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Market News

It's very hard to go a week without numerous reports hitting the headlines suggesting a possible market crash. Despite facts being stressed concerning our population surge and shortage of 'useable' housing, a minority find a public voice to beat the drum of impending disaster. No market or investment is risk free, which is why it's important to protect and minimise risk through a carefully strategized plan prior to making any financial decisions. Weekly we witness buyers bidding at auctions with the heart rather than the head, often paying above market value to secure the house of their dreams. However the market we're experiencing at present is a perfect 'negotiators� market', and with a little patience and the right advice, its possibly the best market to step into before we start to see prices creep upwards once again as stock diminishes as it always does during the winter months.

In a balanced market, it's important for vendors to keep expectations at a conservative level if they're to be assured of a successful result. Agents are reporting good stock for the next month, however as it diminishes we're likely to see competition push property prices higher (all be it at moderate levels), as our inner and middle ring suburbs suffer once again from low supply and continuing high demand.

However anyone thinking the market is about to crash would have done well to accompany us on the auctions this weekend. We attended 5 auctions - all had huge crowds, multiple bidders, and achieved above average prices which proves we're a long way from the doom and gloom scenarios often spruiked by the bubble 'naysayers'. Considering there has been a lot of stock on the market of late, it's no surprise to see a plethora of second home buyer's either upsizing or downsizing, as many sell before they purchase, and this is the main force behind

However although some of today's results proved positive for a number of vendors, there is still plenty of stock on the market for buyers to take their pick - and with good negotiation skills - healthy opportunities are there to take advantage of.

3 Central park Rd, Malvern East - Is a beautiful 5 bedroom Edwardian house on a corner block of 925 sqm. However with a heritage overlay it was only ever likely to attract interest from home buyers rather than developers. A crowd of at least 150 people attended this auction. Quoted at 2.5 - 2.7 Mil and with such seemingly healthy interest, the auctioneer didn't waste any time in asking for an opening bid right at the top of the range. He many have unwittingly priced out a few bidders who were hoping to start at a more conservative figure, and when no one offered to step forward, he placed a vendor bid of 2.7 Mil and invited jumps of 20K increments.
A good 7 mins later and almost looking as if it would pass in with no interest, two bidders stepped up to take the challenge. The price made its way to 2.82Mil before the action ceased. The pause to go inside and talk to the vendor's failed to see it placed on the market despite the price being a good 100K above the quoted 'interest' level. The agent - giving the well-used excuse of what a hard decision it is for the owners to make a choice after 33 yrs of residing in the home, and assuring the crowd it wasn't far from being placed 'on market' - enthusiasm diminished. The property passed in, only to be sold later via negotiation for 2.86 Mil. (Price undisclosed)

Just round the corner - 28 Wheatland Rd is a property that couldn't quite match the prestige of Central Park Rd, but attracted an equally large attendance. This 3 bedrooms, 1 bathroom, un-renovated Edwardian, on 601 sqm of land, had a quote range of 1.4 - 1.5Mil. The opening bidder, who had taken time prior to the auction to question the auctioneer openly during his pre-amble on the risks of purchasing a property in case it was vandalised prior to settlement (!) - tried his luck at opening the event well below the quoted range at 1.1Mil. He was quickly outbid by the agent with a vendor bid of 1.35Mil, and from there on 3 bidders took the challenge pushing the price upwards until it was placed on the market - without pause to consult the vendor - at 1.45Mil The pace didn't slow, and the house sold under the hammer for 1.490 Mil. (For once within the quoted range!)

29 Carlton St in McKinnon quoted at 1.020 to 1.120 Mil - is a beautifully renovated Californian Bungalow, on 460 sqm of land with 5 bedrooms, and therefore was always going to attract a large crowd of home buyers. Situated in the heartland of the McKinnon School zone - a very tightly held neighbourhood with little stock - the crowd easily bordered on 200. There were four buyer advocates in attendance, none of which were successful for very good reason. Opening on a genuine bid of 1.1Mil, this auction literally 'flew'. In no time at all the property was placed on the market at 1.25Mil however that wasn't the end. How any valuer will price this one is beyond me. Three buyer advocates didn't even bother placing a bid as two buyers took the bit between their teeth to push the result way passed market value to a whopping result of 1.417 Mil. The highest price achieved so far this year in McKinnon.

Catherine Cashmore

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Recent Articles Of Interest

Reading results? These are important terms

Each weekend hundreds of homes are bought and sold at auction with results reported in this newspaper and at www.reiv.com.au If you are attending an auction or reviewing the results there are some important terms you need to understand.

Passed in

An average of 37 per cent of properties auctioned this year have been passed in. This occurs when the highest bid at the auction does not meet the vendor's reserve price.

Sam James

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Staff News

March 13th Courtney & Chris had a wonderful day celebrating their wedding with family & friends.
They honeymooned in Thailand for 2 weeks.
They are looking forward to going back to Thailand as soon as they can.
Thanks to everyone for their well wishes.

Click a photo for a larger version

Sam James

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Will the call for a 'first home buyers strike' make any difference to our property markets?

The recent call for a first home buyer's strike from the 'Tax reform' group called 'Prosper Australia', has received a fair amount of publicity. It's one of those irresistible headline grabbing stories the media loves - a little like Dick Smith's two children per family policy.

The proposal calls for first home buyers to go on strike and refuse to purchase into a market that is typically rising between 7 - 10% a year. I can fully sympathize with the emotions behind this campaign. Single first home buyers fighting to save a deposit whilst they're caught on the rental roundabout are essentially priced out of the market unless they lower their expectations, or opt to purchase in the outskirts of the city.

At around 15%, the number of first home buyers currently in the market reflects these difficulties. However this isn't because the will to purchase property has diminished. During 2009 whilst the Government dangled the carrot with generous incentives in the form of the first home buyer boost - offering in some cases up to $32,000 towards the purchase of a new home - first home buyers were at record levels

To take advantage of this brief window of opportunity many bought their plans to purchase forward, however since the incentive has been withdrawn, affordability and a succession of quick interest rate rises has reduced further activity in this sector.

Despite this the market has not suffered any great demise. Auction clearance rates may have returned to normal 'pre boom' levels, however we're not seeing any great reduction in growth. Melbourne alone recorded a new record median house price earlier this year, with buyers now needing in the vicinity of $600,000 to purchase a property. Overall turnover in Melbourne's market is down approximately 8% since first home buyers were at their most active in March 2009 - however considering we've been through, and continue to suffer the effects of a world recession, a series of natural disasters, uprise in the middle east, and a marked increase in the price of everyday living, this change should be regarded as minimal and more a case of general uncertainty than any lead into 'a great property crash.'

The market is currently being fuelled by second home buyers, downsizers, and investors and therefore is probably best termed a 'discretionary market'. In a discretionary market vendors - if they can't get their price - will generally choose not to sell. Most people sell before they buy, so unless they are under financial pressure to do so, they're quite happy to wait for better times ahead.

On the flip side buyers are in the same position. Prices aren't increasing at any great rate, therefore there's no motivation to move quickly. Those properties that ooze buyer appeal are attracting good interest and subsequently good prices. Other properties not getting the level of interest to push the result past expected market value, are generally selling via negotiation - whether it be a pass in at auction or private treaty. Therefore if there is any growth in the property market this quarter it will be modest.

The RBA have already reported Australians are now choosing to save rather than spend, with 10% of disposable household income being put aside compared to less than 4% prior to the GFC. This is reflected in current buying habits, with the trend focused on post auction negotiation rather than competitive bidding activity.

So what can a first home buyers strike achieve? The publicity surrounding the campaign may motivate the government to think about implementing more help in the form of extra grants or incentives. However, whether renting or buying, people have an essential need for shelter, and if they're not buying, they will rent. We have a rapidly growing population, and relatively low supply in our inner and middle ring suburbs, therefore any more demand on rental properties will increase yields and likely ignite increased interest from investors which can only increase, not decrease competition.

As for easing the burden on first home buyers, well the only smart way to ease house price inflation is to make the move 'outwards' feasible and affordable for first home buyers who are most adaptable to adjusting into newer suburbs away from the CBD. However it's up to market forces to determine what property in the top third of suburbs surrounding the CBD will be worth in 5 years' time. Considering we have low un-employment, a good economic outlook, and continued supply and demand pressures, expect to see the number of suburbs with a million dollar median increase considerably.

Catherine Cashmore

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Spotlight On Melbourne Suburbs

In our regular spotlight section we examine a selection of Melbourne suburbs, highlighting what's happening in these areas right now

Aberfeldie

Municipality: Moonee Valley
Population: 3455 (2006 census)
Postcode: 3040
Location: 9km from Melbourne CBD

Located approximately 9 km north-west of Melbourne with a population 3455 (2006 census) Located just south of Essendon, Aberfeldie is characterised with abundant park land and the winding Maribyrnong river. The Boulevard and surrounding locality runs long the river and has some stunning examples of period homes - Edwardian and Californian Bungalows - however there is also a large amount of post war housing stock in the suburb - much of which has been updated, renovated or replaced with newer property. The parks offer great recreational facilities - walking and bike racks - BBQ areas - and there are a number of private and public schools in the suburb which generally attracts families to the area. Most of the homes are owner occupied & streets are generally wide and tree lined.

There is a small shopping strip located on Buckley Street, however much of the retail traffic is picked up by Highpoint Shopping Mall in the neighbouring suburb of Maribyrnong.

Aberfeldie shares the same post code as Essendon and Essendon West. There is generally a young demographic with most residents below the age of 50 years. Residents report the suburb as quiet and picturesque.

Amenities

• Aberfeldie Primary School
• Our Lady of Nativity Primary school
• Ave Maria Secondary College

Transport - Closest train station is Essendon Train station. However three metro bus routes also service the area (465, 467 & 468)

Shopping - Closest shopping centre is Highpoint Shopping Centre in Maribyrnong, and Mount Alexander Shopping Strip

House Styles

House styles in Aberfeldie range from period grand residences - Edwardian and Californian Bungalows - to more mundane post war homes, generally on 600 + sqm of land. There are a small number of flats and apartment blocks located closer to the transport and shopping hubs, and a range of town residences - double and single story - on smaller blocks of around 400 sqm.

Sam James

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Is purchasing the 'worst house in the best street' always the road to success?

It's long been thought that buying the worst house in the best street is a wise plan for investment. After all it's location that's the most important aspect of any real estate acquisition right? Well not necessarily so - many 'would be' property developers enter into an acquisition only to find themselves with a plethora of problems they hadn't expected to encounter. Whether it's purchasing a renovation project that leads on the fast track to bankruptcy, or simply mis-matching the suburb's buyer profile, it's important to get the equation right if you really want to win the game. Here are a few tips to get you started:

• Firstly, don't imagine purchasing and renovating for a profit is an easy exercise. It will more than likely involve significant holding costs and a number of year's growth before you reap a harvest. The oft marketed 'flipping' technique made to look easy by numerous renovation TV shows, is not for the inexperienced and can result in costly mistakes. Before you start see a financial advisor and be realistic about what you're hoping to achieve




• Learn the area profile and understand the type of buyer that purchases in your suburb of choice. If you're purchasing in a family orientated suburb concentrate on larger blocks of land with the potential to build a family sized home. If purchasing in a street full of single fronted period terraces, don't buy the townhouse that sticks out like a sore thumb on the horizon. Chances are the reason buyers migrate to the area is due to the attraction of the architectural landscape.




• Subdivision is a marvelous idea however again it's important to pick your area of choice carefully. If you�re in a school zone, purchasing land which once subdivided only has the ability to fit two small 2 bedroom units is not going to attract punters when it's time to rent or sell. Make sure the land size is large enough to accommodate any future plans. The local council website can be a font of knowledge when it comes to gathering essential information of what is and isn't allowed when developing. Also make use of your local government land data website ((www.land.vic.gov.au) to assess other important criteria such as zoning, heritage overlays, or areas in threat of flood inundation.




• Watch out for outstanding issues such as large trees or sites with steep gradients which will blow the budget. Moving trees not only requires council approval, it can also be a very costly exercise. If they're on the blocks periphery it may not affect your plans, however all due diligence must be assessed prior to signing the contract. Don't consider embarking on a purchase until a solicitor has thoroughly checked the paperwork for items such as easements & covenants.




• Under estimating the cost of renovation is a classic error many 'would be' developers make. Even if you're planning on demolition your plans may require the property to be livable for a period of time (1/2 years) before you begin your project Get a building inspector to assess the property and inform whether there are any issues that will render the house dangerous for immediate occupation. If the roof is going to cave in as soon as there's a storm, you need to take this into account before you make any long term plans.




• Over paying for property is the most common error investors make. It's not unknown for an un-renovated property to get a higher price than its renovated neighbor simply because people rock up to the auction thinking they're going to 'bag a bargain'. Old houses are often advertised as 'executors' auctions, quoted low, and therefore create a furfur of activity. If you don't do your homework, or have doubts about a property's value, it pays to invest in good independent advice. Sales campaigns are designed to create the impression that you're purchasing a 'one off' opportunity. However employing a buyer advocate not only opens you up to off market listings, you're prevented from over paying and have someone with strong negotiation skills to secure the 'bargain' you're looking for.

Catherine Cashmore

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Technology Monthly

Apple TV

The Apple TV is my new favorite gadget...I received it for Christmas and for the first month or so of it's use it was just a novelty, but then Apple released an update (and a jailbreak was released online) and it is now my most used media player.

When the unit first arrived, all you could really do was rent movies over the internet and stream your music and movies over iTunes from a PC, meaning you had to have a PC on all the time and you could only watch video's in Apple's supported formats (h.264, mp4, mov & m4v) which is fine, if you only rent movies from Apple and don't have any of your own.

Then Apple released the 4.2 firmware allowing the iPhone and iPad to send video directly to the Apple TV over a wireless internet connection, meaning you could start a movie on your iPad, then if you got bored holding it, switch it directly to a TV with no interruption.

The biggest breakthrough came when the unit was finally jailbroken allowing for the installation of XBMC onto the system. XBMC is media center software that supports almost every format in existence, allows plugins to be installed and for skin customizations. It also supports the streaming of media from a network hard drive, which until I purchase my new server means I can watch all my stored movies from any TV in the house that has an Apple TV without needing a PC on all the time, and at $129, it is the cheapest and easiest media streaming unit I have come across.

The Apple TV can be purchase here (Apple.com.au)

Chris Thursfield

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Recipe: Chocolate hot cross bun and butter pudding

Ingredients: (server 6)

• 6 chocolate hot cross buns
• 30g unsalted butter, softened
• 125g roughly chopped good-quality dark chocolate
• 1 vanilla bean, split, seeds scraped
• 600ml thin cream
• 600ml thickened cream, plus extra to serve (optional)
• Zest of 1 orange
• 4 eggs
• 170g caster sugar
• 1/4 cup (60ml) brandy (optional)
• Icing sugar, to dust

Method:

1. Split the hot cross buns and butter each half. Lay the bases in a 2-litre (8-cup) baking dish, sprinkle with the chopped dark chocolate, then place the bun tops on the bases.

2. Place the vanilla pod and seeds in a saucepan with the creams and zest, and heat over low heat until just simmering. Remove from the heat.

3. Beat the eggs, sugar and brandy until just combined, then pour into the warm cream, stirring continuously. Strain the custard evenly over the buns and set the pudding aside for 30 minutes for the buns to soak up some of the custard. (The pudding can be prepared to this stage several hours in advance and refrigerated - just bring to room temperature before baking.)

4. When ready to cook, preheat the oven to 170 degrees C.

5. Place the pudding dish in a large roasting pan and pour enough boiling water into the roasting pan to come halfway up the sides of the pudding dish. Place in the oven for about 45 minutes or until the custard is set. Dust with icing sugar and serve with extra cream if desired.

Chris Thursfield

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