Category Archives: A Word from Warwick

warwick williams real estate agent drummoyne

A Word from Warwick – Summer 2016/2017

The year that was 2016

Looking back on the year that was 2016 we are very pleased to report that the full year rate of growth was the fastest pace since 2009. In fact, the cumulative change in dwelling values from January 2009 to now (post GFC growth) has been 97.5% for Sydney followed closely by Melbourne at 83.5%.   With many local property price records being set, it should come as no surprise that the 2016 annual change for dwelling value in Sydney increased by 15.5%, with the December quarter contributing 2.4% to that figure.

One of the advantages of  property in the Canada Bay precincts is that we have a very diversified market place and this sees our agency moving a variety of individuals and families on a day to day basis. The satisfaction that comes from achieving the highest price paid for a home in Russell Lea ($5,610,000) to the purchase of a studio apartment on Lyons Road for $337,000 is very gratifying as different as those purchases may be, the people we worked with were equally excited to be moving into or within the area.

What did we see in 2016? What did we learn in 2016? What did we experience? What were the major take-aways from 2016?

  • Serious stock shortages put pressure on demand for local housing pushing prices up, sometimes well beyond agent and vendor expectations
  • An affordable mortgage climate saw more sellers holding off selling to upsize or downsize as bridging finance became less of a concern in the short term
  • Auction was the preferred method of sale
  • Length of time on market was kept to a minimum, in many cases property sales were negotiated prior to the usual 28-35 day auction campaign
  • With prices at a premium so are the needs and wants from purchasers who are happy to pay a premium so long as they feel they are getting value in return
  • Vendor discounting was minimal and where properties were not sold within 2-3 weeks of auction dates an anomaly in either vendor pricing expectations or building/design issues appears to have been the underlying factor
  • The latest Housing Affordability Report (HAR) highlighted that approximately 44.5% of household income is now being used to service a mortgage
  • With prices soaring across the board, first home buyers were struggling to enter the market and looking to sources such as parents, grandparents for financial assistance
  • Australian Bureau Statistics data shows investors have been progressively increasing their share of mortgage demand and total 49% mortgage demand (excluding refinances)
  • Investors continue to look to property as a preferred financial growth option despite the fact that rents are growing at a substantially slower rate than that which dwellings values are increasing

What do we anticipate for the year ahead?

  • While stock levels remain subdued competition for housing will continue to grow and underpin prices
  • Auction will remain the preferred method of sale so as not to cap prices in a heated market
  • Negotiating with purchasers is critical but the key element to success here is the rapport, reputation and experience the agent has throughout any scenario which may arise. Even in a good market there is a difference between the cheapest agent and the best agent – that is the difference between a good result and an outstanding result
  • With less reliance on print media there will be more of a focus on property presentation so that when prospective purchasers look online or in person first impressions are lasting
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A Word From Warwick – Spring 2016

“For our vendors this is actually a very positive climate to be selling as the competition for property is being concentrated on only a few properties as opposed to being spread across many.”

Current Market Climate

The warmer weather has arrived and there is certainly a “spring” in our vendors’ steps as we review some of the outstanding sales results across the property market. The results we are seeing, along with strong auction clearance rates, are a result of a shortfall in new properties entering the market compared to what we would normally see in our traditional Spring selling season.

Locally we saw properties moving steadily through to the end of the June quarter, however the anticipated influx of properties at the beginning of September was somewhat lacking. For our vendors this is actually a very positive climate to be selling as the competition for property is being concentrated on only a few properties as opposed to being spread across many.

Purchasers in the market are very anxious to secure a property prior to the end of the calendar year which is making for a perfect competitive storm come most of our auction days and, in some instances, seeing eager parties pulling out all stops to secure properties before they officially hit the market or get to auction.

sydney auction market 2016 graphi

Given the long term view that most purchasers are taking, whether they pay a little more to enter the market now, will be outweighed by future capital growth.

We have seen some volatility in the stock market in the past few months and as a result we are getting increased interest from the DIY Superannuation sector who are opting to invest their future in bricks and mortar.

We can report WWRE auction campaign days on market averages at 33 days and auction day clearance at around 81% (for past 24 months across 100+ auctions by our office).

Until next time,
Warwick Williams.

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A Word from Warwick – Winter 2016

Given purchasers are more flexible on location they are keen to secure
property prior to auction.

Property Sales

The cooler weather was late in its arrival this year which certainly helped to keep the shine on the property market in the June Quarter.

Sydney median property prices rose by 2.4% for house and 0.6% for apartments compared to the March quarter. This increase pushed Sydney’s median house price back up past $1m to $1,021,968.

Locally we saw a lift after the Easter and school holiday breaks which really saw April as a bit of a write off for campaigns with so many public holidays disrupting the flowof auction programs. That being said May and June were exceptionally busy and as the pressure to off-load property before the end of financial year became the desire for so many vendors.

Comparing the stock levels to this time last year we are down approximately 30% in volume and similarly the number of purchasers in the market have been much fewer. Some purchasers have been frustrated by the lack of availability and choice in the market and taken a break from looking, though encouragingly prices have remained quite steady across the board as those purchasers actively looking are conscious that they do not want to miss out on a property for fear of not knowing when the next one that suits their needs will become available.

A trend that has certainly emerged as a result of declining stock levels is that buyers are casting their net a lot wider geographically than traditionally seen. Previously buyers would hone in on one suburb and perhaps a neighbouring one but because stock levels are so tight they now appear to be looking for property in regions quite wide spread. Value for money is also coming into the equation now more than ever, with desired suburbs being less available they are prepared to compromise on a specific location in order to get more boxes checked off their wish list.

Given purchasers are more flexible on location they are keen to secure property prior to auction, if what they deem to be a reasonable offer is not accepted in the pre-auction phase of the campaign then they quickly move on to the next opportunity.

Investors are again circulating through the market speculating that interest rates may fall even further in coming months given the low inflation levels which of course makes financing a property purchase all the more attractive.

It is interesting, given all the above, a recent Domain report shows in all of Sydney’s 700 suburbs, Drummoyne is the only area showing a positive sales pattern.  Almost every area has seen its property market fall but Drummoyne has gone against the grain to become the only growth suburb in the nation’s largest city.

I am sure like me you are all looking forward to the cold winds subsiding and warmer weather arriving for Spring when we also hope to see purchasers coming out of their winter hibernation ready to compete in the Spring Market.

Property Management

Our property management team has been focused on achieving the best possible rents for our landlords, which in a market where we are surrounding by newly developed projects impacting the supply chain is proving challenging. Landlords are now having to give serious consideration to the state of presentation of properties when re-leasing in order to protect their yields. This is extending beyond a simple paint and carpet refresher to new kitchens, bathrooms and landscaping to compete for tenant market share.

If you have an expired lease or know your tenant will be looking to vacate it is advisable to have early and pro-active conversations with your property manager about any improvements which may need to be made to avoid any unnecessary vacancy periods.

We would like to extend a warm welcome to our new clients and tenants resulting from the merger of Rowe Street Realty with our company.  Our senior Property Manager Hannah Tatam has been busy ensuring a smooth transition has taken place.

Until next time,
Warwick Williams.

 

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A Word from Warwick – Autumn 2016

“The first quarter of 2016 has seen the property market pick up nicely after a turbulent finish to  2015 with the toughest December Quarter our local market had seen since 2012.

The volume of property on the market may be down approximately 40% compared to this time last year, however this is only helping to underpin prices in the area and ensuring that purchasers act swiftly to secure property when they findit for fear that it may be some time before another one becomes available.Auction clearance rates have bounced back nicely in the firstquarter with the Inner West results hovering around 75% after rates took a tumble towards the end of 2015 amongst a lot of hyped up negative press in the media about the property “bubble bursting”. Our officeis very pleased to report that our auction clearance rate is 92% for the past 12 months to date and we attribute much of this success to the transparent way we operate our auction campaigns and working together with purchasers to ensure they understand the market so they can prepare themselves for auction day.

The new quoting laws have come into effect in NSW which aims to govern the way agents quote potential selling prices to purchasers, in auction campaigns in particular. The impact of this change cannot yet be fully measured after only 3 months in practice, however we are seeing some improved practices among agents with respect to more realistic prices being quoted. Sadly though, there are still some repeat offenders out there who are drawing in unsuspecting purchasers with grossly understated price estimates compared to what properties are actually selling for. While tightening market conditions are seeing fewer properties coming onto the market – something we expect to see for the foreseeable future, we are still seeing quality blue chip properties attract impressive competition and sale prices beyond expectation, keeping buyers alert.

As market conditions appear to have stabilised since the dizzying heights of July 2015, we are confidentthat as long as sellers are realistic, a respectable price in a short timeframe is still readily achievable.Treasurer Scott Morrison has used his firstBudget to state the government will not limit or remove negative gearing used by investors in the residential market.Mr Morrison said the government would not remove negative gearing  as it would increase the tax burden on Australians “just trying to provide a future for their families”.

Property investors throughout the nation will be very pleased that their rental property tax offsets are safe, for now.  In Australia, the greatest negative gearing expense is capital works deductions worth  $2 billion followed by repairs and maintenance at $1.6 billion (in 2013-2014).

Until next time,
Warwick Williams.

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