Thursday, August 15, 2013

Weird feeling.... something is brewing.

Something is happening out there. During the week I received a text from a client of mine who is a developer with information about the expected price break out in Sydney. My inbox has been receiving all sorts of different notes and comments about the market—record low interest rates and high clearance rates for auctions in Melbourne and Sydney. A client even sent me an article by Robert Harley headlined "Bondi apartments sell like hotcakes". It seems there is a mood swing happening.

All the Holden news, the unemployment talk and all the carry on by the politicians doesn't seem to have dented demand. In fact, the mood seems upbeat. This is unusual—usually the market stalls during an election campaign—and all that has occurred is that sellers have held back­­, not the buyers! Maybe it's the expectation of a change of government, or it could be the fact mortgage costs have met rental costs again in some sectors. Despite the gloom and doom, it feels like something good is brewing.

After so many tough years, softening prices and low stock levels, maybe the market is on the verge of a break out. South Australia has had so few new developments that we are in UNDER SUPPLY in Adelaide­; under supply is a feature of a boom, not a recession.

Back in the late '70s - early '80s, all booms and busts occurred state by state, and you could set your calendar almost at seven year cycles. In later years property cycles became National, and of course the latest property markets seem to have become global trending. 

So let's assume for a moment Sydney is heading for a full on boom or at least a price break out—South Australia will ultimately be positively impacted should that occur. Money in property investing is moving much more readily across boarders. SA is currently the most affordable mainland state, and as always, is seen as a stable place to invest in real estate. Buyers from WA are already pouring money into the state because they see our prices as cheap and under value. Superannuation funds and investors like our consistency and stability. We may miss the heady booms, but we also avoid the big crashes too—investors like that.

Buyers anecdotally seem to be getting anxious again; sales are happening off market and I think sellers are ready to transact again. Add these three dynamics to our election in early spring, record low interest rates, plus a chronic shortage of stock (properties to buy), it's shaping up to look like quite a crazy spring for the SA residential market. The big unanswered question is whether sellers will suddenly all dump their properties on the market in late spring—some sellers have been waiting years for a recovery of prices before they have another go at selling. If that happens, it may head off any chance of us seeing long awaited upward movement in prices. 

Toop's Tip! Sellers—don't leave it too late in spring to get your property on the market, do it soon (NOW) while supply is low and demand is hot.

Loving real estate… I think it's about to get a whole lot more interesting!

Anthony Toop

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1 comment:

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