With the spring season drawing to a close we have seen the “clearance rate” climb to 57%. Private sales picked up to 635 for the week and this is the figure that we will be watching throughout 2009. I have been saying for months, the “clearance rate” is an obsolete statistic. Agents have finally worked out to put their clients before their agencies’ advertising.
In 2009 properties under $500,000 will most likely continue their positive march. The median price for the last twelve months according to the REIV increased 3.6%. I believe this figure will rise steadily throughout 2009. Investors who are secure in their jobs will be looking to capitalise on other vendors insecurities. With interest rates dropping and rents rising, neutrally gearing a property, maybe even positively gearing maybe possible in some areas early in 2009. Investors should however be aware that yield is not always the best indication of a good investment property as the capital growth may not be the best.
First Home Buyers looking to pounce on the governments first home owners boost will be pushing up the price of the sub $500k properties until at least June. Then it will depend on whether the government extend the boost or not.
All in all, properties that are in good locations that show a history of good capital growth, have an improving yield and are under $500,000 will be the hottest property for the first six months of next year. In the later half of the year, depending on the economic outlook and what consumer sentiment brings, properties between $500,000 and $1M will be the next bracket to move. Once the economy begins to recover, properties above $1M will rebound extremely well. If you are in the market for this type of property, spring 2009 may well be the last time to buy at reduced prices before a recovery in early 2010.
It has been a tumultuous year throughout the world. Next year will probably be easier to read than this one. Although some downsizing in nearly all industries is a fact that we will need to get used to, it will also be a time for opportunity. Don’t look back in 2010 and say “why didn’t I buy property last year”
Whatever property you are looking at next year, come in and have a chat to us. Our office will be open from 5th January next year.
From the team at JPP we wish to extend our best wishes for the holiday season to all our avid readers and wish you the very best fortune in the New Year.
Ian James
