PROPERTY NEWS FROM BUYERS ADVOCATE

Welcome to Buyer’s Advocate monthly
Newsletter for June 2011

We will catch up each month to talk about the most common property and market issues that we are being asked about, relevant and current facts and figures, report to you our professional and real observations of the market, and we’ll take you out into the action with a couple of recent purchases.

Please click on any of the following articles you would like to read, or simply scroll down the email to read all.

Our view on the ground  
Buyer’s Advocate in the News 
Suburb profile of the month – Abbotsford 
Recent purchases Tip of the month

If you want to discuss anything property related please call our office to chat with one of our advocates. Or make an appointment to meet us for an hour of personal and tailored property advice.

OUR VIEW ON THE GROUND

This weekend there have been 146 auctions reported with a clearance rate of 57 per cent. The long weekend has resulted in a low volume of auctions with a total of 83 properties sold. A total of 63 properties were passed in, of those 38 were passed in on a vendors bid.

This weekend last year saw 348 auctions and a clearance rate of 72 per cent. Around 700 auctions are expected on each of the next two weekends.

We have seen an increase over the past month in advertised quotes being significantly less than the vendor’s reserve on the day of Auction. A possible explanation for this is under quoting, or the vendor providing the agent with an unrealistic reserve on auction day. However it highlights that buyers need to be extremely cautious when entering into negotiations, especially in a pass-in scenario. These situations can be very high pressured and buyers can make expensive mistakes when up against highly trained selling agents.

A classic example of this was the recent sale of a property in Elwood, advertised realistically prior to auction for $580,000 to $640,000. This apartment was beautifully renovated and in a great location. Comparables show the property was worth around $610,000 to $630,000 and buyer competition may have pushed just above this on Auction day. However due to an inferior marketing campaign and lack of real interest for the property there was no competition and the property was passed in to the highest bidder for $640,000 and later sold for $680,000 after post Auction negotiations.

The above example demonstrates the dangers of buyers using the selling agent’s quotes to determine what to pay for a property. We hear from many buyers who are not using professional assistance to purchase, that to determine how much they are needing to spend on the property they are just adding 10 to 20 per cent on top of what the Agent has quoted.

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THE BUYERS ADVOCATE TEAM

ABC 7:30 Report 17th May 2011

Last month we were invited to provide comment on the ABC 7.30 Report program as a professional representative of the buyer residential property market. The focus of the report was to discuss the current question of whether there is a housing bubble occurring. Our comments were as follows:

“Our view is that the Melbourne market has held up pretty well. While there has been a lot of talk about property prices declining we are seeing some stability come back into the market. Any talk of a property bubble is premature. It is natural in a property cycle that there will be some correction over time, however we do not believe that there will be any dramatic falls in prices. There are too many factors that will underpin the market, including migration and the low levels of unemployment. We still very much have a housing shortage in Melbourne that is likely to be the case for some time.

We are seeing some fairly significant decreases in $1.5M + category of the market, but reasonably stable in the $400k - $1M categories. Good quality is still selling well but there are certainly more opportunities today to pick up a bargain than 9 months ago. While 9 months ago there may have been 4-5 parties bidding at auction, there are only 1-2 now or even none in some instances. Even properties that are passing in are still selling within a couple of weeks.

Going forward will be very interesting. I believe the market will be fairly flat with some good buying opportunities. But do not expect the market to collapse to the extent that there is a fire sale of property.

But without doubt the most significant impact will be what happens with interest rates. If they are increased by 50 basis points as many economists are predicting this will certainly happen, demand and increase supply which could see some price falls.”

You can view the complete ABC 7.30 Report article by the link on our website home page. 

Sky News 23rd May 2011

Buyer’s Advocate was recently a guest on Sky News Australia where we were asked “Why are the Auction Clearance rates the lowest they’re been since the Global Financial Crisis hit?”

Sam Lally as Buyer’s Advocate provided this advice:

“The published weekly Property Auction Results are the broader results, spread across whole of metropolitan Melbourne and selected regional areas. Don’t follow the herd mentality and believe everything you read.

Published results often do not take into account every property sold in a suburb or buyer sub group purchasing behaviour. For example investors or first home buyers. When looking to purchase a property in a particular area make sure you keep a close eye across the various buyer groups within the market.

Quality properties are still selling well and some are achieving phenomenal results under the hammer regardless of suburb or receipt of rents and profits.

Financial Review 31st May 2011

The focus of this story was the drop in new detached house sales which is 22 per cent lower than the long term average. Our view is that this is being impacted by interest rate rises and cost of living pressures which was making it harder for people to get into the market.

Abbotsford is a small suburb bordering Collingwood and Richmond and Clifton Hill and separated from Kew by the Yarra River.  It has often been viewed as the poor cousin to Richmond and yet offers great value for money.  It is conveniently located close to the CBD, within the municipality of the City of Yarra and offers a choice of transport options from bus, train and tram. The suburb has many well known and loved icons from the neon 'Skipping Girl' sign along Victoria Street to the Carlton United Abbotsford Brewery. Though there is great deal more to be discovered and enjoyed in this suburb.

In the early 1900’s Abbotsford was a mix of industry blended with streets of Victorian miners cottages. Today many of these fantastic dwellings have been updated and converted to contemporary residences. Appreciation for the local heritage and communities of Abbotsford is seen in the many wonderful creative and cultural public places.  A feature is the grand and beautiful Abbotsford Convent Arts Precinct and Collingwood Children’s Farm. The Sophia Mundi Steiner School is found alongside the grounds of the old Convent gardens. The Abbotsford Convent is open 7.30am to 10pm daily and is a great place to stop for lunch and enjoy a relaxing drink among a range of cultural activities, music and arts and artisan food. The Abbotsford Convent is also host to a Farmers Market that operates the fourth Saturday of every month.  Here organic fruit, vegetables, flowers, breads, olive oils, free range meats and specialist cheeses are available to taste and buy direct from the independent growers and manufacturers.  With farm animals, paddocks and market gardens in view, the extensive parklands of Studley Park, merging with the larger Yarra Bend Park, a golf course, sports grounds, and pockets of natural forest, follow the Yarra River by bike or walking tracks to Dights Falls and in these surroundings it is easy to forget you are 2km from the CBD.

In the mid to late 1990’s Abbotsford became known for the Victoria Street hub of Vietnamese restaurants and fresh food markets. Today Victoria Street is a wonderful variety of community and culture, families and food where Saturday shopping is always an adventure. Abbotsford is only a short tram, bike or walk away from Richmond, though there is a different pace in the lovely tree lined streets of Abbotsford. Attractive boulevards created from old Plane trees are something you won’t find in Richmond.

Abbotsford offers great opportunities and choices for home buyers of all ages. The traditional Victorian terrace through to modern townhouses and an increasing amount of new apartment living.  Abbotsford is still offering excellent buying given its location and features, an average house price of $782,000 and apartment average of $682,000.  Semi detached homes make up 47.6% of all homes in the suburb.  The medium age of Abbotsford resident is 35 years with the reported average of 2.2 people per household. What is really impressive about Abbotsford is that the auction clearance rate is still achieving 80% and this is because of the proximity to the city.

RECENT PURCHASES

Cate Dundon
Buyer’s Advocate
Licensed Agents
Representative

Paul Borovac
Buyers Advocate
Licensed Agents Representative

June Hall
Executive Assistant

6/256 Station Street Fairfield

Needing some love and attention. A large un-renovated 2 bedroom apartment only metres away from shops and the Fairfield Train Station, this was an excellent buy bought for $389,000  as a private sale.

One of eight apartments, unit 6 is positioned at the back of the block and away from the road among four 2 bedroom apartments and four 1 bedroom apartments.

This apartment requires work internally and externally with great potential to bring the building up to a better standard. Internally the bones are good as the floor plan is already open, with the living area leading to a North facing balcony. What is required is a new kitchen, bathroom, flooring and painting. Externally all that is required is rendering to modernize the building and better security. This can be achieved through the body corporate by convincing the group owners of the value add. Once completed unit 6 should be valued around $500 - $550k.

2 Yanakie Crescent Caulfield North  

Purchased for $1.791M, the property is a 2 storey solid brick, large family home with expansive living areas. The property has been stripped ready for new fit-out. In the golden mile of Caulfield on 776 sqm of land this was certain to attract interest.

After extensive bidding we secured this property for our client at auction.

TIP OF THE MONTH 

If you are a first home buyer or an investor looking at buying with $400k to $600k now is a good time to buy.

First home buyers have not been a big player in the market this year with loans to this category dropping by 30%. However this could change after the 1st July when the stamp duty relief for Victorian first home buyers comes into play. This could increase demand and put pressure on prices below $600k, where the stamp duty relief is being provided.

The good news for first home buyers is the stamp duty relief is based on settlement date so you can still buy today, settle after the 1st of July and obtain the stamp duty relief.

So if you are considering buying a property, now would be a better time than after the 1st July. This also applies to investors who do not want to compete with first home buyers in the market.

Warm regards from the Buyer’s Advocate team