Newsletter - Inner Circle July 2022

Inner Circle

There is no need to panic

The property market is always topical, but over the past month we have seen it dominate the media headlines, particularly as interest rates have risen again. 

At the RBA’s June meeting, the cash rate was lifted by 0.5%, so it now sits at 0.85%. The rise was bigger than expected and has been passed on by many banks, but the fact remains that interest rates are still very low. However, we have since seen many doomsayers come out, once again, and predict price falls of 20 per cent-plus as a result.

This is a good time to remind you not to panic. Yes, there has been a levelling in the market in terms of prices, but major price fall predictions are just click bait, sensationalising the headline figures. Really the property market is made up of many different markets around the country that must be viewed individually, rather than as one whole.

We must remember that this slowdown is a part of the property cycle that we have seen time and time again.  Growth will return at some point in the future, and the smart investors will be taking this opportunity to buy, while many other buyers sit on the sidelines. We don’t believe property values will experience huge falls as some are predicting because the fundamentals – being a shortage of supply and ongoing strong demand – persist. As always, if you buy an investment-grade property, your investment will hold its value.

On another matter, underquoting has long been an issue in the Victorian real estate market, and recently there have been discussions about whether reforms to address it need to be strengthened. The REIV recently expressed its opinion on this issue, and like this body, I also don’t believe change to legislation is the answer. What needs to happen is that penalties need to be significantly increased, better training for agents needs to be take place and the definition of ‘comparable’ for properties used when trying to provide a price guide needs to be updated because it’s lacking reference to the land size. Ultimately, Consumer Affairs Victoria also needs to start proactively policing real estate agents rather than just responding when a complaint is made.

If you need expert advice or help – whether you’re buying or selling - Property Mavens is here to guide you through the property market.  To talk to a qualified and highly-regarded buyers’ agent or sellers’ advocate, contact us today.

Tune in to the Hotspotting webinar

I will be featuring in Terry Ryder’s Hotspotting webinar on July 13.

Tune in to hear us discuss Where To For Real Estate In The New Financial Year? Click here to register

Much has changed in real estate in the past 12 months. We have transitioned from a nationwide boom to segmented markets with some rising strongly, others rising moderately and a few stagnating or falling after years of notable growth.

So, as we approach a new financial year, where to for real estate?

Answering this core question requires more sophisticated analysis than the shallow and sensationalist treatment in mainstream media.

We are entering an era where ….

•    regional differences will be profound;
•    vacancy rates and rents will define markets more so than prices;
•    markets that offer relative affordability will be leaders;
•    the return of overseas migrants and students will change some markets;
•    economic and sharemarket volatility will draw more investors to real estate;
•    major infrastructure-generating events will have a big influence.

Now, more than ever, real estate consumers need access to good information and quality analysis.

And, on Wednesday 13 July, multi award winning buyers’ agent Miriam Sandkuhler of Property Mavens will join independent researcher Terry Ryder of Hotspotting to provide in-depth analysis and discussion on what to expect from real estate markets in 2022-23.

Expert Insight

What is the latest in the building industry?

I think by now we have all heard about the ongoing problems in the building industry, with a perfect storm of strong demand colliding with a shortage of materials and labour, leading to delays and huge cost increases. Quantity surveyors estimate the cost of building materials alone has risen by around 20 per cent to 25 per cent over the last year. We have seen many building companies go bust, and there may be more to come. 

At the same time many consumers have been asked to fork out more for their build or exit their contract, which has meant many have not been able to get their home constructed. Cost rises have been higher in some places, like Melbourne’s east, as one of our associates found out. Their building contract quote increased by 50 per cent from last year to $900,000, killing off their project, with no fixed price contracts being offered.

Builders are now reluctant to offer fixed price contracts fearing escalating expenses will swallow their profit margin. But this makes it increasingly difficult for banks to lend to people who want to build a new home. My advice for would-be buyers is to get qualified legal and property advice before committing to a building contract. 

The impact of all of this on the housing market is that the supply of new homes is falling right when we need more to address Australia’s chronic housing affordability issue. Unfortunately for aspiring home buyers and renters, the cumulative effect of the soaring building costs is not great, but there is a silver lining for investors. While the residential property market is likely to fluctuate a bit over the next year, a slowdown in new home supply will act in two ways. First, it will help limit any price contraction and secondly, the shortfall in new properties will assist in driving rents up. But it does illustrate one point: property investors need to be highly disciplined in choosing where to invest their hard-earned money.

To find out more about what’s happening in the building industry read my blog posts on the problem and the impact of soaring building costs.

An experienced and expert buyers’ agent such as Property Mavens can provide advice and help buyers and sellers to navigate any market and choose the right property. If you are a buyer or seller that needs assistance, contact us today for an obligation-free discussion.

With a tight budget and in a hot and very fast-rising market, Justin wanted to purchase a low-maintenance property with potential for capital growth while delivering a strong yield and cashflow in the interim. He engaged our Ballarat buyers’ agent services to help and we successfully purchased this fantastic property, a 3-bedroom, 1-bathroom house in Ballarat.

The property was purchased for a very significant $20,000 below the vendor’s reserve via a private sale.

If you want help to identify an investment-grade property like this one, whether it’s a family home or an investment property, click here to book a time with us to discuss your requirements. It’s 100% obligation-free. 

Felicia and Warren needed to sell their family home of many years, a 3-bedroom, 1-bathroom house in Bonbeach to downsize. They needed our expert advice to guide them through the sales journey because not only were they were living interstate at the time, but they also still had a great emotional attachment to the home and it was tenanted, so the sale process was challenging.

As a vendors’ advocate, we determined which three real estate agents best suited their needs, and when the couple selected their preferred agent the sales and marketing process began with gusto. The result was a sale after auction at the reserve price set by our vendors.

As professional property buyers and vendors advocates, we know the difference between a bad selling agent and a great one.

If you would like help to secure a fantastic outcome like this one, whether it’s selling a family home or an investment property, and you’re ready to get started, click here to book a time to discuss your requirements. It’s 100% obligation free.

Dwayne wanted to buy a low-maintenance development site in Ballarat to landbank and develop in the future, and he engaged our Ballarat buyers’ agent services to help.

We were able to successfully purchase a high tenant-appeal property, a 3 bedroom, 1 bathroom house and development site in Ballarat delivering a good yield in less than two weeks after engagement, in what was a highly sought after market. The property was purchased within one day of the inspection and a tenant was placed within five days of settlement.

Dwayne’s property was purchased for market value at $415,000 in November 2018 and less than four years later it is worth $680,000. That’s a huge capital gain of 64 per cent in just 3.5 years, equating to more than 18 per cent per year!

As professional property buyers we know the difference between a bad property and a good one, where to buy to generate the strongest returns, how to buy to secure the best result, and what properties are really worth, to ensure our clients don’t pay too much. If you want similar results,  click here to book a time with us to discuss your requirements. It’s 100% obligation free.

Go Forth and Prosper !

Miriam Sandkuhler

CEO

If you want to invest or buy the right home for your budget, or sell your property  click here to book a time, or call us for a chat about securing your financial independence.

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