January 2012 Market Update

The property market appears to be off to a solid start for 2012!
One of our first open for inspections for the year enjoyed a total of 44 groups through a single 30 minute open with a number of other agents around Sydney & Australia suggesting they have started 2012 with similar enthusiasm.

With interest rates falling by 50 basis points at the end of 2011 we anticipate that with the early positive signals there should be a solid selling period during the first quarter of 2012 and the traditional seasonal factors to follow with the typical gentle slowing of the market over winter & spike in Spring. Reducing interest rates will keep buyers motivated and searching for the right property while soft economic data will ensure most remain wary of overextending. We believe buyers will continue their trend of last year of completing lengthy due diligence before submitting an offer. Due to this smart sellers will ensure they commence any sale campaign with the best planning, appearance and price point to attract interest. There is great opportunity for those looking to upgrade in the present market and we see this sector as being a key driver of the market in 2012.
We look forward to reporting on the market this year. If you’re interested in having a more detailed discussion, or some assistance in planning your property goals – please don’t hesitate to contact our experienced team.

Having a deeper understanding of market movements can provide more flexibility and attractive selling strategies. We look forward to hearing from you when you’re ready!

Tim Wirth & the Team at R&W Seaforth/Balgowlah.

.

See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors

A lot of news, still waiting on any impact…

 
The Henry Review has ended up with surprising little on impact property – given the voluminous 138 recommendations; the expectation was for a far greater impact.

One of the key recommendations of the Henry Review related to the tax on savings and how the current legislation distorts people’s savings and investing behaviour. The Review focused particularly on current trends of negative gearing property taking advantage of the tax rules and how this has encouraged households to take on too much debt and risk when undertaking investments.

The review proposed a more consistent approach to taxing savings – with the specific recommendation being to apply a 40 percent discount to most interest income, net residential rental property income, capital gains and interest expenses.

The view was that our tax system actively encourages risk-taking and perhaps to an excessive degree. More problematic is that it penalises investors who are more cautious and risk averse.

With no changes at this stage being implemented, the current property trends are likely to continue unaffected by the Review, perhaps a different story for Western Australia who has seen their market driven largely by the mining sector. With the 40% tax grab on the mining industry’s profit, there may still be some ripples to be felt closer to home.

The trend for interest rates continued with the 6th increase in a row, taking the cash rate up another 25 basis points to 4.5%. As indicated in past blog posting this move starts to place interest rates back to the Reserve Banks (RBA) neutral territory with the Standard Variable loans now in the mid7%. It will be interesting to monitor if this is enough for the Governor Glenn Stevens & the RBA to pause and watch for full effect prior to any further interest rate movement. 

Australian Cash Rates 2006 - 2010

*The above graph from the SMH commentry on the May interest rates decision.

Supporting this is the Australian Bureau of Statistics (ABS) release of Retail sales having a lower-than-expected 0.3% to a seasonally adjusted increase to $19.92 billion in March from $19.85 billion in February, With retail sales being weaker than expected this may be enough to put rates on hold for a little while.

Today The RBA will publish its quarterly Statement on Monetary Policy where there are expectations that they will upwardly revise the medium-term forecasts for both inflation and economic growth.

As we saw pre-GFC the Reserve’s focus has been very strongly focused on keeping inflation firmly in the 2 – 3% range, hopefully this cycle they do pause to monitor effects rather than continue increasing till the cracks start to show in the economy. Most of us learn from our mistakes, but time tells all things.

Confidence in property has remained strong even with a number of new listings on the market; there is still a relatively low supply of properties for sale relative to the strong  demand. It has been interesting to note a number of buyers comments that they hoping for a couple more interest rate rises to knock out some of the competition, particularly in the lower price brackets.

 

Till we meet again, wishing you all the best in your property search!

The Team at Richardson & Wrench Seaforth/Balgowlah.

.

See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 6/05/2010

Interest Rates – April commentary

It seems to depend on who you chat to and which articles you read at the moment as to whether interest rates are moving up or staying put, when the reserve bank meets on the 4th of May.

On one hand, a recent online survey of 3500 people shows that over 70 are expecting an increase again next month.

With headline inflation rising by 0.9% in the March quarter, there is argument for another rise now, before pausing to monitor how the Australian economy performs back at the lower level of ‘neutral interest rates’.

On the other hand, there is a level of uncertainty which may prompt the Reserve Bank to keep the cash rate at 4.25%, particularly in light of the instability in the European Union and the repercussions of Greece’s crumbling economy, as an article in yesterday’s Daily Telegraph “Greece rates gift” suggests.

Some turbulence is being felt in the financial markets with the news of Greece’s credit rating being moved to “Junk” status with a $430 billion national debt. Portugal & Spain are also in the firing line with fear of the debt crisis spreading.

Realistically, whether the bank increases the cash rate this month or they wait a little longer, our feeling is that the trend will continue with a couple more eventual increases to push interest rates firmly back into the Reserve Bank’s ‘neutral territory’.

Meanwhile, mortgage stress seems to be coming back into the popular media vernacular. It is more likely to be felt by the first home buyers who extended themselves to purchase their first home & who are feeling for the first time the extra pressure created by the upward jolts of interest rates. For seasoned property market players who have been through the rate cycle before, it is familiar territory where interest rates are required to trend up significantly before the ‘mortgage stress’ term starts to truly become appropriate – particularly for our lovely part of the world.

Confidence continues to be strong, as seen in the ‘Consumer Sentiment & Business Confidence’ graph below.

April Confidence

With many savvy buyers having already factored in interest rate increases when setting their budget, and with confidence levels remaining in very positive territory, we see no reason for the market not to continue on its current positive trend.

 

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

.

See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 29/04/2010

Is the sky the limit for Sydney Property…

An interesting read in last Saturdays Sydney Morning Herald, stated that the “Sky’s no limit for Sydney property”. Reviewing the article, surprisingly it revealed that despite very strong recent growth the average price in Sydney for 2009 had only increased by 6% on the 2004 figure.

Over the last couple of weeks there have been a number of articles about the recent spike in property demand, the talk of Melbourne being in a property bubble and the general comment on interest rates.
 
Looking at the fundamentals of property, extrapolating from Westpac’s Chief Economist Bill Evans’ comments (at an industry economic update this week), the Australian economy is faring quite well on the world stage. Reports of this strength have stimulated buyer confidence (which had evaporated for much of 2008 & 2009) and the property market is surging to make up for the time lost in the first half of 2009, when buyers were sitting on their hands waiting for the property market to crash. According to Bill, Australia is undersupplied by approximately 180,000 dwellings with around 50,000 of these in NSW. Of this, Sydney has the lion’s share of current undersupply, while the high population growth in our city will put further strain on housing supply.

To turn this worrying trend around and make supply meet demand, it would take an additional 12 months of building at full capacity on top of what is currently occuring. However, in our local Northern Beaches there is neither a significant number of additional land (although a few blocks are being released in the not too distant future in Seaforth), nor a large number of high density developments. Consequently, we are unlikely to see any real shift in the supply side of the equation.

Until this additional development happens we will continue to see the long-term pattern continue, with premium prices being paid for prestige apartments, extremely strong competition for the entry level homes in our area & the general demand continuing to increase.

 In marketing the ‘Tahani’ development in Ethel Street, Seaforth, we recorded over 1,000 potential buyers inspecting the apartments. This supports the theory that this area will need to cater for the baby boomers, who are now reaching retirement age and wish to secure the beachside lifestyle without the home maintenance that they have been dealing with for the past thirty-plus years.
 

 

Tahani, 33-37 Ethel Street

.

Back to the here & now, yesterday’s announcement of unemployment recording a surprising increase of 0.1% in February to a total of 5.3% will probably not deter the Reserve Bank from the next interest rate increase. However it will show cause for them to take their time with the next step in the move back to the equilibrium cash rate of around 4.5% (currently 4%).

 

ABS February Employment Figures

Source: Australian Bureau of Statistics

.

If this holds true then we can expect the property market to continue on its current bullish trend for some time. 

So is the sky the limit? Looking at reality although the trends are strong, the limit is probably a little closer to the ground than the stars. But who am I to interrupt media sensationalism?

.

We look forward to your posts on the blog with any additional thoughts & comments from our readers.

Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

.

See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 11/03/2010

The trend is up…

.
With Thirty-Three (33) auctions on the Northern Beaches last weekend, R&W’s Glen Wirth was privileged to be the auctioneer at Four of the Auctions [with 4 sales]. We are seeing that confidence in the market has built upon the momentum that started in November last year is still heading in the same positive direction, certainly a strong turn around from what we were experiencing 9 months ago!

While the Reserve Bank increased rates again on Tuesday this week and with expectations of another rise over the next couple months, interest rates are still below the Reserves’ economic “neutral“ position! Viewing the weekend’s results - buyer confidence seems to be moving with interest rates rather than having its usual inverse relationship. Put simply, although interest rates are going back up to their historical average, the market in our area is likely to keep powering on – with no sign of buyer interest coming off the boil.

Many cashed up buyers on our database would like to see more homes coming to the market, for those considering selling, now is definitely the time to come & have a confidential chat about the market with the team at R&W.

For those who have been out at the opens & attending recent auctions, it doesn’t take long to notice that there are many buyers out there searching for a new home (22 registered bidders for 16 New Street East, Balgowlah) and with a relatively low level of new listings - the demand trend is likely to keep on its current path for the foreseeable future.

The prestige market as we commented on 2 weeks ago is continuing to build momentum, for those looking to upgrade there are still great opportunities to take advantage of the greater market activity at the lower price brackets & comparatively less competition at the top end. 

With today’s topic of the Trend is up…, it is prudent to look at why we are experiencing this trend. This week the 6th Annual Demographia International Housing Affordability Survey: 2010 has been released. A worthwile read for those with a bit of time on their hands!

Looking at the trends from a Global, National and local view the reasons are similar, however at the local level there are some subtle differences.

Over all – supply & demand are very much the key to strong prices being paid for property. Looking at the below diagram we see that in Sydney particularly, the number of new properties being built had been falling substantially over the past few years. With the current Australian immagration policy - demand for housing is continuing to grow substantially faster than the supply.

 

Housing Starts By State '02 - '09

 

In our local area there is only a very limited number of blocks that have come to the market in the past decade & there is a very limited supply that can come to the market in the years to come, so for our area the new builds are replacing existing homes rather than adding to the housing supply.

 

With the lifestyle that the Beach side / Harbour side location of our area offers, we are going to continue to find that out of area buyers are drawn to our gorgeous pocket of Sydney and as such we will continue to see increasing demand without the opportunity of any significant additional supply.

Manly Beach

 It’s not a bad lifestyle with Manly Beach on your door step!

 

Continuing our review of our local suburbs sales statistics

Today we delve into North Balgowlah and see what’s been happening over the past few years.
 

North Balgowlah sales so far in 2010* (House / Townhouse / Semi)

Total number listed                          6

Total number of sales recorded  1

Private Treaty   1 Properties        $980,000 (Total Value)

 

North Balgowlah Sales in 2009* (House / Townhouse / Semi)

Total number listed                          60

Total number of sales recorded   42

Total Value Sold                                $ 38,257,335

Public Auction   12 Properties    $ 8,905,000 (Total Value)

Public Auction Average                 $890,500   

Private Treaty   30 Properties     $29,352,335 (Total Value)

Private Treaty  Average                 $1,012,149 

Median Price                                       $879,000 

Average Price                                     $980,957   

Highest Sale                                         $1,785,500 (R&W)  
 

North Balgowlah Sales in 2008* (House / Townhouse / Semi)

Total number listed                          67

Total number of sales recorded  53

Total Value Sold                                $52,568,750

Public Auction   16 Properties     $16,942,250 (Total Value)

Public Auction Average                 $1,058,890   

Private Treaty   37 Properties     $35,626,500 (Total Value)

Private Treaty  Average                 $962,878  

Median Price                                       $955,000 

Average Price                                     $991,863   

Highest Sale                                         $1,805,000 

  

North Balgowlah Sales in 2007* (House / Townhouse / Semi)

Total number listed                          61

Total number of sales recorded   58

Total Value Sold                                 $57,294,893

Public Auction   17 Properties    $18,406,000 (Total Value)

Public Auction Average                 $1,082,705   

Private Treaty   40 Properties     $38,888,893 (Total Value)

Private Treaty  Average                 $948,509  

Median Price                                       $900,000 

Average Price                                     $987,842   

Highest Sale                                         $1,750,000 (R&W) 

 

We look forward to your posts on the blog with any additional thoughts & comments from our readers.

 

Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.

 

Till we meet again, wishing you all the best in your property search!

 

The Team at R&W Seaforth/Balgowlah.

 
See you at the open for inspections www.teamrw.com.au/buy/opentimes-sales/

 
To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate www.teamrw.com.au/buy/local-market-watch/*

*Sales are as reported by Australian Property monitors on 05/03/2010

Strong competiton for property.

Welcome to the first edition of “Real News” – with our new website launched & all the bugs discovered – we hope – it’s time to focus on what’s happening in Real Estate in the Seaforth / Balgowlah area.

Many feel that our area’s greatest strength is the summer lifestyle and we at R&W have been making a point of enjoying the benefit of a swim/surf before and/or after work. The very lifestyle that motivates many of the purchasers we deal with to secure property in this area!

Competition for local property appears to be back with strong attendance to all open for inspections – one property in Balgowlah Heights recently enjoyed 65 groups through a single open.

The prestige market has over the past couple of months, enjoyed a level of enthusiasm not experienced for over 18 months. There has not been the same number of buyers looking over $2 million as experienced in the early to mid $1 millions; however from the recent sales we have been privileged to bring together in the $2 – $4.5 million range (89 Seaforth Crescent Seaforth, 37 Edgecliffe Esplanade Seaforth, 42 Peronne Avenue Clontarf, 11 Gordon Street Clontarf, 19-21 Ellery Parade Seaforth, 6 David Place Seaforth)  – buyer confidence at this end of the market is definitely back  and a few more prestige listings are in the wings.

Most of us were pleasantly surprised when the Reserve Bank announced that they would be keeping rates on hold for the time being. From the current data however, it would appear that we are going to see interest rates continue to trend upwards this year, although most astute purchasers have been factoring this in for 6 months or more.

With unemployment seen as being back under control, inflation & housing activity are the main figures that the Reserve Bank will be monitoring closely and will determine how quickly interest rates return to their equilibrium levels.

Over the next few weeks we will be reviewing the sales activity of local suburbs over the past few years. Being located in Seaforth –it seemed a logical choice to start here.

Seaforth sales so far in 2010*

Total number listed                          41

Total number of sales recorded   10

Total Value Sold                               $13,567,500

Public Auction   3 Properties      $  3,655,000 (Total Value)

Public Auction Average                $  1,218,333

Private Treaty  7  properties       $  9,912,500 (Total Value)

Private Treaty Average                 $  1,416,071

Median Price                                      $  1,117,500

Average Price                                    $  1,356,750

Highest Sale                                        $  3,950,000 (R&W)
 

Seaforth Sales in 2009*

Total number listed                          180

Total number of sales recorded   174

Total Value Sold                               $226,737,894

Public Auction   37 Properties   $  40,542,500 (Total Value)

Public Auction Average                $  1,095,743

Private Treaty   137 Properties  $186,195,394 (Total Value)

Private Treaty  Average                 $  1,359,090

Median Price                                       $  1,106,750

Average Price                                     $  1,349,630

Highest Sale                                         $  4,600,000
 

 
Seaforth Sales in 2008*

Total number listed                          210

Total number of sales recorded   172

Total Value Sold                                $258,337,260

Public Auction   39 Properties    $  61,913,500 (Total Value)

Public Auction Average                $  1,587,525

Private Treaty   133 Properties  $196,423,760 (Total Value)

Private Treaty  Average                $  1,476,870

Median Price                                      $  1,085,000

Average Price                                    $  1,501,960

Highest Sale                                        $  5,910,000
 

Seaforth Sales in 2007*

Total number listed                          183

Total number of sales recorded   116

Total Value Sold                               $169,498,128

Public Auction   37 Properties   $  48,355,240 (Total Value)

Public Auction Average                $  1,306,898

Private Treaty   79 Properties     $121,142,888 (Total Value)

Private Treaty Average                  $  1,533,454

Median Price                                       $  1,235,000

Average Price                                     $  1,461,190

Highest Sale                                         $  8,310,000
 

Till we meet again, wishing you the best in your property search,
 

The team at R&W.

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate http://www.teamrw.com.au/buy/local-market-watch/*

 

*Sales are as reported by Australian Property monitors