Mums and Dads Are Feeling the Squeeze

Graeme Salt

Research produced by the Housing Industry Association this week showed that total new home sales fell by 4.7 per cent in July 2013 – this despite the fact that we are hearing stories of a property bubble.


 


Can we be in both a period of growth and stagnation? Yes.


 


I have arranged many pre-approvals for clients and yet they are being pipped to the post at auctions. Yet Australian Property Monitors have concluded that, for properties sold via private auction, prices are down.


 


Despite the auction market strength, APM concluded that private treaty vendors were required to offer higher discounts in Sydney, with the average discount increasing mildly in August to 5.4%.


 


I talk to real estate agents regularly. Depending on where they are and the market they serve, they can be either an optimist or a pessimist – because there are markets within markets. So, let’s look at each segment:


 


The Top End


Research by SQM shows that there are many multi-million dollar properties that have been on the market for years. Sellers are having to reduce their asking prices by 30-40 per cent to stand any chance of a sale. It is my view that this sector won’t really kick off until the economy regains its mojo, that investment bankers see the good times again and we are far-removed from the GFC.


 


The Bottom End


In 2009-2010 the first home owners market went crazy; fueled by generous government grants, singles and couples were fighting each other to snag their first unit. But recent research by Westpac has argued that all these grants did was bring forward people buying their first home; rather than saving for a couple of years, they were using the grant as their contribution. The result is that there are fewer first home owners actively looking to purchase.


 


The Middle


So, if the top and bottom are flat, why are we hearing so much about overheating properties? Because there is quite a bit of competition in the middle band – as I write I have just received an email from a client who was looking at a property advertised as $650k+ which sold for $713k.


 


Next week is that start of Spring – traditionally when the property market comes to life. It will be interesting to see what happens in each of these sectors especially if we do get a surge in new home sales.


 


If you want to talk about how you can finance a property purchase, please call me, Graeme Salt on 02 9922 5055