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Brisbane Property Market Commentary | October 2011
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This month we continue to monitor the state of the real estate market, look at the cost of paying too much for property and tell you more about our renovation management service.
The established housing market in Brisbane is experiencing low buyer demand compared to previous years indicating we are still languishing at the bottom of the market. In their "month in review" Herron Todd White still has Brisbane and Darwin houses and units at the Bottom of the Market on the property cycle, with Sydney at the Peak of the Market and Melbourne, Adelaide, Perth, Hobart and Canberra all Declining Markets.
This has been the most prolonged period of low demand since the 1990s. There has been a corresponding increase in the number of properties being offered for sale, however it should be noted the level of quality property, property that is well positioned and renovated/finished, being offered for sale is similar to this time last year
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Properties are sitting on the market longer but quality property priced correctly to the market with a willing seller are selling quickly and often under multiple offers. The REIQ reports that property price growth remains relatively subdued. They go onto say that across the state buyers continue to be mostly hesistant given the steady stream of poor economic indicators being released both here and overseas.
We have seen values fall by up to 10% over the last 12 months in some suburbs particularly those affected by the January floods ( 2km – 10km band around the CBD). Outer lying suburbs of Brisbane have fared the worst according to industry reports.
BIS Shrapnel forecasts a recovery in the residential property market with Brisbane expected to have mild improvement in prices over 2011/2012 and pick up in 2012/2013
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Property is definitely not for short term investors (less than 5 years), or speculators, and this period is further evidence of the need to maintain a long term focus with property and to ensure that you don't pay too much for a property.What is the financial risk of paying too much for a property? Selling agents, good selling agents that is, work on a premise that the average buyer will pay up to 5% over their planned budget for a property.
Some buyers will do better, some will do worse. We have a case study that only occurred last week. The selling agent's advertised price on the properties were vague to say the least.No doubt you’ve seen some of what I’m talking about. Offers over…Contact agent…Submit your offer….and my personal favourite: All offers considered….
A prospective client purchased a 3 bedroom house in a popular suburb and paid $45,000 more than market value. In this case, they have not only paid $45,000 too much, they’re up for an additional $2,164 in stamp duty as well as paying around $40,000 in extra interest on their mortgage (assuming a 25 year loan @ 7% and borrowing 80% of purchase price).
On the upside, our ability to negotiate exceptional purchases at the moment was reinforced at a recent auction when we purchased a lovely renovated 4 bedroom home in Yeronga for a massive $65,000 below the pre-auction bank valuation.
We certainly aren't saying that we can save this much on every property negotiation but there are some good buying opportunities at the moment. Your focus should always be on the right property in the right location rather than any property at a 'bargain' price.
Yours in property
Meighan Hetherington
What's new @ Property Pursuit
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Property Pursuit are a proud Classic Sponsor of Multicap's Carnival Carousel 2011 Cocktail Party.
Multicap is a non-profit organisation that provides support options for people with high-needs disabilities. The Cocktail Party, to be held on Saturday 29th October 2011, is one of their major fundraising events for the year.
Please join us for this wonderful event and support an organisation that provides valuable support to the community.
Click here to view the invitation. Please RSVP by Wednesday 26th October 2011
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Welcome back Meighan! Six months after the birth of their little boy, Meighan was back to work negotiating purchases for our clients, managing client renovations and providing sales advice to clients.
Jason continues to focus on our asset management division and looking after our client's investment properties and Barry is busy managing the finance clients.
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Meighan will be giving a short presentation at the up coming REIQ Experts Guide to Buying Property on Saturday 19th November 2011.
Designed for first-home buyers, new and seasoned investors or anyone interested in Queensland property, this session will address some of the key questions about buying property and provide practical advice to make the process as stress-free as possible.
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You can now follow Property Pursuit on Twitter and Facebook. We'll keep you updated with what's happening in the Brisbane property market, which suburbs we're buying in and why, as well as insights into the some of the 31 investment fundamentals we use to assess investment properties.
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Multicap Home Opening September 2011
Meighan and Carol were invited to attend the opening of the second Multicap 'home4life' initiative in September 2011.
Multicap, a non-profit organisation that provides support options for people with high-needs disabilities, celebrated the opening of a second home through their 'home4life' initiative.
Property Pursuit are proud to have found and purchased this home and another for Multicap and to be a Classic Sponsor of the Multicap Carnival Carousel 2011 Cocktail Party.
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Courier Mail Do the rental research by Michelle Hele May 2011
Taking your time to find the right property is crucial for would-be landlords, writes property editor Michelle Hele.
Buyer's agent Meighan Hetherington of Property Pursuit, says too few investors do the demographic research that is needed to buy and investment property.
She says too many buy with their heart and don't treat it like the business transaction it is.
"Few people think it through," Hetherington says.
"A large percentage buy in their own suburb because they are comfortable in that suburb, so they don't buy something that somebody renting would find had good attributes."
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"Overall the trade up market for near city locations remains firm as long as the fundamentals feel right. I know we bang on about it endlessly in almost each month's issue of this mail out, but sticking with the fundamentals of avoiding main road and rail frontage, keeping some elevation and ensuring good access to services and facilities is well and truly the way to go no matter what your sector of interest. You will have competition for this type of property close to the CBD but keep at it. It will be your best bet in the long term."
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Spotlight on: ACQUISITION
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Top Tip: Don't just stand there - bid!
If you have found a property that you want to buy and are able to put yourself in a position to bid unconditionally then there's a very good chance you're way ahead of other buyers so take advantage of it!
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Have you ever attended an auction and wondered why nobody raised their hand to bid? We are constantly amazed at why you would let such a great opportunity pass you by!
In most markets, auctions are a very structured process designed to maximise the sale price by placing buyers in competition with each other. Buyer's can purchase well through the auction process but prices are often pushed higher than expected because buyers get caught up in the emotion of the moment.
However, buyer behaviour over recent months has changed the landscape of auctions therefore providing excellent opportunities to buy really well at auction. As more and more people try to 'play' the auction game by standing still and refusing to bid, the opportunities increase.
Many buyers are unable to bid at auction because they have not arranged their finance, or they have not done their research properly. Other buyers turn up to the auction, register to bid then act arrogantly refusing to place a bid despite being genuinely interested in the property.
The great news for genuine buyers is that many sellers are put under immense pressure on auction day and are often prepared to lower their price expectations in order to get the sale over and done with on the day.
If you are interested in a property that is going to auction you should do your research and get yourself in a position to bid on the day and then bid with confidence.
We offer a Auction Bidding Service that can help you to take advantage of the market whilst also taking away all of the stress of the auction. If you aren't going to be here on auction day or don't wish to be identified then our service is an ideal and inexpensive solution.
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Some of our recent purchases:
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Brief: Multicap is a not-for-profit organisation who provide high needs disability support providing individual, respite, family support networks, opportunities, and programs. They engaged us to find 2 houses - one for short term respite and one for their Home4Life initiative.
Their requirements are quite extensive with wheelchair access to all areas, privacy, easy access to transport and shops just to name a few.
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1st June 2011
As a Queensland based not-for-profit organisation we rely on limited financial resources to fund our activities. One of our initiatives is to provide respite for people with disabilities and their carers in short term home style accommodation with full-time support.
Until recently we have had to source these properties ourselves by using our own personnel which took our valuable resources away from their core activities.
When we became aware of the concept of buyers agents we extensively researched the market and decided on Property Pursuit because of their professionalism and Quality Assured processes.
Although our property requirements are very unique and difficult to satisfy the properties that were recommended to us were very well matched to the criteria that we set and the timeframe for the search was far shorter than we expected.
The prices negotiated were less than we expected to pay for the right properties and the savings were well in excess of the fees incurred.
The service provided was a direct reflection of what was promised at the initial meeting and using Property Pursuit has allowed our people to stay focused on their business without unnecessary distraction.
We have been so impressed with the service and value for money that in addition to the two properties we have already purchased using their services; we will be commissioning them again once funding is arranged.
Joanne Jessop
Chief Executive Officer
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Brief: Overseas based family seeking a family home to return to in a few years time, it will be rented out in the meantime. Finding a property in a family oriented area was important as well as being close to shops and transport.
Property: Large renovated 4 bedroom, 3 bathroom art deco home in the Ashgrove "avenues" on over 1000m2 land. Fabulous deck and pool area, walk to shops and local schools.
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How long? We searched for 9 long months. The client changed their brief several times which lengthened the search period but our continued commitment meant we were able to eventually find their perfect home.
How many did we investigate? 224
How many did they have to inspect? 0
List price: Auction
Bank Valuation: $1,350,000
Purchase Price: $1,100,000 pre auction
Rent return: We have found tenants ready to move in straight away at $950 per week, a gross yield of 4.5%.
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Brief: Local owner occupier 'trading up' to a larger home. Townhouse or small home with outdoor entertaining area with a short walk to transport and easy commute to the CBD.
Property: Yeronga townhouse in a small complex of 4 with low body corporate fees. Modern, light and airy with 3 bedrooms, 2 bathrooms, a powder room and a lovely paved private courtyard.
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How long? 4 weeks
How many did we investigate? 30
How many did they inspect? 2
List price: $550,000
Purchase Price: $465,000
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Brief: Existing client looking to purchase a home close to the beach in a small number of specific streets with the potential to add extra value over time
Property: Off market purchase of a 2/3 bedroom renovated beach home on 607m2 within a short walk to the beach. It has potential to raise and build under, add a pool and extend the upper level. The key to this property is that it is located on the high side of the clients favourite street and is surrounded by prestige properties.
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How long? 3 weeks
How many did we investigate? 26
How many did they inspect? 12
List price: NA, off market transaction
Purchase Price: $607,500
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Top Tip: Talk to your broker about fixed rates now
Banks have been reducing their fixed interest rates in recent months and in some cases 3 year fixed rates are lower than current variable rates.
Talk to our broker about what this all means and how you may be able to take advantage.
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The 90 day interest rate futures market is betting the RBA will lower the cash rate before the end of the year.
No one really knows if this will happen of course, but if the basket case economies of Europe and the USA don't improve we suspect the futures market could be spot on.
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Spotlight on: ASSET MANAGEMENT
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Top Tip: Renovate and update to improve rental return
Rental income can often be improved by updating your property.
A fresh coat of paint, new kitchen cabinets, updated bathroom fittings, new lights, fans or air conditioning can have a big impact on the attractiveness to a tenant and how much rent they are prepared to pay.
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The best news is that we can manage the whole process for you so you don't even have to worry about finding tradesmen or cost blow outs.
Current projects:
Renovation in Windsor. This classic asymetrical Queenslander has 3 bedrooms, one bathroom, a front and rear deck and was purchased as an investment property in 2005. We will replace the kitchen, open up the living and kitchen areas, update the bathroom, paint inside and outside, install a new internal laundry, install new air conditioning and ceiling fans as well as replace the lights and hot water system.
Budget: $60,000 Timeframe: 8 weeks
Townhouse development in Gordon Park. We purchased this site for our client in 2007. The old post war house will be demolished this week and work will begin on 3 luxury townhouses each featuring 3 bedrooms, 2 bathrooms plus a powder room, and good sized courtyards. The client has a buy/develop/hold strategy with this property.
Budget: $715,000 Timeframe: 7 months
Rental demand is on the increase with enquiries on rental properties improving in recent weeks compared to earlier this year.As a result we expect to see modest increases in rents leading into the end of 2011 particularly with houses in non flood affected streets and units in or close to lifestyle precincts. Vacancy rates and rent arrears have also improved with good quality tenants the norm across the properties we manage for clients.
The highest level of demand is from the executive rental market for properties in the $800 per week and above range. We have 5 exceptional tenants who have missed out on a property which we rented for $950 per week so if you know of anyone who owns a large well appointment family home to lease please contact Jason at jason@propertypursuit.com.au |
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Top Tip: Maximise your exposure
We have always recommended a strong marketing program should include both digital and traditional paper based mediums.
The digital media, including websites such as realestate.com.au and domain.com.au are the most widely used websites for buyers who are actively looking to purchase.
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Marketing stratgey should include as much information about the property as possible including location, floor plan, photos and features.Whilst websites capture active buyers, newspapers and magazines capture non-active buyers who may become interested in a specific property they see in an advertisement.
Covering all advertising mediums will ensure that all potential buyers become aware of your property but the cost can be daunting.
If cost is an issue then use an agent who has a strong web presence and knows how to maximise the sales potential through internet based marketing. We can help you to source the right agent to suit your property and marketing budget.
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Kind Regards,
The Property Pursuit Team
Advice Warning
This newsletter is intended to provide general information only and has been prepared by Property Pursuit Pty Ltd without taking into account any particular person's objectives, financial situation or needs. Readers should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend readers obtain financial advice specific to their situation before making any decisions.
Information contained in this email is subject to the terms and conditions outlined in the Legal statement and our Privacy Statement.
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