It’s noticeably harder to qualify for a loan, meaning there are fewer buyers.
Foreign buyers have been scared off by substantial fiscal disincentives, meaning there are fewer buyers.
News headlines are forecasting turbulent times, so sentiment is weak meaning there are fewer buyers; and
Supply has increased a little, meaning there are more sellers.
This is all well and good, but what does it mean and how should you act?
Highs & Lows
The seemingly never-ending real estate ‘high-pressure system’ that was camped over much of Australia for many years has finally moved on and we are now feeling the effects of a new ‘low-pressure system’ that first hit WA, and has finally made it to the east coast. This new weather system has resulted in ‘cooler temperatures’ (unless you are in Hobart where the market is surely overcooked), with even a little patchy drizzle here and there. There’s been no rain though, and certainly no hail or thunder.
Not yet, that is.
The topic of conversation now seems to be whether the weather is a short-term blip, the new norm for the foreseeable future, or a pre-cursor to a Game Of Thrones style real estate ‘winter’ that will put the freeze on property investors.
As I like to say, I know my head may be bald, but it’s not a crystal ball – so I don’t know for certain what’s going to happen, but what I do know is that you need rain to make a rainbow.
Real Estate Rain
The long boom in Australian real estate was not normal. Real estate used to be a yield (i.e. income) investment, but structural changes to taxation and various buyer incentives that began in the early 2000s changed it so that real estate became a growth (i.e. capital appreciation) investment.
Eventually though, the conditions that facilitate growth naturally dissipate, and, unless new conditions arise to fuel a new growth cycle, the market will experience a period of stability or decline until conditions arrive to kick-start the next period of growth.
However, rather than pause for breath, the Aussie property market experienced the equivalent of an extended Indian summer after an unprecedented run of growth-stimulating events: CGT discount, FHOG, rising populations, a commodities boom, historic low interest rates, foreign buyer boom, lax lending standards, and easy profits from speculating.
Today we have rising interest rates, fewer foreign buyers, more rigorous lending standards, and fewer speculators. It’s understandable, even expected, that prices are softening and they should continue to do so until new conditions emerge.
The Usual Umbrella
Theoretically, when growth subsides, an investment’s yield (i.e. income over expenses) usually makes it affordable to hold until the next cycle begins. That is, the positive income acts as an umbrella to shield the investor somewhat from the impact of declining values.
Aussie real estate is now so over-valued that the after-debt yield is negative so, in the absence of growth, investors are losing money (i.e. expenses greater than income) for the right to lose money (i.e. property values falling). Add in a few interest rate increases, and the number of sellers will increase while the number of buyers decrease, and prices will fall further. The drizzle will become rain. With no income umbrella, a thorough financial soaking is a distinct possibility.
Which brings us to the important point of this article -people think that real estate rain is bad. It’s really not. It’s completely necessary to balance out the previous cycle, to reset expectations, and to set us up for the next period of property sunshine.
In fact, when the sun eventually comes out again, the easing rain tends to result in a rainbow – a profit opportunity from values resetting, with a possible pot of gold to be found (and maybe a leprechaun or two) at its base.
As mentioned, some people believe the present drizzly circumstances are a short interlude in a continuing property boom. That’s unrealistically optimistic. While others feel a few drops of rain is an omen to run for the Ark. That’s unrealistically pessimistic.
What is needed is a reassessment of your strategy to ensure it is suitable for the current climate, and to make appropriate adjustments so that you don’t get caught out in the rain. Meanwhile, also ready yourself to act so that when the real estate rainbow eventually appears you’ll be able to jump on it.
If I’ve learned anything in the past 20 years of professional investing, it’s that one person’s rain is another person’s rainbow.
What do you think is going to happen to Aussie property prices going forward? Be sure to contribute your thoughts by leaving a comment below.
Here is an Opportunity For You To Get Into This Popular Suburb with this 4 bed 2 bath duplex only part joined with a common wall. Great for downsizers or singles with its simple low maintenance upkeep.
Enjoy the peace & quiet of this lovely 44.7 acre property in the quaint town of Kendenup 16.5 km from Mt. Barker.
Modern 3 bed 1 bath energy saving home with double glaze windows, solid timber floors and gracious casual living areas. On mains water with several rain water tanks strategically placed for their use. Double septic tanks
On those hot days or balmy summer evenings after a hot day, relax in the large spa on the back verandah to enjoy the peace and quiet of the location other than the birds calling.
Sweeping vistas and glorious sunsets across the rolling country side gives you a sense of space from neighbours in your little piece of heaven.
This beautiful spacious home provides a solution to a variety of needs due to its configuration of 3 x 1 plus a 2 x 1 granny flat.
With new carpets in the bedrooms, freshly painted throughout including the roof and all maintenance brought up to scratch you will be able to just move in and relax, but there is scope to add an updated kitchen in the main home.
Property has had long term tenants due to it ideal location that is close to transport, school and shops. Access to the freeway is just down the road and the beach just 10 mins away.
Tucked away at the edge of the Stirling ranges, this quaint cottage offers you the opportunity to escape from the city to your own rural hideaway.
Sitting on 3.8 acres this Council approved 2 bedroom rendered cottage is completely off the grid, & offers the chance for someone with a vision to add their own finishing touches and complete the renovation to make those dreams come true - most of the hard work has already been done.
399 sqm block for sale in quiet cul de sac in good area of Leeming.
Take advantage of the new Government Building Grant by putting your foot on this lot now & preparing your building plans & other building requirements before titles are ready for dealing, so when you settle you are ready to go & are able to start in the shortest time possible.
This vendor is prepared to meet the market to downsize and here is your chance to secure a property that has all the basic infrastructure completed for the comfort of your family & to be self sufficient. An opportunity like this is not to be ignored or missed.
FOR SALE BY OPENN NEGOTIATION (FLEXIBLE TERM ONLINE AUCTION). FINAL BIDDING 7pm, 14th AUGUST 2019. You will need to get qualified AS SOON AS POSSIBLE as this property can sell from anytime NOW to the Auction date.
Located on just over half an acre is this modern hardiplank and iron 4 bed 2 bath home. Timber floors bring a warmth and easy care to the bright main living areas which includes informal dining for a large table to seat 8, family lounge heated by a lovely wood stove and plenty of space to have comfortable seating and book shelves. At the front of the house is a medium size theatre room or formal lounge.
The modern kitchen has gas stove and electric oven with an island bench/breakfast bar that has a double sink, dishwasher and spacious cupboards. The panty is a good size with shelving and alongside the cooking area is plenty of bench space not to mention the breakfast bar area.
The outside entertaining area is under the main roof patio or around the fire centred conversation pit on a balmy winter's night. The rest of the back yard is neat & tidy with a well fenced chicken run and a further powered garage/workshop at the back of the block.
Located just out of Kendenup town centre and across Beverley road opposite the Kendenup Country Club & Golf Course.
This property provides the space for that the city no longer provides for you to just 'do' your thing.
Offering 6 bedrooms, 3.5 bathrooms, study, kitchen with massive double oven, overlooking a the meals area and family room. The separate lounge with an open fireplace to warm up those cold winter evenings and the substantial dining room flow out to a private inner courtyard with 2 spacious activity rooms suitable for work or play.
Glen Robin Farm was one of the original larger farms of the district of Kendenup producing sheep, cattle and pigs with orchards and cropping country. The farm has been divided over the years and now the original homestead remains on 21.7 ha [55 acres].
The farm is situated just east of Albany highway and has bitumen road frontage. 18km to Mt Barker which has schools, shops and medical facilities. Not far from vineyards, the Porongurups, the city of Albany and the beautiful southern coastline.
Here is an opportunity to own this unique villa offering the benefits of spacious living (89 sqm) plus an extraordinary alfresco area, - in the sought-after, leafy suburb of Applecross.
Total privacy with no traffic noise in the two bright bedrooms, large living and dining areas, and offering an amazing alfresco lifestyle with huge, idyllic ( approx. ) 140sqm easy-care garden including (approx.) 42sqm pergola for entertaining.
Spacious 4 bed 2 bath hardie plank home situated on a 92 acre rectangular farm block, guaranteeing you privacy, peace & quiet. There is no waste space here. The floor plan is simple and very liveable with power points just where you need them...... awesome.
The home is well appointed with a triple size master bedroom with spectacular views of the Stirling Ranges from the large windows located to capture the outlook. Large walk in robe and ensuite complete with spa bath, large shower and bench topped vanity provide the comfort to relax after a hard day's work.
IS YOUR HOME NOW TOO BIG, TAKING TOO MUCH TIME FOR UPKEEP?
185B Riseley Street, Booragoon
This stone double storey 3 bed 3 bath home could pin point exactly what you are looking for both in style, accommodation, easy care & location. Your guests will just LOVE IT - upstairs they will have their own large bedroom, with built in robes & their own spacious bathroom.
Positioned in the sought-after Parkwood area, this beautifully presented home is ideal for small families, first home buyers and investors.
Offering a easy care open design, the home comprises of four bedrooms, two bathrooms, beautiful spacious open kitchen with adjoining dining and living area and good sized laundry with cupboard.
Situated on a 546 sqm private rear block, there is plenty of room for entertaining and secured area for kids to play.
- Energy Saving solar system - Ducted Evaporative Air conditioning - 2 split air con units - Security Doors - Double garage with internal access - Close proximity to Riverton Leisureplex, Riverton Shopping Centre and nearby schools.
He who hesitates is lost. If this property is of interest to you then you will need to get registered to be able to participate in the final bidding. The vendor will be meeting the market and it will be sold....
Come and visit this charming north-facing quality home on easy care 344sqm survey strata block, in quiet tree lined street. You are within walking distance to Garden City shopping centre and bus station, medical facilities, library and Shire offices. A main bus route is one street away.
This delightful home has 3 spacious bedrooms, 2 large enough for king size beds. The master has a large walk-in robe whilst the secondary rooms have built in robes.
Two delightful courtyards beckon- one offering a covered patio with built-in gas BBQ nook and water feature, the other surrounded by mature trees is perfect for sundowners on balmy evenings.
Pristine apartment with direct estuary views. 3 double bedrooms and 253sqm of laid back living. Main ensuite leading to huge balcony overlooking the water. Second balcony overlooking the tennis court. Spacious light filled living areas and gourmet kitchen. Enjoy a relaxed lifestyle in this whisper quiet beautifully maintained resort
Q: What price can I get for my property if I sell with PWC Realty?
Selling a property for the best price in the market depends upon 3 P's:
1. Price - Where & how you price the property relevant to the market conditions & sales evidence 2. Promotion - How it is promoted ie marketed & with the right listing strategy 3. Presentation - in other words does it have a 'wow' factor.