Market News

The gloom and doom from the media would make you think that property prices going up is a bad thing. Nothing could be further from the truth. The majority of wealthy people around the world have a large proportion of their wealth held as property. The average person will generate more wealth out of their family home than almost any other investment.

The Reserve Bank is seriously considering raising interest rates again this month. They know there is enormous investment in the pipeline happening in Australia. And with that comes wages growth and inflation. With that comes both growth and stabilisation within our economy. With that comes wealth to the average Australian. WITH THAT COMES PROPERTY PRICE GROWTH.

I am asked daily: "are we at the bottom of the property cycle?" I can answer quite honestly; "I don't know, but we are not far off"

When the $100 Billion "plus" of investment in the mining sector comes online, property prices will jump. Not everywhere, but in the areas that have historically been highly sought after. AND THIS IS NOT MINING TOWNS. IT IS NOT NEW ESTATES. It is within 20 - 30 km of the CBD of our major cities. Most probable highest growth areas will be Sydney, Melbourne and Perth. It usually takes a little longer to filter through to Queensland.

In January 2008 when the GFC hit, everyone was talking 40% drops in the median price to housing. Professor Keene ending up taking a very long walk over that lost bet! The median price of property in Melbourne at the end of the March Quarter was $472,250. It is now $565,000. This is an increase of 20% over three years. This is down on the long term averages. Normally our median would see approximately 8%p.a. There was a drop in 2008, it then stabilised and climbed through 2009 and the early part of 2010, before arresting at its current levels. The last 30 years have seen recessions, market fluctuations, stock market crashes and the GFC and we still have the top third of suburbs in Melbourne averaging growth rates between 9% & 11%p.a.

If we look at individual suburbs in relatively good locations such as Prahran units: increase 28% increase; Elwood units: 36%
Yarraville house: increase 15% increase Kew 25%; Frankston: 18%

It is not a case of will the market rise, it is a case of WHEN will the market rise. The time to buy property is "As soon as you can afford to do so"

Ian James
Director JPP Buyer Advocates

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Recent Articles Of Interest

Population growth and housing issues

Accomodating our growing population is one of our community's most pressing concerns.

This was highlighted in a recent report by the Productivity Commission, in which Australians were surveyed about attitudes to population growth and the increased density required to house it.

The report found that the majority of Australians indicated that they would not like increased population. In Melbourne, 52 per cent said they would not like it, while a mere 11 per cent said they would.

Read the rest of the article here (source:REIV).

Take a medium term view

The constant debate about whether there is a bubble in the local housing market and if it has burst consistently fails to take into account the long term performance of the real estate market.

Some commentators, often with an air of expectation who use statistics to suggest an imminent collapse, need to take a longer-term view and look beyond what happened in the market last weekend or last month.

Like any broad-based market reliant upon the participation of thousands of people each week, it will be bound to fluctuate over the short term, but due to most households wealth being in housing and the fact that most people only buy and sell infrequently, what really matters is the medium to long term performance.

Read the rest of the article here (source:REIV).

Sam James

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Current changes to Melbourne's Road infrastructure

Swanston St Melbourne

Driving through the city of Melbourne can be daunting for some, while others live, drive, cycle & walk through their daily, Many people and families will only visit the city for special occasions, perhaps a show, visiting the Myer Christmas lights, watching a parade - Moomba, Footy, Santa's Christmas parade. Whatever the reason, Melbourne is a great place. However if it is a while since you have driven in you will notice many changes, some good some maybe not so good, below you will notice the roads to avoid to make it easier to get around in the heart of the CBD.

The changes to Swanston Street are beginning with changes to the roads for motor vehicle access.

Here you will find information from the City of Melbourne Website.

Peninsula Link

The latest freeways / tollways are making getting in & out of the CBD easier, (some people traveling at certain times of the day with peak hour may not think so!). The latest is Peninsula Link. This is a 27 kilometre toll free road bypassing Frankston and making Mornington driving times much shorter. It is being built with additional walking tracks and bike paths. Some of the areas on the Mornington peninsula known to many of us as beach side holiday locations will now be within daily driving distance of Melbourne. As the infrastructure improves many people will see the attraction of the lower reaches of the Mornington Peninsula as a place to live as opposed to simply a holiday destination. This should see median house prices throughout the Mornington Peninsula start to rise

Sam James

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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

Alphington

Municipality: City of Yarra
Population: 4483 (2006 census)
Postcode: 3078
Location: 7km from Melbourne CBD

Located approximately 7 km north-east from Melbourne's CBD with a population of 4483 (2006 census). There is a rough 50/50 split between those who own and those who rent. 859 people are aged under 15 yrs, 3132 are 15-65 yrs, and approximately 500 over 65 yrs. The Bridge hotel and Darebin Creek Bridge (a stone arch bridge) are features of Alphington. The suburb has a nice residential feel with tree lined streets, and properties suiting a wide demographic, from first home buyers, families, downsizers and investors. The Amcor paper recycling factory is located in Alphington taking up a large industrial zoned area near the Chandler Hwy bridge.

Amenities

Alphington's main schools are:

• Alphington Grammar School
• Alphington Primary School
• St Anthony's Primary School

Transport - Alphington Railway Station, and bus route 508

Shopping - There are no main shopping centres in Alphington, however the local shopping st is on Wingrove St

Alphington is home to the Amcor paper recycling factory (who have been found guilty of polluting Alphington's environment on at least three occasions.)

House Styles

The suburb is popular with home buyers because of its proximity to the CBD whilst still maintaining a suburban family friendly atmosphere, with parks, the Yarra River and Darebin Creek nearby.

Alphington contains a variety of home styles - period properties are mixed in with original and renovated 1970′s style brick houses. Town houses and apartments are becoming increasingly common as more move into the suburb. The largest proportion of Alphington's real estate is detached houses.

Catherine Cashmore

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What low clearance rates should really be teaching buyers

Are we starting to see more distressed vendors than may have been reported? Australia wide, the delinquency rate has climbed from around 1.4 per cent to 1.79 per cent. It may be low in comparison to Europe and America, however it's a figure the reserve bank should be paying close heed to because it seems there are other distressed vendors flying under the radar and trying to bail out before they get to the delinquency stage.

The average time Australian's stay in their homes is 7.5 years (RPData) - although in the established suburbs of Melbourne - close to the water and city - it's 9.1 years. However there seem to be increasing numbers of vendor's selling prime real estate after only 1 or 2 years of residence - (something I'm seeing more and more often when I research the sales history of homes). In many cases these homes are struggling to sell with days on market stretching into months as vendor's try to achieve their 'wish price' (a return on investment) in a flat conditions. These are often people who purchased when interest rates were low, and now rates have climbed, find themselves laboring to make the repayments.

Investment in real estate is long term game plan, so trying to get a return on price 1 or 2 years down the line is a gamble no one should take, or be forced to take. Therefore in a flat market, with the possibility of interest rate rises brimming on the horizon, paying the right price and insuring that decision by purchasing the right property, is not only important, it's crucial! Pay too much in the first place and you'll get no short term capital growth. Choose a 'lemon' and if you need to sell in a soft market, reducing the price will be the only way to do so.

So how do you know you're paying the right price? Just because the papers are screaming 'buyer's market' and the agent is giving you a "discount" on the asking price, doesn't equate to a 'bargain'. Drawing comparables against the weekend results in the paper won't always help as they only list exact addresses for auction sales, and many of those are now 'undisclosed'. In fact, sales results won't help you much at all unless you've been monitoring the market closely and assessing the individual properties listed - and furthermore, how do you know someone else didn't over pay on the property you're comparing against? I was recently asked to help with a report into vendor discounting. This is the amount the vendor discounts throughout the sales campaign in order to sell. It wasn't hard to find examples, however it was much easier to find examples of advertised prices (private sale) which had been exceeded!

There are three numbers in real estate - what the vendor's wants, what the market (you) is willing to pay, and what a properties reasonable market value is against comparable sales. Unless you've got a handle on all three you can't negotiate effectively. If you're a current buyer who has little experience negotiating and find yourself judging a property's value based on the quoted range, or 'reserve' price, rather than a solid base of knowledge, beware! Selling agents know all the tricks to con a buyer into paying more, from touting they have other offers on the table, to convincing them the 'distressed' vendor has 'a very reasonable' reserve.

And what about choosing the right property? Well even in flat markets with well-publicized drops over any one year, there are those properties which buck the trend - the roses amongst the thorns - in locations with unique aspects that drive owner occupiers to stretch budgets. And these are the very properties investors need to target if they're going to prosper during boom and bust cycles.

A suburb by suburb look through Melbourne highlights a few of these areas which are withstanding current conditions. Take for example Kew, located south east of Melbourne's CBD. Made up of roughly 70% owner occupiers it's already seen a 29% jump during the first quarter in median value, and a steady 74% year to date clearance rate (REIV). Whilst this doesn't guarantee every home in Kew will buck the downturn, you can be pretty sure, if you own a good well-positioned property that suits the buyer demographic of the area, it's going to attract attention.

I would never advise someone to purchase a property unless they are fully committed to a long term game plan, however what I would strongly advise, is the essential need to get experienced advice before you risk becoming a distressed vendor.

Catherine Cashmore

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Technology Monthly

Wordpress

Over the last few weeks Wordpress has become my favorite peice of web technology, and it seems I am not the only one with this opinion. Unless you are a web geek like me, you may not realize just how many websites on the internet are built using this program.

Wordpress is an open source (free) blog tool that allows you to quickly and easily construct a basic blog page that can be expanded on with plugins and themes to create a powerful and very nice looking website.

I personally am a self tought web designer....and am by no means a master coder, but after the initial setup, wordpress allows you to create a website using a simple backend and start posting articles with very little web coding knowledge.

The process of installing wordpress is as follows:

1. Buy a domain name and some web hosting (needed to host a website) and make sure the host runs at least mysql so you can create a database (eg: http://www.website.com.au).

2. Through your web providers interface, create a mysql database, and a user for that database.

3. Download Wordpress from here, unzip and FTP the contents onto your webserver, under a subfolder if you wish (eg: http://www.website.com.au/wordpress/")

4. There is a file inside the wordpress folder called 'wp-config-sample.php'...this is where you enter the database setails you have create in mysql... you also put the authentication keys and salts here (an extra layer of security)...once done, rename the file 'wp-config.php'.

5. Install Wordpress by going to http://www.website.com.au/wp-admin/install.php or http://www.website.com.au/wordpress/wp-admin/install.php if you have used a subdirectory (changing the name according to the subdirectory name you have used of course)...the install screen will ask you to create a site title and user to log in as.

6. That is pretty much it for a basic set up, you can log into wordpress using the user you created and start posting articles straight away using the very user friendly interface.

This is only a basic install, not including adding themes or plugins that can be used to further customize a website, but it is pretty much as easy as it comes for someone who doesn't know much about web design.

I would say the only difficult part of wordpress is designing a template...especially if you are intergrating it into a current website that is a few years old...but the wordpress website has a very extensive document section, so you can start with the basic stuff and work your way up from there.

Unbelievable Wordpress is free and available here

Chris Thursfield

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Recipe: Tomato And Bacon Soup

Ingredients: (serves 4)

• 1kg roma tomatoes, halved 2 teaspoons olive oil
• 1 tablespoon brown sugar
• 1 onion, finely chopped
• 3 rashers bacon, chopped
• 2 garlic cloves
• 1 cup (250mL) chicken stock (gluten free)

Method:

1. Preheat the oven to 150 Degrees C.

2. Line a tray with baking paper.

3. Lay tomatoes on baking paper cut side up, brush with one teaspoon of the olive oil and sprinkle with brown sugar.

4. Roast for 1 hour. Heat remaining teaspoon of olive oil in large fry pan or stock pot, add onion, garlic and bacon and cook over low heat, stirring occasionally, for about 10 minutes until onion softened.

5. Add roasted tomatoes and stock, season well with salt and pepper.

6. Puree with a stab mixer or in a blender, adding more stock if the mixture is too thick.

7. Serve with crusty bread (or gluten-free toast).

Chris Thursfield

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