He who hesitates is lost

[travelbug]

These days it doesn't pay to hesitate.

I rang a REA about a property. He said he'd be there this morning but the person he was taking through was signing the contract after the viewing. I had another appointment nearby so thought I might as well look for comparison. We turned up and the couple with the contract (and their family) plus another couple were there. The agent told the contract people to wait a minute and he proceeded to take the other couple in. We walked up and I told him who I was. Ok he said just a minute. Then we went in, nice place. The couple left and the agent said I'll ring you.

Turns out the people with the contract put in a price (slightly below asking) last weekend. It was accepted. They waited as they were busy. They had an appointment earlier to sign but wanted to have another look first. Other couple offered above asking. They lost. I'm glad I didn't see their face when the agent went out and told them.

 

[Propertunity]

Yep, we had two enquiries yesterday from FHBs who experienced the same thing. Both missed out on getting their properties but were prepared to pay more than the price paid by the 'winner'.

In frustration they have turned to BA's like us to handle the transaction so they don't miss out. I think it will only get crazier leading up to 30 June.

 

[Player]

Propertunity, what's your take on the likelihood of the FHO grant being extended beyond 30 June?

Would certainly make Kev look good for next election. Do you feel that the lower (below median) end of the market will pull-back and soften if OO's get into strife with job losses?

Or will there be enough investor demand in the lower interest rate environment to take up the slack?

Obviously you'd be focusing on the Sydney and surrounding market. Would appreciate your take on things as a buyers agent.

 

[Propertunity]

Propertunity, what's your take on the likelihood of the FHO grant being extended beyond 30 June?

Dunno. IF they do extend it they won't be announcing it anytime soon IMO as that would take away the urgency to "buy now". Maybe they will announce something in the May mini-budget if it is going to be extended?
But I'm not banking on it. There has been quite a bit of 'stimulation' and consequent price rises in the lower quartile already. They might just see how it flows into the rest of the housing market.

Would certainly make Kev look good for next election.

Pork anyone.....anyone for pork?

Do you feel that the lower (below median) end of the market will pull-back and soften if OO's get into strife with job losses?

I still think 8% unemployment = 92% employment and it will make virtually no difference. If anything it will be the fear of job loss that will make ppl pull back.

Or will there be enough investor demand in the lower interest rate environment to take up the slack?

I am seeing investors back in the market now. They weren't there before but they are now. And my guess is that with another IR decrease they will be back more so.

Obviously you'd be focusing on the Sydney and surrounding market.

Yes, we focus mostly on the NSW Central Coast (about 1 hr north of SYD), the North bit of SYD and northern beaches and the lower end of the Hunter (incl Newcastle).

 

[Player]

Thanks for your spin.

Nice distinction between actual job losses and FEAR of same. Fear (and perception of doom) can lead to capitulation in many market environments, not just stocks, but also property and all its sectors.

Sentiment and emotion drive many people's decisions in life.

 

[nww]

Propertunity, what's your take on the likelihood of the FHO grant being extended beyond 30 June?

Would certainly make Kev look good for next election. Do you feel that the lower (below median) end of the market will pull-back and soften if OO's get into strife with job losses?

Or will there be enough investor demand in the lower interest rate environment to take up the slack?

Obviously you'd be focusing on the Sydney and surrounding market. Would appreciate your take on things as a buyers agent.

A bit of reading but the experts think it will be extended.
See link.
http://business.smh.com.au/business/now-is-the-time-to-pick-and-choose-20090227-8kam.html?page=2

 

[nww]

These days it doesn't pay to hesitate.

I rang a REA about a property. He said he'd be there this morning but the person he was taking through was signing the contract after the viewing. I had another appointment nearby so thought I might as well look for comparison. We turned up and the couple with the contract (and their family) plus another couple were there. The agent told the contract people to wait a minute and he proceeded to take the other couple in. We walked up and I told him who I was. Ok he said just a minute. Then we went in, nice place. The couple left and the agent said I'll ring you.

Turns out the people with the contract put in a price (slightly below asking) last weekend. It was accepted. They waited as they were busy. They had an appointment earlier to sign but wanted to have another look first. Other couple offered above asking. They lost. I'm glad I didn't see their face when the agent went out and told them.

Ive been getting home alerts from Domain and realestate.com with
big red writing at the top "under offer or contract".
Makes there alert feature look a bit silly.

 

[Propertunity]

A bit of reading but the experts think it will be extended.

Would these "experts" also be the same ones that predicted:
1. This resources boom is not like the others we've had to date - it will go on for 10 years or more?
2. China has decoupled from the US economy, so even if the US goes into recession China won't?
3. The BRIC (Brazil, Russia, India & China) countries will keep Australia's resource boom continuing?
4. Interest rates will continue to rise in 2009?
5. well you get the idea.............even the best economists did not see the GFC coming..........what chance have "market watchers" got of predicting the Feds to continue the cash splash on property?

 

[topcropper]

I still think 8% unemployment = 92% employment and it will make virtually no difference. If anything it will be the fear of job loss that will make ppl pull back.

.

Your a great asset to this forum Propertunity.

However dismissing the effect that 8% unemployment will have is a mistake. It's a massive factor. 6 months ago, anyone who wanted a job could get one. If someone was sick of their current work they could do anything else they were qualified to do.

Going from 4% unemployed to 8% is massive. It's like saying that before, there was no one out of work, [only those unemployable or too lazy] and now there will be hundreds of thousands out of work.

Australian resi property prices will sink or float depending on what unemployment does.


Remember too, there is a whole generation of younger workers who have never seen high unemployment.

See ya's.

 

[Propertunity]

Your a great asset to this forum Propertunity.

I'm not sure if you are being sarcastic here or not TC

However dismissing the effect that 8% unemployment will have is a mistake.

Please don't mistake what I said in response to Player's Q. I am not saying that 8% unemployment (if it gets to that) will not have an effect - of course it will.
What I said was that IMO it would not have an effect on "the lower (below median) end of the market".

This lower (quartile) end is pretty resilient and there is almost always a buyer of some sort to be found for a cheaper property - no matter what the unemployment rate / IR / D&G.

 

[topcropper]

This lower (quartile) end is pretty resilient and there is almost always a buyer of some sort to be found for a cheaper property - no matter what the unemployment rate / IR / D&G.

No, I wasn't being sarcastic.


The current hot spot is the 300k area in Sydney. You say that it will be resilient with unemployment. I wouldn't be so sure. There are plenty of 120 to 150k cheap houses in rural areas renting for 160 a week. I could see lots of city people who end up unemployed moving to rural areas. They might'nt like it, but they may have no choice if they want a roof over their heads.

If things get bad enough, anything can happen.

See ya's.

 

[Propertunity]

No, I wasn't being sarcastic.

Cool

There are plenty of 120 to 150k cheap houses in rural areas renting for 160 a week. I could see lots of city people who end up unemployed moving to rural areas.

Interesting thought - I would not have thought so...........has this ever happened in the past?

 

[Perp]

The current hot spot is the 300k area in Sydney. You say that it will be resilient with unemployment. I wouldn't be so sure. There are plenty of 120 to 150k cheap houses in rural areas renting for 160 a week. I could see lots of city people who end up unemployed moving to rural areas. They might'nt like it, but they may have no choice if they want a roof over their heads.

Interesting observation, TC. I've actually felt for a few years that if you consider the property market in 3 layers - capital cities, regional cities, smaller rural towns - that it's the regional cities which have become overpriced, relative to the desirability of living in them.

For example, taking SE QLD... A median Brisbane house in a working class suburb such as Darra might be, say, $350K. A similar quality home in Toowoomba is probably $280K. If I'm in Darra, the 20% difference is unlikely to entice me to move from Brisbane to Toowoomba. But if I could find a job in Toowoomba, I can move from Toowoomba out to Clifton (15 km) and prices drop substantially more, to around $160K.

So I think if people are looking to cut the cost of housing, it's those small towns within an easy commute of the regional cities that will benefit.

 

[The Fence]

8-10% unemployment I would not think cause an exodus from city to country IMHO.
Sure some may take that option but we do see some from the very low end of socioeconomic arrive in our little country towns, but most of them may never have worked and they come and go no matter what the state of economics are.

Australian resi property prices will sink or float depending on what unemployment does.

...cough...aahh hemm. Property pricing is not totally accountable to the amount of jobs available in this country.....c'mon TC.....better add some supply and demand in there too at least don't ya reckon...?

Where did I see figures the other day saying a rise in unemployment has often been followed closely by a rise in housing starts...doesn't sound logical but the figures were there and my eyebrows raised a little......must go back over some files read of late for the details...might have been AFR....

 

[topcropper]

Cool

Interesting thought - I would not have thought so...........has this ever happened in the past?

As Thorpie says above, there is a steady flow of unemployed people who move to the little rural towns. A lot of them are in the 4% who will never have a job. Rural towns don't have any less jobs than the city, but if unemployment rates are higher, it could be due to a higher percentage of unemployable people.

See ya's.

 

[topcropper]

...cough...aahh hemm. Property pricing is not totally accountable to the amount of jobs available in this country.....c'mon TC.....better add some supply and demand in there too at least don't ya reckon...?

....

Sure, it's not, but unempoyment is just one of the countless factors that determine property prices, and it's right up there with the most important ones,.......

Unemployment and property prices are probably directly related, as people who are out of work have to sell their houses. And they are probably even more related indirectly, as unemployment rises in times of weak economic conditions, which also lessens the amount of cashflow people have to spend on housing.


See ya's.

 

[evand]

Higher unemployment lessens demand in the short term. Simple.

Demand is a by product of many events and the employment level is just one of them, albeit a very important one.

 

[Player]

Interesting thread.

I was just this morning reading thru BRW's recent "Hot Property" edition. It's actually got some reasonable content, unlike some other headline front page BRW banners that imply a detailed consideration of a property topic and you find out it's only a two page article.

Any way Jason Anderson (BIS Shrapnel) provides an interesting perspective (his opinion.....don't shoot the messenger please! )......." The impact of the anticipated rise in unemployment on the housing market is not likely to be as big as expected. Every 1 per cent fall in interest rates puts $ 8 billion into household budgets, and every 1 per cent rise in unemployment takes out $ 6 billion."

I've never heard data put forward in that light. He does also mention:

".......Unless unemployment rises and sits above 11 per cent over the next two years, we think there's enough liquidity injection into the market in terms of interest rate cuts- and potentially from other sources as well, in terms of tax cuts - that will offer the liquidity that comes out of the market as people lose wage income."

He doesn't forecast when price growth will occur, but rather that housing construction will recover in 2010 and there will be stability in house prices (I would assume at the lower/affordable end) despite a rise in unemployment.

Doesn't factor in dual income earners in a household losing their jobs and the fact that unemployment may actually rise to (or above) his threshold redline of 11 %.

 

[Rockstar]

Interesting thread.
Every 1 per cent fall in interest rates puts $ 8 billion into household budgets, and every 1 per cent rise in unemployment takes out $ 6 billion."

Based on this alone (if correct) folks should be well stimulated with the 4% odd drop in IR's compared to the smaller rise in unemployment. I think most mortgaged folks must be currently tightening their belts and/or paying down debt. I vaguely remember R. Gittins mentioning the other day on Insight that this is common during recessions. Then all of a sudden the 90 odd% of folks still in work realise that they're doing pretty well - confidence returns and folks suddenly have more savings/less debt to start spending again - then unemployment falls once more. I guess the big question is how high the unemployment figures will get to??

Too simplistic?

 

[Player]

Simple is best I reckon. I just found it an interesting way of comparing non-related things, i.e: comparing apples with oranges and not apples with apples. I guess the the interest rate drops (not all of the 4 % passed on by the banks anyway ) was a preventative move pre-empted by the RBA before the potenital for rising unemployment took hold.

If the fear of job losses lead to people tightening their belts and paying down debt (consumer or other non-deductible loans)....then they will be well poised for the next cycle of banks throwing money at people so another consumer debt cycle can once again begin and the merry go round can get out of first gear (or is that reverse at the moment)

Don't know if that's simplistic Rockstar. I'm not an economist and I prefer things to be simple.......analysis paralysis leads to inertia and can in fact create more fear. When we smell fear in the air we should become greedy for acquisitions.

I'm of the opinion that......this too, shall pass.