Monthly Archives: September 2013

Rental Market Softens

Landlords Face Some Challenging Conditions

Landlords have enjoyed consistent price growth over the past decade. Admittedly the growth was coming off a very low base compared to the value of the investment property. Now as record low interest rates and mass construction of home units make buying more affordable, many tenants are abandoning the rental market.

For a long time it has been cheaper to rent than buy. But with mortgage rates sitting at 5%, a buyer with a $50,000 deposit on a $550,000 apartment would face repayments of $500 per week. That same apartment may cost somewhere between $550 and $600 per week to lease, making buying an appealing option for many.

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Interpreting the auction clearance rate

The auction clearance rate is the most commonly quoted indicator on the performance of the real estate market. Simplistically, if the clearance is high, the market is doing okay. If the clearance rate is low, say below 50%, the market is in trouble.

Prior to looking at the accuracy of the auction clearance rate as a market guide, it’s worth looking at how and why the clearance rate has become the indicator of choice, over all others.

Getting reliable and accurate data on the real estate market is near impossible. Unlike the stock market which is dynamic and real time in the manner it reflects price, the reporting of results in real estate is cumbersome and slow. There is no centralised point or organization where all sales results are collated, to offer accurate and insightful perspective on how the market is performing, at that point in time.

Sales results are only publicly available upon settlement of the sale. The actual exchange of contracts could have happened 3 or 4 months prior to the result being reported. The only way to have total clarity in the real estate market is if it were compulsory for every transaction to be re Continue reading

Changing trend

Use of a home office or study area is on the decline.

It was only a few years ago that bedrooms were being transformed into home offices and study areas were considered important as people began to work longer hours and have fewer children. The advent of the Internet made working from home popular too.

Today, because the number of portable electronic devices utilising a wireless internet connection continues to grow, the need for a designated home office is declining. Free access to the internet in cafes, along with wireless hot spotting, has reduced the demand for ‘dial up’ and ‘cable’ connections in the home.

Will this change in the way people are connecting to the internet have an impact on the real estate market? It already has!

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Your reputation precedes you …

How to avoid a damning digital footprint

The Internet is a game changer for the real estate industry. Fortunately, many developments have been positive for both home buyers and home sellers. Marketing costs have reduced while the quality of promotion per property has improved. Email has made communication with a critical mass of qualified buyers easier, quicker and cheaper than ever before. That’s the upside.

Here’s the downside: the Internet never stops connecting the dots and it never forgets.

What that means is your property has an un-erasable digital footprint. A digital footprint is a databank of information collated over time on any property that has been advertised, sold or withdrawn from the market in the past. This includes information on every property on the market right now.

There are positives and negatives here for both buyers and sellers. And you need to know them.

Every property listed in Australia is promoted on at least one of two major real estate websites realestate.com.au and domain.com.au. Both of these sites are either owned or controlled by large media companies. These same media companies also have ownership or affiliations with the two main real estate data companies in Australia — RP Data and Australian Property Monitors. Both

provide detailed information about the real estate market which is quoted and re-quoted in the media. While the accuracy of that information is quite good, the right to collect it and use it is somewhat controversial.

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