Majella Corrigan | March 28, 2009
FIRST-HOME owners were seen as the saviour of the residential property market. Now they're seen as carrying real risks.
Debate is widespread about whether we are creating our own sub-prime crisis, with first-home prices inflated because of the Government's boost to the first-home owner's grant.
The property industry is pushing for the grant to be continued past the June 30 deadline because it stimulates new housing activity.
But some are arguing that the longer the grant is kept in place, the bigger the fallout will be, with demand quickly drying up and prices falling when it's removed.
The focus on first-home buyers may have overshadowed growing anecdotal evidence that investors are coming back to the market too, courtesy of lower interest rates.
And believe it or not, there's also movement at the higher end of the market, where price falls have been substantial.
It takes time for price falls to filter through a market, but that may now be starting to happen.
Hegney Property Valuers said last month that in Perth, substantial price reductions in a short time had changed the high end of the market, and buyers appeared to be finding value again.
That was reflected in improved sales activity in the prestige suburbs of Cottesloe, North Beach and other high-priced areas such as Mandurah and Mount Lawley.
"Three to six months ago, price wasn't even an issue -- the buyers were just not around," says Hegney.
"But now the prices are more attractive and buyers are back."
In Sydney too, residential agency McGrath Estate Agents says it has clocked in eight sales above the $3 million mark in 12 days -- five in the eastern suburbs and the others on the northern beaches and north shore.
Again, the reasons are a combination of price reductions, low interest rates, and increased activity from expats.
Melbourne buyers' agent Ian James of JPP Buyer Advocates says the question he's most frequently asked is whether the market will fall when the first-home buyers grant ends.
He points out that first-home buyers, while very prevalent in the market, have only moved from 17 per cent to 24 per cent of the total market.
Yet in Melbourne, sales have increased from an average turnover of fewer than 950 properties per week to 1073 per week over the past five weeks.
"Everyone who has any money and a secure job has flooded to the housing market," he says.
Sales over the past five weeks have fallen below 1000 only during the Labour Day week.
Last weekend, for example, according to the Real Estate Institute of Victoria, 243 properties were sold at auction, but there were also 836 private sales.
James says that in the under-$700,000 price range investors are moving in, while people who have actually sold really well in that lower range are now buying in the $1.2 million to $1.3 million range. In the $3 million and above bracket, buyers are creeping back, mainly looking to see whether they can get something at below its 2007 value.
First-home buyers were shut out of the market during the boom. Now they can get in, but they face more competition, and because they are generally less flexible in their financing than investors, they do face more risk.
But those who are not new to the market and not dependent on the first-home owner's grant, are looking at the rents, the interest rates and the prices, and arriving at their own conclusion.
Source: http://www.theaustralian.news.com.au...rom=public_rss
Cheers
Marc
FIRST-HOME owners were seen as the saviour of the residential property market. Now they're seen as carrying real risks.
Debate is widespread about whether we are creating our own sub-prime crisis, with first-home prices inflated because of the Government's boost to the first-home owner's grant.
The property industry is pushing for the grant to be continued past the June 30 deadline because it stimulates new housing activity.
But some are arguing that the longer the grant is kept in place, the bigger the fallout will be, with demand quickly drying up and prices falling when it's removed.
The focus on first-home buyers may have overshadowed growing anecdotal evidence that investors are coming back to the market too, courtesy of lower interest rates.
And believe it or not, there's also movement at the higher end of the market, where price falls have been substantial.
It takes time for price falls to filter through a market, but that may now be starting to happen.
Hegney Property Valuers said last month that in Perth, substantial price reductions in a short time had changed the high end of the market, and buyers appeared to be finding value again.
That was reflected in improved sales activity in the prestige suburbs of Cottesloe, North Beach and other high-priced areas such as Mandurah and Mount Lawley.
"Three to six months ago, price wasn't even an issue -- the buyers were just not around," says Hegney.
"But now the prices are more attractive and buyers are back."
In Sydney too, residential agency McGrath Estate Agents says it has clocked in eight sales above the $3 million mark in 12 days -- five in the eastern suburbs and the others on the northern beaches and north shore.
Again, the reasons are a combination of price reductions, low interest rates, and increased activity from expats.
Melbourne buyers' agent Ian James of JPP Buyer Advocates says the question he's most frequently asked is whether the market will fall when the first-home buyers grant ends.
He points out that first-home buyers, while very prevalent in the market, have only moved from 17 per cent to 24 per cent of the total market.
Yet in Melbourne, sales have increased from an average turnover of fewer than 950 properties per week to 1073 per week over the past five weeks.
"Everyone who has any money and a secure job has flooded to the housing market," he says.
Sales over the past five weeks have fallen below 1000 only during the Labour Day week.
Last weekend, for example, according to the Real Estate Institute of Victoria, 243 properties were sold at auction, but there were also 836 private sales.
James says that in the under-$700,000 price range investors are moving in, while people who have actually sold really well in that lower range are now buying in the $1.2 million to $1.3 million range. In the $3 million and above bracket, buyers are creeping back, mainly looking to see whether they can get something at below its 2007 value.
First-home buyers were shut out of the market during the boom. Now they can get in, but they face more competition, and because they are generally less flexible in their financing than investors, they do face more risk.
But those who are not new to the market and not dependent on the first-home owner's grant, are looking at the rents, the interest rates and the prices, and arriving at their own conclusion.
Source: http://www.theaustralian.news.com.au...rom=public_rss
Cheers
Marc