When will Brissy & Melb turn good for sellers ?

[on the move]

I have absolutely no clue, look for the opinions of my more knowledgeable fellow SSers. It'll be good if you could state why you think so as well. I know S.Mcknight said the Brissy market probably dead for the next few years (hope not), but I also remember he said in 2007 that interest would go up to 12 % !
I guess I didn't word properly in the heading, what I mean is stock easier to move, not necessarily price growth.

 

[pickle pickle]

I don't know much about the Brisbane market, so won't comment on it.

As for Melbourne, I expect it to be quite for quite a while. We just had a boom in prices.

As for people predicting 12% interest rates back in 2007, we probably would have had 12% interest rates (or close to it) if we didn't have some GFC. Yes there were some noise about sub-prime mortgages, but to predict that governments would have to bail out banks back in 2007 would have been a brave call.

So I wouldn't completely dismiss the person because they predicted 12% interest rates back in 07.

 

[Rickardo]

Just my opinion as someone not actively looking for properties in Melb, but always keeping my eye on things, I don't see any significant growth in Melb for a few years at least, more likely a flat market after the massive boom over the past 2 years, prices need to take a breather and rents need to catch up as the yields are very unattractive right now.

 

[on the move]

I guess I didn't word properly, what I mean is less price discounting & stock easier to move, not necessarily price growth.

 

[Player]

I have been posting for a few months that in Melbourne at least, I smell 1991 in the air. Sideways, possibly tracking inflation, for some time.

Steve McKnight (surprisingly) is bullish on Melbourne. At his briefing/update last week, he considered that Melbourne's pause for breath would only be until Autumn next year and that from March or thereabouts in 2011, we will have good growth again.

I fail to see personally how Melbourne will pause and kick-a$$ again next year.

It's not something my gut/intuition tells me is gonna happen. Then again if it does, that's great as I hold other stock here that I will pull equity out of. Time will tell I guess.

He mentioned Brissy in passing and was of the opinion, that it wouldn't see much growth until toward the end of 2011. I am no expert on Brisbane, however if deals stack up now (despite some over-supply in both sales and rentals), and the discount is attractive, it would be a good time to buy there to be poised for recovery. At the very least, those interested in that market should be preparaing their entry by lining up their finance ducks all in a row and being ready to pounce.

Brissy missed out on the heat that Melbourne experienced and current growth that Sydney still appears to be getting, so the next leg up for Brisbane should be steep IMO

 

[Ms Jade]

I guess I didn't word properly, what I mean is less price discounting & stock easier to move, not necessarily price growth.

In melb at least there is a lot of supply on the market right now. Buyers can be choosy & are not generally in a hurry. Not a great situation for vendors unless they have a really excellent & unusual property, perhaps. As long as you don't want top price - i.e. What you might have been able to achieve in March-April, you may be OK early in the new year. Everyone is trying to sell before Xmas so just keep an eye out for when the supply turns in your area. Quite often this is January but it may not be that early this year (because not all those houses will probably sell before Xmas). You have to watch these local supply & demand closely to see what's happening. Hopefully the property you want to sell is a 'good' one. By that i mean not backing onto a train station, on a main road etc. It's when you have to sell in a flat market that you appreciate why it's better to buy an easily 'saleable' house in the first place.

 

[on the move]

Any comment on Brissy will be good. Compare the # of listing now and last year, similar. So the question is : "is it really bad now this year ?" or "it's bad every year around this time ?" Seems the listing drops between late Jan & April.

 

[buzzlightyear]

I preface all my comments about the fact that I am influenced by the areas and property types that I have/am looking at. So it may not be a reflection of the enitre Melbourne market....Anyhow disclaimer out of the way, things are good for sellers right now!

The reason is, as a prospective buyer, the prices I have to pay to purchase something similar that I purchased in 2009 are approximately $100-150k more. And when I go to the OFI's and auctions, there are still plenty of people around. So if we are waiting for pre-2009 prices to occur, we may need more than an Irish Bailout or a Chinese brake to provide a catalyst for such a fall. Of course sentiment has changed from early this year, sales are taking longer, some vendors need to realign their price expectations but you can't purchase anything for 2009 prices. However if your increase is $80 instead of $100k or $125k instead of $150, really have you lost or actually gained?

My gut instinct tells me, like Player mentioned, we may track sidewards for a little time but I don't see signs on the ground of people retreating like they looked to have done during 2008 (so far).

If you need to sell, I wouldn't be afraid of doing so. If you want to buy, the usual caveats apply as in anytime.

 

[urban cowboy]

I just had lunch with a good friend of mine who is a licenced valuer and a licenced real estate agent - and very good at both so I value her opinion.

In short, Brisbane is in for a whole world of hurt with some suburbs (Bardon and Kenmore were mentioned) experiencing a massive downturn - two particular properties mentioned had a drop of around 35-40% from valuation to sale price. Now yes there are always potentially mitigating circumstances that we are unaware of, but it is concerning from a pure real estate perspective.

As most long term readers here would know, I am generally quite bullish on the market regardless of prevailing conditions - and I certainly don't go making wild observations and commentary - my surname doesn't start with K and end in N with two vowels in between, but for the first time in a long time I think we are seeing the start of some trouble for the sunshine state.

my colleague is of the opinion (and I am less pessimistic, but agree with her observations generally) that we will see conditions similar to the early 90's where prices dropped significantly over the course of a year or two then remain stagnant for 6-8years. Between the interest rates, prevailing economic conditions, an oversupply myth and the migration population starting to prefer renting over purchasing, she has a point!!

I sincerely hope she is wrong, but then again - if prices do plummet and stay low it may make for some good buying!!

Be interesting to check these comments in 12 months and see if she was correct!!

cheers
UC

 

[on the move]

can't see this happening unless there is mass unemployment.

 

[Player]

Along the lines of the Steve Mcknight opinion I posted above, the following is an excerpt of an email that came to me yesterday...............


Buyers' Market for the next 12 weeks

The next upswing in property prices will start about March 2011
There are several major factors driving the Melbourne property market both now and for the next 6 months. In short, it will be a "buyers' market" for the next 6 - 12 weeks before reverting back to a "sellers' market" and a sharp increase in property prices from approximately March onwards. This will be far more pronounced in the top third of suburbs in Melbourne. In fact we could even see a stall or drop in the overall Melbourne median house price due to falling prices in "New Estate" areas.
Most buyers who are informed about the property market from what they read in the media are sitting on their hands. Even though there are plenty of good properties out there to purchase at very good prices. Many people decide to do nothing when there is indecisiveness in big business. For the smart investor now is the time to buy a bargain.
We currently have a confluence of instability. Firstly, our federal government is still in turmoil. The Labor party is floundering around still trying to work out how to govern in such a difficult situation. Julia Gillard is losing massive public support and the honeymoon period from the media is definitely over. Further to this we have a State Election coming up shortly and most commentators are agreeing it is too close to call. The only real consensus of opinion is the Greens may end up with balance of power at both a State and Federal level.
Add to this the fact that for the first time in recent memory three out of four banks did not raise their own interest rates in the same week as the Reserve Bank raised the cash rate. With CBA having jumped and raising 20 basis points above the RBA, and not getting any back up from the other majors, many people are simply waiting to see what happens. Now the other three banks have joined in, exactly as the RBA predicted (according to their recent minutes), everyone is wondering when the next rise will occur.
We know that there is a massive shortfall in the total number of properties that are required in this state to keep pace with the rising population. We know that with interest rates rising the RBA believes the economy is doing well. Whenever the economy does well prices of all things tend to go up due to inflationary pressure. We also know that jobs growth is striving ahead, unemployment is incredibly low and the economies of our major trading partners, China & Japan, are growing very steadily. All this adds up to rising property prices.
I believe most of the short term instability will dissipate by early in the New Year and that after a stalling of price growth over the next 8 - 12 weeks, prices will again take off. March, April & May 2011 will probably run as hard as they did this year.
Anyone thinking of buying property in Melbourne now would do very well to take advantage of the lull before the next major upswing early next year.
Ian James
Director JPP Buyer Advocates

Agree with the buyer's market bit. Not sure how much further Melbourne prices will run next year. I see sideways for a while, however I could be wrong

 

[cloudyday]

Director JPP Buyer Advocates[/COLOR][/I]

Vested interest? No buyers, no income?

"We are Licensed Real Estate Agents that specialise in buying property. We are known as Buyer Advocates, Buyer Agents or Property Finders. We are licensed in the state of Victoria in the same way as any selling agent is, and we are members of the REIV. As Buyer Advocates we work only for the buyer."

 

[joanmc]

I don't know about the majority of Brissy but my little corner of the world is flat, flat , flat. There is very little inquiry about property. I have one that I paid 250k for about 3 years ago and I would not be likely to get more than 210K at the moment. so a 20% drop there. That being said there are some reasonable buys to be had here, old houses rented for 250-260 pw for 210k-220k and zoned res B which means if you get 3 in a row you can build units 4 stories high ( this is my specific investing area). Granted it is a welfare area so not to everyones taste.

 

[evand]

What a load of self serving BS! Not your post Player. The article.

The housing shortage is a myth. If it was true there would be 0% (or close to) vacancy rental rate. When it comes to demand, there is no difference between renting and buying. People have to live somewhere.

Immigration will drop significantly in the next few years. So that's out.

And if unemployment stays low or gets lower and the economy keep bounding ahead with the commodities boom the RBA will continue to raise interest rates.

And why does he say 121 weeks? Do we wake up on a Monday morning and the market has turned? Ridiculous!

IMO we are in for a long period of no growth/fall in price outright and relative to inflation. And that's nationwide, not any particular state.

Why? The recent stimulus and corresponding increase in demand and rise in prices sucked a lot of future demand out of the market going ahead.

Add to that the already high prices housing and interest rate rises making affordability lower will result in demand dropping right off. Ive spoken to agents and they agree with this. And its starting now.

I think these articles are written for people that really don't know whats going on with the property market/economy and believe everything they read from so called 'authorities'.

Along the lines of the Steve Mcknight opinion I posted above, the following is an excerpt of an email that came to me yesterday...............


Buyers' Market for the next 12 weeks

The next upswing in property prices will start about March 2011
There are several major factors driving the Melbourne property market both now and for the next 6 months. In short, it will be a "buyers' market" for the next 6 - 12 weeks before reverting back to a "sellers' market" and a sharp increase in property prices from approximately March onwards. This will be far more pronounced in the top third of suburbs in Melbourne. In fact we could even see a stall or drop in the overall Melbourne median house price due to falling prices in "New Estate" areas.
Most buyers who are informed about the property market from what they read in the media are sitting on their hands. Even though there are plenty of good properties out there to purchase at very good prices. Many people decide to do nothing when there is indecisiveness in big business. For the smart investor now is the time to buy a bargain.
We currently have a confluence of instability. Firstly, our federal government is still in turmoil. The Labor party is floundering around still trying to work out how to govern in such a difficult situation. Julia Gillard is losing massive public support and the honeymoon period from the media is definitely over. Further to this we have a State Election coming up shortly and most commentators are agreeing it is too close to call. The only real consensus of opinion is the Greens may end up with balance of power at both a State and Federal level.
Add to this the fact that for the first time in recent memory three out of four banks did not raise their own interest rates in the same week as the Reserve Bank raised the cash rate. With CBA having jumped and raising 20 basis points above the RBA, and not getting any back up from the other majors, many people are simply waiting to see what happens. Now the other three banks have joined in, exactly as the RBA predicted (according to their recent minutes), everyone is wondering when the next rise will occur.
We know that there is a massive shortfall in the total number of properties that are required in this state to keep pace with the rising population. We know that with interest rates rising the RBA believes the economy is doing well. Whenever the economy does well prices of all things tend to go up due to inflationary pressure. We also know that jobs growth is striving ahead, unemployment is incredibly low and the economies of our major trading partners, China & Japan, are growing very steadily. All this adds up to rising property prices.
I believe most of the short term instability will dissipate by early in the New Year and that after a stalling of price growth over the next 8 - 12 weeks, prices will again take off. March, April & May 2011 will probably run as hard as they did this year.
Anyone thinking of buying property in Melbourne now would do very well to take advantage of the lull before the next major upswing early next year.
Ian James
Director JPP Buyer Advocates

Agree with the buyer's market bit. Not sure how much further Melbourne prices will run next year. I see sideways for a while, however I could be wrong

 

[evand]

Joan, are you referring to Caboolture/ Morayfield in your post below?

I don't know about the majority of Brissy but my little corner of the world is flat, flat , flat. There is very little inquiry about property. I have one that I paid 250k for about 3 years ago and I would not be likely to get more than 210K at the moment. so a 20% drop there. That being said there are some reasonable buys to be had here, old houses rented for 250-260 pw for 210k-220k and zoned res B which means if you get 3 in a row you can build units 4 stories high ( this is my specific investing area). Granted it is a welfare area so not to everyones taste.

 

[on the move]

So include 2011 everyone has been sitting on their hands for 2 years !

 

[buzzlightyear]

May not be one of the reasons for prices to potentially increase, but it bodes well for rents imo. Admittedly the sub-editor's have gone to a tried and true headline. Article here

 

[Player]

Drifting.......

What a load of self serving BS! Not your post Player. The article.

The housing shortage is a myth. If it was true there would be 0% (or close to) vacancy rental rate. When it comes to demand, there is no difference between renting and buying. People have to live somewhere.

In a general sense, I agree. There will be pockets/precincts within certain suburbs that will still have demand, however I see rental demand along the same lines as buyer demand. Too much stock for the customer base particularly on the eastern seabord where I focus my investing and have some kowledge on. I am unfamiliar with Adelaide, Perth, Darwin, etc.

Immigration will drop significantly in the next few years. So that's out.

This will also impact our transient influx especially in Melbourne of international students. The sentiment and perception of Melbourne in this regard is waning. They have been big business here for some time both for property demand and the spin off to the local retail economies.This will affect mostly the specifically constructed studio type student accommodation apartments. Woeth those that hold such assets.

And if unemployment stays low or gets lower and the economy keep bounding ahead with the commodities boom the RBA will continue to raise interest rates.

And why does he say 121 weeks? Do we wake up on a Monday morning and the market has turned? Ridiculous!

Agree. I can't see it here in Melbourne. I don't envisage Armageddon of any lasting nature. We aren't immune of course from another "House(s) of Cards" event from the US or Europe that will cause a bear capitulation such as 2008. Recovery from that was rapid (in blue chip Melbourne suburbs that copped the worst of it) and growth has been white hot since then and into mid this year. Medium term I see sideways tracking. Yields, especially in residential Melbourne at present are rubbish.

IMO we are in for a long period of no growth/fall in price outright and relative to inflation. And that's nationwide, not any particular state.

1991...........

Why? The recent stimulus and corresponding increase in demand and rise in prices sucked a lot of future demand out of the market going ahead.

Add to that the already high prices housing and interest rate rises making affordability lower will result in demand dropping right off. Ive spoken to agents and they agree with this. And its starting now.

Evan, have you noticed this in Sydney at the moment? From memory of your posting, you are familiar with the inner west and middle western suburbs. How are they going by way of sales and rents?

I think these articles are written for people that really don't know whats going on with the property market/economy and believe everything they read from so called 'authorities'.

Yes, vested interests and barrows to push. I subscribed to JPP newsletter a couple of years ago when they purported to be Geelong experts. Didn't use them in a BA capacity, however found their knowledge of the region good to learn off.

I find it interesting to read a large variety of material and make up my own mind. Conflicting views are good as they force me to go and seek out more specific information to my situation, investing criteria and goals. Others may just follow blindly. Caveat Emptor folks

 

[joanmc]

yes Evand. waytown in particular has a LOT for sale and not moving. I reckon someone cashed up could come in a buy a fair bit for under 220k and the average rent in there is now 250-260 pw. As long as you buy in the bit that was rezoned to res B (and that's only half of it) you have future development potential. There is stuff up in Caboolture (brick) for 260k+. We have a fairly new 4br 2 bth DLUG on the river that was valued at 365k but I reckon we would be pushing it to get 330k at the moment.

I would say that on average most of Caboolture area has dropped 10-15%.

We had a couple for sale and not much enquiry at all so we have taken them off the market.

 

[Meandering]

I have absolutely no clue, look for the opinions of my more knowledgeable fellow SSers. It'll be good if you could state why you think so as well. I know S.Mcknight said the Brissy market probably dead for the next few years (hope not), but I also remember he said in 2007 that interest would go up to 12 % !
I guess I didn't word properly in the heading, what I mean is stock easier to move, not necessarily price growth.

Won't be any better for sellers in Brisbane than NOW

Vendors are already chasing prices down. Those that "hang on for a better deal" are being disappointed on listing at a later date.

Should turn around in 6-7 years time once all the excesses of the past decade have been purged and prices retreat about 30-35%.

HOWEVER, if rent is your go, stay the course....rent should appreciate 1-2% a year for the next few years at least.

Good luck