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Housing affordability update

Wednesday, June 29th, 2011

Across Australia the proportion of family income needed to meet an average loan repayment was 34.2 per cent compared to 35.3 per cent in the December quarter and 32.6 per cent a year ago. This was due to a small decline in the average monthly loan repayment and a small increase in median family income.

Comparing the states it is apparent that Victoria remains the second most expensive state in which to buy a home. Only NSW was more expensive with 37.2 per cent of an average family income required.

In Victoria in the March quarter the proportion of family income needed to meet an average loan repayment was 35.9 per cent compared to 36.1 per cent in the December quarter and 32.6 per cent a year ago.

Consistent with the situation across Australia the small improvement was because the median weekly family income increased by $1 from $1,469 and the average monthly loan repayment dropped by $6 to $2,289.

This change is so slight that most households would not have noticed. The situation was different for renters.

The report reveals that only in Western Australia and the ACT is renting more affordable than it is in Victoria.

In Victoria in the March quarter 22.9 per cent of the average family income was required to meet an average rent. In WA and the ACT the comparative numbers are 20.5 and 16.8 per cent.

The most expensive location was Tasmania were 29.5 per cent of income is required, a number that is actually higher that the comparative number of buying a home.

Tags: advocacy, auction results, Auto, Buyer Advocate, cent, comparative numbers, Draft, home, housing, housing affordability, loan repayment, median family income, property prices, proportion, repayment, vendor advocate, western australia
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Auctions in Winter and Spring

Wednesday, June 29th, 2011

It is traditionally the case that auction volumes reduce over winter in Melbourne and that is expected to be the case again this year.

Many people prefer to sell in spring–summer: the weather is better, houses and gardens can be more inviting – and auctions are very much a part of Melbourne at that time of the year.

It is interesting to note that while there are fewer auctions, the clearance rate has not often differed substantially between winter and the spring selling season.

In 2010 the clearance rate in winter was 68 per cent compared to 63 per cent in spring-summer. There were 647 auctions per weekend in winter and then 778 auctions per weekend in spring–summer. The winter months last year saw an unseasonably high volume of auctions.

In 2009 the clearance rate in winter was 85 per cent compared to 82 per cent in spring-summer. From a volume perspective, there were 419 auctions per weekend in winter and 679 auctions per weekend in spring–summer.

In 2008 the clearance rate in winter was 63 per cent compared to 59 per cent in spring-summer, with an average of 456 auctions per weekend in winter and 663 auctions per weekend in spring–summer.

Finally, in 2007 the clearance rate in winter was 85 per cent compared to 81 per cent in spring-summer, with an average of 554 auctions per weekend in winter and 790 auctions per weekend in spring–summer.

With this recent history in mind, it is important to remember that your selling real estate agent will be best placed to advise you on the optimum time to sell your home. They will be able to take into account local demand and supply conditions to suit your needs and devise a marketing campaign to maximise the outcome for you.

Tags: advocacy, Auction, auction results, Auto, Buyer Advocate, cent, clearance, clearance rate, Draft, houses and gardens, optimum time, property prices, spring, spring summer, Time, vendor advocate, winter and spring
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Pre-auction offers

Wednesday, June 15th, 2011

Through the real estate agent you can make a pre-auction offer to the vendor.

So far this year 20 per cent of all auction sales have been sold before the day of the auction; this compares to 23 per cent at this time last year. In general there is a 20 per cent chance the home will sell before so if you are interested it is sensible to consider an offer lest you miss out.

With that in mind, there are a number of advantages in making an offer, even if the offer fails.

A successful offer can allow you and the vendor to avoid the auction itself. It is also the case that even if your offer is unsuccessful, the vendor is less likely to sell to a higher bidder without giving you another opportunity to make an offer.

If you do make an offer it has to be an attractive one that gets the vendor’s attention and convinces him or her not to wait ‘til the day of the auction.

There are a number of things you can do to make the offer attractive: first, put the offer in writing; second, attach a time limit after which the offer expires. In some cases presenting the offer with a cheque for the deposit can really show the vendor that your offer is serious and that they may be better off not waiting ‘til the auction.

It is also always advisable to get legal advice before signing the contract of sale.

Warwick Brookes – 0412 340 611

Buyers Advocate

Domain Property Advocates

www.warwickbrookes.com.au

Tags: advocacy, Auction, auction results, auction sales, Auto, brookes, Buyer Advocate, cent, domain property, Draft, home, property advocates, property prices, real estate agent, til, Vendor, vendor advocate
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Take a medium term view

Wednesday, June 15th, 2011

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.

A review of the performance of the market over the past decade indicates that the only time that prices fell significantly was during the Global financial crisis, the reasons for the drop of around $70,000 in the median house price between 2008 and 2009 are well known and home owners and investors should be pleased that once local economic conditions improved so, too, did the market.

The alternative would not be welcomed by anyone. In the same way, as rapid increases in value are unsustainable and ultimately not positive for the economy so, too, are substantial falls.

If prices fell strongly and remained low then many home owners and investors would face the scenario of negative equity, increases in mortgagee sales and investors leaving the market.

There is no doubt the residential market is different now to what it was last year with lower price growth expected and less transactions undertaken, however it does present opportunities for those who are in a position to buy.

A review of the residential market which each year in Victoria turns over approximately $70 billion from about 150,000 transactions will show that is based on solid fundamentals and has provided reasonable capital growth over the last decade.

Warwick Brookes – 0412 340 611

Buyers Advocate

Domain Property Advocates

www.warwickbrookes.com.au

Tags: advocacy, auction results, Auto, burst, Buyer Advocate, collapse need, decade, Draft, global financial crisis, home, housing, imminent collapse, median house price, medium, mortgagee sales, property prices, vendor advocate
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Population growth and housing issues

Wednesday, June 15th, 2011

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.

The reasons behind the resistance to higher population were not surprising: 86 per cent said increased traffic congestion was the main reason, followed by increased noise and loss of street appeal. Shadows from higher buildings and decreased property values were also cited as a problem.

Conversely, those who were in favour of increased population cited increased property values, improved services and more vibrant suburbs as positive factors.

It’s fascinating that on both sides of the debate, property values are an issue.

While not included in the survey, the message is clear that most people do not want to see housing affordability further reduced.

Those surveyed were also asked to rate different types of development, indicating which of five different variants they most favoured. The least popular form was ‘multiple dwellings replacing single dwellings’ (basically infill development), which 53 per cent of those surveyed opposed; compare this to the much more favourable rating given to ‘residential development in a new area’, which was only opposed by 29 per cent.

The problem for our community and its decision makers is that none of these factors adds up to a solution.

Opposition to infill development is in part why the cost of infill development is higher and the preference given to ‘greenfields’ development results in higher costs for government in the form of more roads and public transport.

Given that the inability to provide enough homes is the main cause of reduced affordability, solving this issue will also provide the keys to improved housing affordability

Warwick Brookes – 0412 340 611

Buyers Advocate

Domain Property Advocates

www.warwickbrookes.com.au

Tags: advocacy, auction results, Auto, Buyer Advocate, cent, development, Draft, form, housing, housing affordability, issue, most pressing concerns, productivity commission, property prices, street appeal, traffic congestion, vendor advocate
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