Thursday, August 13, 2009

This week's InsideStory : So what is going on right now, right here in Adelaide?

Conflicting property media reports always bring quite a reaction. Over the past two weeks I have been asked a lot of questions. So what is going on right now, right here in Adelaide? It’s simple, demand for “market priced” property is very strong.

Toop&Toop have had the biggest July sales in our 24 year history. Given sales volumes are of less interest to property owners than price, what has happened to prices? Prices seem to be holding well across the entire market. While the sub $600k bracket has been in full boom, we have seen some “green shoots” (to adopt the trendy lingo), in the top end.

Let’s take a quick history lesson!! Demand for property over $600k from September 08 until the second week of December 08 was shocking. High volumes of property flooded the market during a period when confidence was in free fall due to the effects of the GFC. Buyer numbers didn’t drop, however their behaviour did. Those buyers who remained active were essentially out for bargains. This situation happened so quickly no one was prepared for it. The interesting twist was Adelaide sellers generally did not capitulate to the downward buyer pressure on prices. Minor adjustments made by sellers in their sale expectations combined with a reduction of stock levels and a rapid fall in interest rates all converged and resulted in the return to a balanced market by the 2nd week in December. It was quite a rollercoaster for all but the first home bracket which was the sweet spot in the market.

December 15th 08, things turned. Properties started to move, stock returned to manageable levels and sellers had made adjustments to meet the new conditions. Buyers also conceded they wouldn’t get that massive bargain, it simply wasn’t there, so they got on with purchasing. Buyers playing hard ball began missing out. By March the middle to top end started to really get moving.

Now in August 09, fixed interest rates are trending upward while variables remain at 49 year lows, but the Banks have gone conservative, making it tougher to borrow and taking weeks to approve loans that would have taken days last year.

Good property is in strong demand. We are seeing some amazing results mixed with some ordinary results. Having been in the business for 30+ years, this is what we would have considered normal, in normal times. Good with the bad. Some wins, some losses... right now the market seems balanced. This is a market where Sellers need to invest in the best marketing, best negotiating, best auctioneers, best trained staff... or you may get hurt in the sales process.

Good luck to all the spring sellers... investors, time to re-enter the game. We need more rental properties!

Anthony Toop, Managing Director.

© Toop Real Estate Group

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