Another week of over 1000 sales with a clearance rate over 80% again. 1109 total sales, 447 sold under auction and 662 private sales according to the REIV. This is up about 20% on the same weekend last year.
After last Thursday’s Age article talking about gloom and doom in the Toorak market and then this mornings, article on www.news.com.au about property prices rising across Australia, it is not difficult to understand why the average potential buyer is confused.
Unemployment nowhere near the levels that were being forecast this time last year, retail sales did not slump over the last six to eight months, interest rates have not continued in free fall, in fact the Commonwealth has just raised their rate, and even the share market is showing a very good indication of resilience. We have not been in a recession, like most of the other countries in the world and we do not have the same issues that many other countries have, relating to some of the above indicators.
Property prices have also remained incredibly resilient throughout the Global Financial Crisis (GFC). Many properties in all levels of the market have actually sold at a higher price than in 2007. Victoria Street in Williamstown was bought in 2007 for $1.775M and was snapped up as soon as it went on the market last month for $1.97M. according to the REIV.
The majority of properties offered to the market this year have been of a lower quality than those offered during the 2007 peak market. So, whilst we can compare specific properties, it is far harder to look at general statistics. Median prices statistics are made up of the properties that have been sold during the period under investigation. It is the change in these prices that some very uninformed commentators will say prove a market that has serious problems. For instance, the Williamstown median price in September 2007 was $795K and the March quarter this year showed us $780K. Therefore with this limited data I could say that property prices in Williamstown have dropped 1.8% in value. But we know good property has not!!
The issues that face purchasers today are simple. There are many properties on the market that are OK. These will and should sell at OK prices. There are a few properties that are good to excellent. It is these properties that are reaching exceptional prices in the market place. There are two reasons for this. Firstly, and very obviously, they are good properties. They are well located, well presented and well marketed. Secondly, and far more importantly, they are scarce. Banks are not forcing that many people to “fire sale” their properties. This would actually be detrimental to the banks. Over supply will bring property prices down and not assist to pay out bank loans.
Supply and demand are the factors that decide price. It is the forces on each of these factors that decide what the balance will be. We have had a substantial increase in turnover from 2008 and although the number of auctions is lower the total sales has easily exceeded the levels of last year. The choice that potential purchasers make when buying this year will be far more crucial than the final price they pay.
We can also see the lack of good stock mirrored by the way some Real Estate Agents are handling themselves. We have heard the rumours, just like everyone else that many agencies are battling to keep their doors open. It is these difficult times that we can see unlicensed, unscrupulous and or unethical people make things difficult for uninformed purchasers. People can make very poor decisions when faced with dilemmas they know little or nothing about.
I believe it is high time the government step in and push for better representation for both buyer and seller. When only one party has someone acting for them and may be purporting to be acting for both then there will always be issues. In the legal system everyone is warned to get representation on both sides, whether it is criminal or civil. I believe the same should be done within the Real Estate Industry. In most cases the purchase of a property is the largest single financial decision a person makes in their life. If you are buying property you should have someone on your side (exclusively).
Call us for a free no obligation meeting to discuss your next property purchase.
