Merry Christmas!

The Team at JPP Buyer Advocates & JPP Property Management
wish you all a Very Merry Christmas & a Safe & Happy New Year

Our office will be unattended from 22nd December through until the 3rd January.
We will be checking messages regularly through this time.

If you would like to catch up in the New Year for a cuppa or a chat with regards to the current market, don�t hesitate to call or email.

Top

Market News

The Valuer General figures are out for June quarter.

The Melbourne property market has only a couple of weeks left to run for the year and with a clearance rate of 55% according to the REIV for the weekend, some vendors and agents alike will be glad to see the end of 2011. But what changes are in store for 2012.

I wrote last week about where property prices will go over the next decade and that for all intents and purposes it is a �no brainer�. We did have the usual comments from people saying that I have no idea what I am talking about. However, not one response offered any other alternative, or even any factual response. In fact the Valuer General data for the June Quarter was released last week showing that house prices increased in the Melbourne Metropolitan area by 2.2% from the previous quarter.

The median house price has risen from $489,000 in March to $500,000 in June. Volumes are however at the lowest quarterly level since June 2009. It has remained unchanged from the median of the same quarter last year. These statistics are not educated guesses or samples of less than 10% of the market. These numbers are a statistical analysis of all the sales collected by the Valuer General of Victoria.

Unit prices have also risen this quarter: up 2.4% on the previous quarter. But the number of sales last quarter was 5353 and the same period last year had 7969 sales.

The biggest movement was vacant land sales. Down in numbers by a whopping 65%, the numbers in the same quarter last year were 5249 and this year are 1848. However, the median price has moved from $185,000 to 213,000. This is a 15% movement.

Tomorrow the Reserve Bank will try to read the tea leaves and have to decide whether to decrease the interest rate again or remain on hold and see whether Europe actually implodes. Further to this, the banks have had a credit rating cut and suddenly their multi-Billion dollar profit margins might be pulled back a touch. Even if the RBA decides to cut 25 bps, there is no guarantee it will be passed on and therefore may be of little use to consumers anyway.

Now throw in the housing figures above. Mining is still surging ahead with investment, retail sales figures were up 0.6% and even some investment into our manufacturing industry was welcomed last month.

I do not think the RBA will cut interest rates tomorrow. I think they will �keep their powder dry� and if the need warrants, will drop 50 or 75 bps in one hit to make sure a substantial lowering of interest rates hits the consumer.

Early next year investors will re-enter the property market. Renters are already having a difficult time finding accommodation, and rents will increase steadily next year. There are still many potential tenants offering over and above asking price for rental accommodation. When we do see a cut in interest from the Reserve Bank, and loans are available around 6.5%, there will be a veritable flood of investors pushing prices in the range of $400k – $700k upwards. For an investor with good equity, who can borrow 106% for an investment property, the shortfall can be as low as $4500 for the year to purchase an excellent long term growth property in Metropolitan Melbourne.

I am not talking about off the plan sales in some mining town in the middle of nowhere where capital growth is usually non-existent, or an apartment block of several hundred, some of which are never even built. I am talking about established A – grade properties within 10 km�s of the CBD. And if the interest rate were to fall to 6% then it is nearly revenue neutral.

2012 will see the slow but steady rise in values, of both houses and units in Melbourne. This assumes our interest rates do not go up, our unemployment rate stays around the same as it is now and Europe remains a mess. If rates drop, unemployment goes down and Europe works out its problems, then our property prices will very quickly revert to a growth near 8% p.a.

The next couple of years will be very interesting for property buyers. If you are interested in buying a property and what some assistance please do not hesitate to call for an appointment

Ian James
Director JPP Buyer Advocates

Top

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

Ashburton

Municipality: City of Boroondara
Population: 7173 (2006 census)
Postcode: 3147
Location: 12km from Melbourne CBD

Located 11km south east of Melbourne�s CBD with a population of 7173. (2006 census). There is no real stand out feature to Ashburton � the housing, land size and facilities on offer fall broadly in line with the neighbouring suburbs of Ashwood and Chadstone. Largish blocks of land (around 600+ sqm), post war housing, some parks and a main road shopping strip on High Street. The shopping strip is popular with residents from Ashwood and the surrounding suburbs, and the amenities on offer are good, however if you�re looking for exclusive restaurants or coffee shops and a quite atmosphere High Street shopping mall probably won�t fit the bill. The more affluent neighbouring suburb of Camberwell underpins house price in Ashburton, and the area attracts families who can�t afford Camberwell prices. Due to the close proximity of Holmesglen, Swinburne, Monash and Deakin university campuses, there is a fairly large proportion of students renting in the area. Ashwood Baptist Church run a student house on Baird Street. Government housing is also more dominant in this area compared to the surrounding locations � with some high density public housing blocks left over from the initial development in World War 11.

Most residents are owner occupiers and there is a good selection of schools in the suburb. As well as the train station and bus services along High St, close proximity to the Monash Freeway makes commuting into the CBD relatively easy (although peak hour traffic is often a problem). Demographics show a large number of residents employed in community, property and business services (2006 census).

Amenities

Main Schools:

• Solway Primary School
• Saint Michael�s Parish School
• Ashburton Primary School

Transport - Ashburton train station, and the 612, 734, 903 bus services.

Shopping - The main shopping strip is located along High Street.

Most of the housing stock in Ashburton is detached, on block sizes ranging from 600 sqm upwards, and post war in style. As with other areas situated in the inner and middle ring suburbs, homes are gradually renovated, extended, updated, or replaced as new families move into the suburb. Subdivisions featuring double story town houses are common. Smaller properties are generally 2 or 3 bedroom villa units, sharing a block with typically 4 � 8 other properties. There are a small number of high rise apartment blocks � 1970′s in style � closer to the train station and shopping strip, and a proportion of high rise government accommodation in the area.

*Image from Wikipedia

Ian James

Top

Where are property prices really
       going?

We have had economists and university academics tell us property prices will fall by 40%. The media as a whole jump on this and espouse the virtues of the �expert� to a point where Nostradamus� spin doctor would be proud.

When that proves wrong, there is no change to the media�s view point, we just wait for a year or two and then put the same experts back up with a different set of �proofs� and again champion their �expert.� Two years after the first academic to say the market is falling 40% we have more people saying the same thing.

The Valuer General figures show that Melbourne�s median house price between 2008 and 2010 moved up 12.66%p.a: the opposite direction to the experts� opinions.

Earlier this year some of the same academics, and a few others that had a vested interest in luring people away from the Melbourne property market, began running with the �property prices to drop 40%� line again. This time with the global economic woes firmly entrenched on the front page of every paper, some people began to believe a 40% drop in property values was possible. The Valuer General tells us that the Melbourne median house price actually grew 1.8% from March 2010 to March 2011. These are real numbers! These are genuine statistics that are collected from people who pay stamp duty of property transfers. Basically it is accurate data.

Over the weekend I heard one of the TV stations running with the line, �The property market will drop 25%.� This is plausible, if you are assuming it relates to volume. I do think the turnover of properties will drop. If you think it relates to price, then there is no evidence this is actually happening. In fact if volumes keep dropping, and the better properties are more tightly held, I know which way property prices will definitely go over the long term. They will Rise and rise faster than they have in the past.

Australia is called the lucky country, and although we have dreadful fires, floods and all kinds of natural disasters, we still live in one of the best countries on the planet. And you will not get that much argument from many other people around the world. Our unemployment rate is the envy of every country on Earth. Our natural resources put Australia at the forefront of world economies over the next 20 years. Our only major problem is our lack of population. We should be striving to double our population within the next 40 years. Net migration should be allowed to increase to facilitate a reduction in skills shortages that our great nation has.
Global economic woes and another credit crunch will stifle property price growth in the very short term. But with our economy booming along relative to the rest of the world, our unemployment rate is almost a little too low, creating a skills shortage, and the outlook throughout most of Asia looking very good, I think people, in general, will feel comfortable to settle down and make a long term property purchase.

With a shortage of houses where people want to live, with the building industry slowing down in the wake of First Home Owners grants drying up from their peak in excess of $30,000 and with the population growing at a rate nearly twice that of the world averages, I cannot see how the humble Supply vs Demand economic rule will not prevail.

House prices over the next ten years will most likely increase at a rate equal to or greater than the last thirty years. Properties are not overpriced in this country. Australia is setting new benchmarks for global prosperity and people from all over the world will want to live here. And they will pay for the privilege. Expatriates are returning home from overseas to ride out the GFC. Many of whom are happy to purchase property here at very low prices comparative living in major capital cities around the world.

The media tend to report �Gloom and Doom� because it markets better than a �steady as she goes!� story. So here is a little gloom and doom for you. Over the next ten years property prices in the Melbourne will reach record highs and it will be just about impossible for first home buyers to even enter the market. For those of you who want your children to have the best possible start in life, think seriously about buying a property within the next decade for each of your children and setting them up as an investment property. Property prices will double within the next ten years across the top third of suburbs through Melbourne.

Ian James
Director JPP Buyer Advocates

Top

Recent Articles Of Interest

Incentives for first home buyers

With house prices lower than they were at the most recent peak a year ago, now is a sensible time for those considering buying their first home to take the step into home ownership.

To assist first home buyers, the Victorian Government offers a range of grants and incentives.

Established over a decade ago, the First Home Owners Grant provides eligible buyers with $7,000. While the grant is not means-tested, the home you want to buy must not cost more than $750,000; an upper limit that covers almost all purchases a first home buyer is considering.

Read the rest of the article here (Source: REIV)

Less time to pay stamp duty

Stamp duty is an issue at the forefront of most buyers� minds.

Home buyers and sellers generally focus on the amount of stamp duty that has to be paid when they buy a home, rather than when it has to be paid.

Given that Victoria is second only to the Northern Territory when ranked by its reliance on stamp duty, and the fact that at almost every price point Victoria�s is the highest, the focus on the cost is an understandable one.

Read the rest of the article here (Source: REIV)

Sam James

Top

Timing

Timing at the moment with buying property is an important negotiation tool.
Coming closer to Christmas vendors have been more negotiable, selling agents have gone back to calling us looking for buyers.
The good agents know that buyer agents / advocates will have serious buyers, and buyers looking for a good property at a fair & reasonable price.
We have been fortunate enough this November & December to secure for our clients some fantastic properties are great prices, due to the fact that vendors are unsure if there properties are going to sell at auction or pass in � therefore they are accepting a reasonable offer prior, we have also secured several properties after the pass in at auction, again vendors cautious that they are not going to get there high reserve they were hoping for.
This is all to do with doing the homework, getting all the relevant information prior to the offer, then knowing exactly when to place that offer down.
A good real estate agent will educate his vendor to take any good offer seriously prior to auction if they have not had a strong campaign.
This does not mean the property is not a good property, it can simply mean there are several properties in this area which are in the same price bracket.
15 klms surrounding Melbourne has been our busiest business, the smaller land sizes, with a period home, townhouse or apartment being of interest to most. The proximity to the CBD has been the huge key factor to most of our clients.
With interest rates on the down � now .5% lower over the last 2 months, this is making it very exciting to our investors, who can see that the rental market is hot at the moment with rent returns getting higher & higher.
Our property management company are holding 1 to 2 inspections on properties & getting multiple applications on each property.
This is on properties ranging from $350pw - $2500pw.
The Melbourne vacancy rate is at such a low, with more & more people coming to Melbourne looking for Rentals, we cannot keep up with the demand.
So timing � is it the right time to buy an investment property � Yes.
Making sure you buy the right investment, you can continue to grow your wealth & continue to buy property to financially secure your future.

Sam James

Top

Property Management

Do you have an investment property that needs to be managed professionally or you are unhappy with the service or Non service you are getting from your current property managers?

Give us a call on 9523 1054 or email [email protected] and we will be happy to discuss our services & fees with you.

We can contact your current property managers on your behalf to make the transfer smooth, without upsetting you or your current tenants. If you are a current or past client we will happily discount our full service for you.

Our team are available to answer any questions you may have with regards to property management.

Rest assured that our family will look after your families� future investments.

We can assist with the maintenance & up keep of your investment property & keep you informed on how you can improve your investments to ensure you get the best tenants paying the best rent.

Sam James

Top

Technology Monthly

The 1983 Videogame Crash

Did you know the Videogame industry almost collapsed into nothingness?

The 1983 videogame crash was brought about by several combined factors and led to the second generation of consoles and games dying out and the market struggling for 2 years to get back on its feet, forcing many game companies into bankruptcy.

The problem was that the industry had exploded over the previous decade or so and the market was oversaturated with consoles and games....and given that there was of no internet to look up game reviews and the fact that almost anyone could publish a game for many of the systems available, there was no way to tell what kind of game you were getting until you had already paid for it...leading to a a lack of trust in the industry.

To illustrate my point....here is a list of every game console I could find that was released in just 1982-1983 (Worldwide Releases).

You'll notice a lot of similar models published by different companies....this was also a major problem as companies would sell of the designs of their systems to many different manufacturers to make virtually the same thing.

• Atari 800 XL
• Atari 1200 XL
• Atari 5200
• Cabel Universal Game Computer
• CGE Vectrex
• Coleco Colecovision
• Coleco Gemini
• Commodore 64
• Emerson Arcadia 2001
• Hanimex HMG 2650
• Hanimex SD-070 Couleur
• Intervision 2001 Home Video Center
• Intervision 3001 Home Video Center
• Leisure Dynamics Leisurevision
• Milton Bradley Vectrex
• Miragama GMC 802
• NEC PC 8001 MK 2
• Ormatu Electric BV Video Spielcomputer 2001
• Poppy 9017 Colour TV Game
• Schmid TVG 2000
• SHG Black Point FS-1003
• Sinclair ZX Spectrum
• Sony SMC 70
• Timex Sincalir 1000
• Acorn Electron
• Adivision Home Arcade
• Apple IIe
• Atari 1400XL
• Bandai Gundam RX-78
• Bentley Compu-Vision
• Brandt Electronique Jopac J07400
• Casio PV-1000
• Casio PV-2000
• Coleco Adam Family Computer
• Commodore Educator 64
• Continental Edison-Saba Jopac J01450
• DMS Telesports Mini
• Gakken Compact Vision Tv-Boy
• Hanimex HMG 7900
• IBM PC XT 1560
• Intellivision II
• ITMC SD 290
• Joueclub SD 290
• Mattel Electronics Aquarius
• Nintendo Famicom
• Phillips Videopac G7200
• Phillips Videopac +G7400
• Polycon PG-7
• Rollet Videocolor
• Sega SC-3000
• Sega SG-1000
• Sony MSX
• Sony SMC 777
• Soundic SD 290
• Soundic Soundicvision SD 200
• Timex Sinclair 1500

As a collector, I have in my possession an add-on for a Colecovision that allows it to play Atari 2600 games...this would be like Microsoft bringing out an add-on for the Xbox that played Playstation games....can anyone say lawsuit!....but back then, the laws were not what they are today.

Only 2 brands would really recover from the crash - Sega and Nintendo (Nintendo releasing the NES and Sega releasing the Mastersystem). Atari would release more consoles, but they would all be commercial failures...Sony would remerged with the Playstation...Sega would switch to Software only after the Dreamcast and Microsoft would start with the Xbox. And we are now left with 3 console manufacturers - Sony, Nintendo and Microsoft (4 if you count Apple's iPhone).

With dozens of games coming out each month, some people believe we are heading for another crash in the next few years...I disagree....with the advent of the internet, people are able to see reviews/gameplay of games before they make their purchase, leading to better decisions.

ET for the Atari 2600 is a game singled out for causing much of the crash (although there were many other factors involved) and has often been called the worst video game of all time - If you are interested why - click here (Source: Wikipedia)

The link below has a 20+ minute video showing over 450 consoles released over the last 30+ years:
The Insane History Of Videogames 2.0

You can read more on the Videogame Crash of 1983 here
(Source: Wikipedia)

*Image from the Videogameconsolelibrary

Chris Thursfield

Top

Recipe: Bacon and Cheese
            Croquettes

Ingredients:

• 4 rashers middle bacon, trimmed, finely chopped
• 2 cups cold mashed potato
• 1 egg yolk
• 2 green onions, finely chopped
• 3/4 cup plain flour
• 40g mozzarella cheese, cut into 1cm cubes
• 1 1/2 cups fresh breadcrumbs
• 1 egg
• 1/4 cup milk
• Azalea grapeseed oil, for shallow-frying
• Mixed salad leaves, to serve

Method:

1. Heat a medium non-stick frying pan over medium heat. Cook bacon for 3 to 4 minutes or until crisp. Drain on a plate lined with paper towel.

2. Combine mashed potato, egg yolk, onion, bacon and 1/4 cup flour in a large bowl. Roll heaped tablespoons of mixture into 20 balls. Push 1 cheese cube into the centre of each ball. Mould mixture around cheese to enclose.

3. Place remaining flour on a plate. Place breadcrumbs on another plate. Whisk egg and milk together in a shallow bowl. Roll croquettes in flour, shaking off excess. Dip in egg mixture. Coat in breadcrumbs.

4. Heat oil in a deep frying pan over medium-high heat. Cook croquettes, in batches, turning, for 3 to 4 minutes or until golden. Using a slotted spoon, transfer to a plate lined with paper towel. Serve with salad.

Chris Thursfield

Top

Kind regards from the team at JPP.
If you have a friend or family member looking for property, please feel free to forward our newsletter on to them.

Don't forget to comment on our Market News Page.

JPP - Facebook and Twitter

For our overseas clients and visitors, JPP has a website translator. Just scroll to the bottom of the homepage, and select your language.

Having trouble viewing this newsletter? The online version with pictures is available Here.