necessary research essential to negotiate the best possible price on the property.

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[Piston Broke]

When vendors see that they can't achieve their expected price
they will either drop their selling price or will take their property off the market.
Both actions result in less properties on the market so as a buyer
you could end up with less choice than before.
Cheers

Until interest rates rise again, living expenses keep increasing, council rates go thru the roof, electricity increases by 16%, and work hours get scaled back, or they lose their job.
Then they'll come back to the market at a much lower price.

 

[BV]

Until interest rates rise again, living expenses keep increasing, council rates go thru the roof, electricity increases by 16%, and work hours get scaled back, or they lose their job.
Then they'll come back to the market at a much lower price.

No, they will come back and list their property at the market price.
Also, don't count on everyone being mortgage stressed.
I have no doubt that some vendors will be financially stressed but most won't be.

IMHO now is a good time to be looking for properties because there is less competition and there is more room for negotiation.
If you are lucky you may even pickup a bargain.

Cheers

 

[Piston Broke]

Market price will then be much less.
Not everyone needs to be mortgage stressed, just enough...
Imo there are many vendors out there (not some) that are or soon to be stressed.

But I agree on the last part, ie "more room for negotiation" and "bargains" to be found. I just think patience will find the bargains, and there will be plenty.

 

[Red Car]

I have been looking to pick something up on the North Shore but I have also been considering Ryde or the Hills. I have been watching these areas for a while now.

One of the big issues for me with the Hills is the Transport issue. From an investment point of view it seems that places with transport seem like a safer bet with the way petrol costs are going and the fact that the Hills is a long way from the CBD makes it more risky in my opinion. I also have no confidence that the current Government will rectify this situation.

I have friends who live out there and some have managed to stager their work hours to avoid the peak hour run to the City but one of my mates told me it takes him up to 2 hours each morning to drive to the City! I think this keeps a number of buyers out of this area. They think paying a little bit more closer in makes better financial sense.

I have to admit I am now one of these annoying people who is sitting on the sidelines waiting to see what happens because it seems that properties are selling but they are the ones where the vendor is willing to negotiate and is not asking prices from 3 years ago. I have a little selection of various types of properties that I think would make a solid investment and that I know the vendor is being unrealistic with the pricing. I wont pay what they are asking but I keep an eye on them just to see.

 

[Rolf Latham]

Hiya Skuzy

Have you thought about using a buyers agent ?

Jacque that replied to yours post above knows the area very well having been a local there for a long long time.

She has recently managed to find some homes in the Hills area for our clients that are very good value for money, and the clients have good things to say.

Often there is stuff on the market thats "not visibly on the market".

ta
rolf

 

[skuzy]

just lookd up what a buyers agent is. No havent looked into this. seems expensive, esp if its a % of the purchase price.

 

[Stinktier]

When vendors see that they can't achieve their expected price
they will either drop their selling price or will take their property off the market.

Both actions result in less properties on the market so as a buyer
you could end up with less choice than before.

Cheers

WTF?

Either this is written by a real estate agent or an 'uber' property bull. But its far from a realistic viewpoint. Listings more often then not are low at the 'top' and large at the 'bottom' -> when there is a clear trend reversal in either of those are prices more likely to reverse as well. ,,,, BUT who can say what is where and when??

First of all when you drop your selling price then your actions could pressure others to do the same (i.e the people down the street or in the same suburb). The same way as prices rose to the stratosphere by buyers overbidding each other can just as simply work in the other direction also (a fact a lot of people just cannot accept). So to say that once you sell then thats one less seller in the market is very simplistic indeed. The lower prices that the market is now forced to accept could easily draw out another 10sellers who are desperate or not to sell. What happens then?

''''or will take their property off the market''''. WTF, here as well?

Selling a property for a majority of people isnt like ordering a pizza. You dont just change your mind and bury it. You are selling for 2 reasons mostly, either you want the cash or you want to move (not everyone has the luxury of just saying 'lets rent it out'). For some people neither of those might be optional (i would take a stab and i would say most!). What if your costs on holding the property far outweigh just selling at market and its hurting/killing your bottomline? What if you need to move because of a job? In these cases you dont just change your mind and sell in 2years time when conditions improve (if they will/do)! You do it when you need to.

The above doesnt even take into consideration the most important aspects such as:
interest rates rising and living costs going up further or what about a 'dreaded' recession--> what happens then with your '''Both actions result in less properties on the market so as a buyer you could end up with less choice than before''' model.

Somehow i doubt that when prices are weakening you will get 'less' choice as a buyer.

A lot of people forget that when you get a stampede with property it can actually work both ways. Im not saying that you have to have property crashes or that they are definite or that we will get one. But we have had massive gains over the last decade so i think its a fair assumption to make that those who have purchased in the last few years 'could' (and im saying COULD) have negative equity should prices even slightly come off. For those people looking for pure CG -> this could prove a disaster.

NB: the ATO released for last financial year the figures of households that have an IP. This number was much larger than for the year previously. If CG's are truly weakened from here on then i would expect a number of these people to be in a pretty 'weak' situation. Not a good thing to be in a 'weak' position at the top of a boom (all economic indicators are weaker).

 

[BV]

WTF?

Either this is written by a real estate agent or an 'uber' property bull.

No it's written by a realist.
Ofcourse it depends on where you are looking to buy and if there is pressure for Vendors to sell.

Cheers

 

[Stinktier]

Well then realists should check their local paper and measure the thinkness of the property lift-out before making comments like '''Both actions result in less properties on the market so as a buyer you could end up with less choice than before.''' .

Overall its a buyers market.

 

[BV]

Overall its a buyers market.

????
I've never said otherwise but I see further than the news articles some people read to make a judgement of market conditions.

You can disagree with my posts.
This is what forums are all about, to exchange different points of view, but I should point out that there are many property markets in Australia and what applies to 1 end of the country does not necessarily apply to your particular location.

Also, I don't know how experienced you are in property but you are new here and are all fired up for no reason. You should know that there is no need to get too personal in your posts and that some people take offence to your wtf reference

Good luck

 

[Jacque]

I have been looking to pick something up on the North Shore but I have also been considering Ryde or the Hills. I have been watching these areas for a while now.

One of the big issues for me with the Hills is the Transport issue. From an investment point of view it seems that places with transport seem like a safer bet with the way petrol costs are going and the fact that the Hills is a long way from the CBD makes it more risky in my opinion. I also have no confidence that the current Government will rectify this situation.

I have friends who live out there and some have managed to stager their work hours to avoid the peak hour run to the City but one of my mates told me it takes him up to 2 hours each morning to drive to the City! I think this keeps a number of buyers out of this area. They think paying a little bit more closer in makes better financial sense.

Agree that the Hills has transport issues- if they didn't, prices would be more akin to the upper north shore areas of Wahroonga/Turramurra. However, buses are pretty good and frequent (and improving) in most Hills suburbs and investors are wise to buy near these- or else the T Way on the Bella Vista/Kellyville/Rouse Hill side. I have my reservations about state govt commitments to rail as well (as does every Hills resident) as we're a little jaded, having "heard it all before" from previous politicians.
However, the northwest is rapidly expanding (wait until the release of the latest North Kellyville dvpt in between Bella Vista and Kellyville) is a popular area for owner occupiers (always a good sign for investors as home owners generally improve their abodes and thus theoretically drive up values) and yields are pretty solid right now (and rising) at around 4.5-5% for freestanding houses.

I like Ryde as well and also have an IP in this area, but the median is a lot higher and naturally you're paying for location and proximity to the cbd. In the end, it's all about your budget and what you are prepared to live without, investment or otherwise.

 

[Jacque]

Well then realists should check their local paper and measure the thinkness of the property lift-out before making comments like '''Both actions result in less properties on the market so as a buyer you could end up with less choice than before.''' .

Overall its a buyers market.

Hi Stink

I think you've misconstrued Bill's comments here, as at no time did he say he disagreed with your viewpoint- that it's a buyers market. He was simply pointing out the logical argument that less properties on the market = less choice for buyers.
As for buyers taking their properties off the market, let me assure you that I personally know several vendors who have done just this in recent months, as buyer interest has been so low that they've reconsidered their position and decided to hang on until times improve. They won't settle for a firesale price because they don't absolutely HAVE to sell. They aren't desperate or in a situation that demands a lower price. If all else fails, these are vendors who will lease their property rather than accept a price that's less than what they paid 4-5 yrs ago.

The "thickness" of pullouts like Domain are really only one indicator of true numbers of listings on the market. You can't really rely on this alone to gage any market. Winter editions are always slimmer with Spring and Summer fatter anyway

 

[Red Car]

Agree that the Hills has transport issues- if they didn't, prices would be more akin to the upper north shore areas of Wahroonga/Turramurra. However, buses are pretty good and frequent (and improving) in most Hills suburbs and investors are wise to buy near these- or else the T Way on the Bella Vista/Kellyville/Rouse Hill side. I have my reservations about state govt commitments to rail as well (as does every Hills resident) as we're a little jaded, having "heard it all before" from previous politicians.
However, the northwest is rapidly expanding (wait until the release of the latest North Kellyville dvpt in between Bella Vista and Kellyville) is a popular area for owner occupiers (always a good sign for investors as home owners generally improve their abodes and thus theoretically drive up values) and yields are pretty solid right now (and rising) at around 4.5-5% for freestanding houses.

I like Ryde as well and also have an IP in this area, but the median is a lot higher and naturally you're paying for location and proximity to the cbd. In the end, it's all about your budget and what you are prepared to live without, investment or otherwise.

Yep all very good points. With transport, despite what Costa tells us Buses are not the answer. To me I cant help but think that this area is at risk if they dont invest in a decent rail option. Adding extra lanes to the M2 is not enough and I dont even think a shiny new Metro is the answer out there. They needed to stick to the original heavy rail plan. It needs to be heavy rail from Epping to Rouse Hill and then connect the line to the Richmond train line. If they must have a Metro start it at Epping down to Pyrmont but I still think heavy rail is the answer there at the moment too.

Metro through the Eastern Suburbs, CBD and Crows Nest up to Manly if anywhere. Maybe one from Parramatta to the CBD too. They also need to finish the Epping to Parramatta Heavy rail line. Although its funny the big issue with extra heavy rail for the North West is actually that they need extra capacity on the lower North Shore, across the bridge and in the City Circle! And that is to expensive for them. Still they are going to have to spend the money I think. Many more people are using Public Transport now and that number will only rise.

I know one of my mates who actually grew up in Castle Hill and loves it has just bought an $800k place in the inner west only because of the transport issues. No other reason. He wanted to buy in the Hills but didn't. I think the issue creates an artificial ceiling on the area for your average properties. Although I think snob value comes into it as well. I have to take emotion completely out of my investment decisions as if I was buying a place to live in the suburbs I would pay a lot more to live on the North Shore than the Hills. To me places like Turramurra and Wahroonga seem so much nicer.

I am amazed how many people are moving into the areas you mention around Kellyville. I had a look and the blocks seem so small compared to Castle Hill and Baulkham Hills. Obviously they are all new homes but the areas leave me a bit cold. Still from an investment point of view you cant argue with those figures! Ryde certainly has gone up and I am kind of annoyed I didn't get in to that area earlier as I could see it was going to happen. Oh well!

 

[Stinktier]

????
I've never said otherwise but I see further than the news articles some people read to make a judgement of market conditions.

You can disagree with my posts.
This is what forums are all about, to exchange different points of view, but I should point out that there are many property markets in Australia and what applies to 1 end of the country does not necessarily apply to your particular location.

Also, I don't know how experienced you are in property but you are new here and are all fired up for no reason. You should know that there is no need to get too personal in your posts and that some people take offence to your wtf reference

Good luck

'fired up' and 'personal' - no way. I look at it more like comedy central sometimes. I usually have a big smile on my face as i go and hit that reply button. (kidding)

The fact that i replied to draw out a response in no way suggests im making it personal - which of course im not - i enjoy reading the posts on here. Of course we all have different viewpoints of the market --> so please dont call it 'getting personal' just because i share a different opinion. I just merely wanted to point out from your post how the he^& it was possible for 2 class of sellers, each having trouble selling, to then result in less choice for buyers - its irrespective of what market you talk about - i just dont think thats something you see on the 'floor' - so that i disagreed with - and i replied - and luckily this forum allows us to make contra arguements.

Maybe its the 'wtf' reference that may have stirred the pot - well it obviously hit a nerve somewhere :-( , but at the time i felt it was justified for what was written. And the fact that the response elicited a 'im a realist' -- to me suggested i wasnt one. IMO that was making it personal - hence i made sure i replied again - which is what you REALLY wanted with that reply . We obviously have different opinions of realists. . Which is good, or bad, depending on if you dont mind different opinions in the first place.

I hope that clarifies my previous posts.

p.s it makes no difference whether someone is 'new or 'old' IMO (i was on here a lot earlier BTW), but the content of the post speaks for itself.

p.p.s ''all fired up for no reason'', sorry but looks like its not me thats fired up. Read my post again. That was a little too harsh IMO.

 

[Red Car]

Heh, considering the nature of my post I found it funny to read this just now:

http://www.smh.com.au/news/national...s-buried-report/2008/07/29/1217097241025.html

 

[brickbuybrick]

A little of track, but the best one i've had so far from an agent was.

"i am telling you this as guidance from your best friend Even though we have never met in person i think you should sell for this offer"

Thanks buddy.

 

[Piston Broke]

From my memories, there was no shortage of sellers in the early to mid 90's, and the too recessions before that.
Considering that more people own IPs than ever before, and no docs hardly existed then, this brings many more potential sellers to the market.

 

[BV]

From my memories, there was no shortage of sellers in the early to mid 90's, and the too recessions before that.
Considering that more people own IPs than ever before, and no docs hardly existed then, this brings many more potential sellers to the market.

The thing many people forget is that today we have LOC (lines of credit) and loans with offset accounts. The majority of today's investors would be on one of those products and would have equity/savings parked into a LOC or an offset for a rainy day.

For example, several people I know could be without income for 12 months or more before they will be forced to sell 1 IP.
Even high interest rates are no problem.
Ofcourse 10% interest rates hurt but those people won't be losing their home and they won't be in need to sell either.

The majority of people who are forced to sell today are unfortunately owner occupiers who stretched themselves too far and not investors.