The combination of low interest rates, foreign buyers, upgrader enthusiasm and investor momentum saw 2013 emerge from its property holding pattern and the market become reinvigorated.
RP Data analyst Cameron Kusher said he believes momentum in property will continue into the new year, propelled by investors and upgraders.
He also believes values will climb further, though not as sharply in 2014. Another of his predictions is that gross rental yields in Sydney and Melbourne will continue the decline they commenced in latter 2013, leading investors to look at alternative growth zones. These are good tidings for the Far South Coast of NSW. The last few months of the year had seen keen interest in the area, with properties that were priced right being snapped up, some as soon as they came on the market.
However, Mr. Kusher issued a warning about other economic wild cards, like the unemployment rate, stating “If it reaches 6.25% it will be the nation’s highest unemployment rate since September 2002. If people start to become nervous about their job security it is likely to result in a lower level of demand for housing.”
Rates are at their lowest levels since the 1960s and inflation is currently at 2.2%. Keep in mind that the Australian interest rates don’t operate in a bubble – they respond to what’s happening in the global economy. The recent fall of the Australian dollar of 2.5 cents against the U.S. dollar as a result of the U.S. winding back its stimulus is a reminder that inflation could increase if the dollar keeps falling and the cost of imports increase. If inflation increases we could see a rise in interest rates. The all important question now is whether the RBA will increase or decrease rates, or leave them as is in the new year.
With keen interest from both local buyers and those from interstate in Merimbula, Bega, Tura Beach, Eden and Cooma and the current low interest rates together with confidence in the real estate market, vendors should not delay listing their properties for sale. Now is a prime time to sell.
A few weeks ago, most people were banking on a rate cut – and in fact we’ve ended up with out-of-cycle rises by all four major banks and at least five smaller lenders. And with the ANZ Bank now rolling out its own decision at a set time each month, we could be in for some lengthy wait times in each of the coming months to see which way rates will go.
The Reserve Bank makes its announcement on the first Tuesday of every month and ANZ isn’t wheeling out its move until the second Friday, which means a wait of at least three days . So where does that leave borrowers? Slightly confused? Yes. Powerless? No.
If ever the banks were going to start breaking the cycle for rate rises, now isn’t necessarily a terrible time from a consumer perspective, thanks to the amount of information at borrowers’ fingertips about what rates are available in the market, and the relative ease for many to switch providers and make up the cost of doing so by negotiating a lower interest rate from their new lender.
The administrative pain of getting your documents together, filling in some forms and swapping some direct debits is very small when we are talking thousands of dollars saved over the life of the loan.
The very sweet part is that having switched now to loans that will attract no exit fee thanks to the Federal Government’s ban last year, it won’t be that hard – or expensive – to move again should there be a cheaper or better-suited offering elsewhere.
Property investors have rushed back to the housing market, with Australia’s biggest mortgage broker, Australian Finance Group, processing $2.9 billion worth of mortgages last month -up 18.4 per cent on October.
Investors accounted for two out of every five mortgages written in November, a record for AFG and no doubt helped by the interest rate cut last month.
Christmas can really throw out the listing cycle when it comes to selling a property. Understanding this will help you to list your property for sale at the right time, and will create an opportunity for you if you are a buyer. Here’s what normally happens when an agent lists a property.
The Typical Listing Cycle
When a real estate agent lists a property for sale, they are granted a 90 day exclusive agency period (this time may vary). The first week of this is taken up by communicating with the owner about advertising and inspections, etc. In a lot of cases it is at least one week after a property is listed that it is first advertised.
The property will be new on the agent’s website, may feature in print media, and potential buyers are contacted. By this stage the agent has already used up around about 35 to 40 days of their exclusive period. They don’t really have long to go and without any fresh marketing, the agent may become desperate.
Now, Lets Throw in a Curve Ball- Christmas
Statistics show that the volume of both enquiries and sales always drops off in the weeks leading up to Christmas. This occurs no matter what the state of the market is.
So for probably 2 to 3 weeks before Christmas there is reduced level of enquiries, and then for 2 weeks over Christmas and New Year there is next to no enquiry.
Put this into context with the 60 day listing period and things become very interesting. A vendor needs to list their property with an agent no later than mid to late October to have an honest and full blown crack at selling their property. List any later than this and your sales campaign will be compromised.
People think it is just those that list in December that will have it bad, but think about if you were to list in mid to late October. Remember it takes about a week before you property to be first advertised, which means the first 4 weeks of advertising will be run through the quietest time of the year, and may not even make 4 weeks before Christmas comes.
So if you ever plan on selling your home at this time of year, ask yourself whether you can wait until the New Year, which is seasonally when property enquiry is at its highest. Perhaps get everything in place: interview agents, arrange appraisals and spend your Christmas break readying your house and gardens. Sign up an agent in the first week of January and hit the ground running!
On the back of fresh news that Italy has now become the weakest link in the Eurozone debt crisis, stockmarkets around the world were pummelled again last week as about $30 billion was wiped off the value of Australian companies.
Although bad news for many equity investors, it’s good news for the property market with an increased probability that rates will again be cut. This could be as early as next month when the Reserve Bank (RBA) is next due to meet.
1 November 2011 was certainly a day of some varying news. The news of course that is good for property investors is that there was an interest rate decrease, and even better still the banks passed it on!
With the financial markets still in disarray there is a good chance that there could be further interest rate decreases in the next 6 months and if that is so then the property market on the Far South Coast should become quite fluid again.
When the interest rates do come down further, that could mean investors will be saving somewhere from $15 to $100 every week. Even if it’s just a little bit of money you now have to spend, the reality is that these days, anything helps.