Wednesday, April 13, 2011

Who pushed up the prices?

An online ‘First Home Buyers’ strike has been gaining momentum over the past few weeks in a bid to drive down property prices, instigated by tax reform lobby group, Prosper Australia. Their aim is to pull the First Home Buyer footing out of the market place completely, causing a domino like collapse and instantly creating ‘affordable housing’.

Now buying your first home has always been a challenge. Yes property used to be cheaper, but then wages were lower and interest rates were much higher. Property prices began their upwards climb when buyers increased their activity in the market place. Wage increases and declining interest rates from highs of 18% plus in the 80s allowed them to do this.

Then, in 2008, the GFC hit. In a bid to maintain economic momentum, the First Home Owners Grant Boost was introduced. At the time the Real Estate Institute and industry as a whole aired their concerns that this, combined with record low interest rates, would drive up prices… and it did.

A giant wave of first home buyers entered the market, causing a boom at the entry level of market pricing. Demand outstripped supply and property prices were pushed higher. In 2009, 190,852 buyers (70,000 more than the previous year) took advantage of the boost and jumped into property head first.

Then in 2010 the numbers dropped by almost 50% to 96,201. Why? Because the First Home Buyers who normally would have bought in 2010 and 2011 were ‘pulled forward’ into the 2009 buying boom.

So while some first home buyers are choosing to abstain from buying (largely due to the price increase driven by those previously in their position) and investors are waiting for the ‘right’ time, it’s imperative that sellers stay on the front foot when it comes to presentation, marketing and price.

Get the right advice, listen to the buyer feedback, market your property at a competitive level and be prepared that it may take a little longer to sell than anticipated. Price is ‘king’, if it’s right, it will sell. Toop&Toop started the business in the 80s when the market was at its worst. We have the tools and knowledge to get our clients the best possible results, even when times are tough – when it’s time to get serious, it’s time to get Toop&Toop.

Mandy Wurth, General Manager.
© Toop Real Estate Group

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