Stock on Market - Up for November
6 December 11SQM Research Newsletter
Stock on Market - Up for November
Figures released this week by SQM Research reveal that residential property listings have slightly increased during the month of November, rising by 5,631 to come to a total of 388,848 nationally. This figure represents a 16.7% increase since the corresponding period of the previous year (November 2010) as well a a 1.5% increase month-on-month.
For the most part, the majority of capital cities either experienced minor increases or remained steady, with Brisbane and Darwin being the only capital cities to post falls - decreasing by 0.1% and 0.5% respectively.
Canberra recorded the largest monthly increase in stock, rising by 5.8% during the month of November and coming to a total of 2,112. Sydney followed Canberra with a monthly increase of 4.2%, coming to a total of 37,172. Melbourne recorded the largest actual amount of stock out of all capital cities, rising by 2.8% and coming to a total of 52,710. Continuing rises for stock levels in Melbourne would obviously equate to further supply woes for this capital city and potentially some significant house price falls.
However, taking into account that November is usually the spring "peak" for online listings, if we do not see a rise in stock levels of December, it is fair to say that stock levels may have peaked for the time being and given today's rate cut, may reduce over the course of 2012.
The managing director of SQM Research, Louis Christopher says, "At 388,000 properties, the market is generally considered to be oversupplied with listings at this point in time. It is enough stock to continue to put downward pressure on house prices. House prices started falling back in the September quarter of 2010 and that was when stock levels were at 307,000. That said, I think once we see stock levels peak and start coming down, we are likely to see the bottom in the market place, and in our opinion that could happen as early February. Much still depends on the events in Europe.
"A credit squeeze even would certainly postpone any recovery here and would cause a continuation of the current price declines right through 2012. Certainly for now it means those who are buying in this market, are taking a bet on Europe."
A word from our Managing Director - Louis Christopher about today's interest rate cut
"Putting Europe aside for one moment, today's interest rate cut will stimulate the housing market for most capital cities and regions in 2012. It puts our more bullish forecasts, made in our Housing Boom and Bust Report into play (see below for forecast for each capital city). But this more bullish outlook does assume Europe muddles through its current crisis.
If we see a major credit squeeze where banks in this country are forced to ration lending in the form of loan to value restrictions, this would mean the housing market would continue to fall in 2012. However, readers should keep in mind that there is no credit squeeze for now, yet there are interest rate cuts. That is likely to immediately tip buyers into the market, particularly NSW First Home Buyers looking to capture the stamp duty concessions still in play until the end of the month.
We literally could have the market climbing into a wall of worry in 2012, in that while potential buyers will be fearful of full blown global recession and credit squeeze, they will also be fearful of missing out on a recovery in the housing market and so, will buy a property. "
Median House Price Forecasts for 2012- Taking into Account a 25bp Rate Cut and Assuming a Europe Muddle through Scenario
* Perth: +4% to 0%
* Brisbane: +3% to -2%
* Darwin: +3% to -2%
* Melbourne: +2 to -2%
* Sydney: +7% to +2%
* Adelaide: +5% to 0%
* Hobart: +5 to +2%
* Canberra: +8% to +2%
Top Ten Most Discounted Properties Under a Million Dollars
This week, SQM Research has formed a list of the top ten most discounted properties in Australia that are priced under a million bucks. By cutting out the the luxury property market sector, what we have in this week's list are a bunch of what may be considered some bargain basement properties, right?
Not necessarily.
| Rank | Address | Suburb | Postcode | First seen | Initial price | Now asking | Reduction | Days on Mkt | Link | ||
| 1 | 588 White Beach Rd | White Beach | 7184 | 23/05/2010 | $780,000 | $400,000 | 49% | 553 | link | ||
| 2 | 92 Beelong Street | Macleay Island | 4184 | 23/05/2010 | $590,000 | $340,000 | 42% | 552 | link | ||
| 3 | 102 Fountain Road | Burpengary | 4505 | 17/04/2011 | $1,200,000 | $699,000 | 42% | 225 | link | ||
| 4 | 3 Boolari Road | Gosford West | 2250 | 08/07/2009 | $990,000 | $580,000 | 41% | 871 | link | ||
| 5 | 329 Waterford Rd | Ellen Grove | 4078 | 16/10/2010 | $1,275,000 | $800,000 | 37% | 406 | link | ||
| 6 | 25 Vicary Street | Triabunna | 7190 | 02/08/2010 | $299,000 | $189,000 | 37% | 484 | link | ||
| 7 | 1302 Birkdale Pl | Magenta | 2261 | 17/06/2008 | $700,000 | $450,000 | 36% | 1257 | link | ||
| 8 | 53 Fairview Avenue | Croydon North | 3136 | 02/04/2011 | $600,000 | $395,000 | 34% | 238 | link | ||
| 9 | 2 Brecknock Road | Strathalbyn | 5255 | 29/01/2011 | $280,000 | $185,000 | 34% | 301 | link | ||
| 10 | 27 Shaws Pocket Rd | Cedar Creek | 4207 | 15/08/2011 | $1,190,000 | $799,000 | 33% | 105 | link |
Just because the dollar figure of a property is low and it has been dramatically discounted, doesn't necessarily mean a home is good value for money. Depending on the location, the quality of the house itself and the land size- some properties may still be overpriced, even if they have already been discounted by over 30%.
As a potential home buyer, in particular- a first home buyer, it can sometimes be very confusing as well as difficult to determine what a property's current value is - we know that just because an agent tells us it's a 'bargain', doesn't mean it actually is.
A good way to figure out if a vendor is asking too much for a property can be to do some of your own property research in the area that the property is located. What are other homes going for in the same suburb, building, street? And not merely what are other vendors are ASKING for their properties, but what are other vendors are actually GETTING for their properties?
Of course aspects such as quality and land size also play a considerable role in a property's worth and you wouldn't be wise to compare a 2 bedroom 'renovator's dream' to a 5 bedroom modern family home with a pool, but with these features factored in, there still should usually be an element of consistency when it comes to similar homes from similar areas.
Finding out what price a property last sold for isn't always easy, and sometimes the vendors keep this information private but you can be watchful for online sales listings in your area as often a 'Sold' price is published on the links to some of these properties. If you come across a property that is asking a great deal more than numerous other sold properties of the same quality in its locality, then the vendors could potentially be asking above current market value. If this property has been on the market for a long period of time, this could also be a sign that it is overpriced.
All you have to do is look at our long standing number one on our top ten list (588 White Beach Road, White Beach 7184) which has been on the market for over 500 days and has been reduced by $380,000, to realize that sometimes both vendors and agents get the price of a home excessively wrong. To add insult to injury, this error is then often used as a marketing tool - and we commonly see property's advertised as being "HUGELY REDUCED TO SELL" when the underlying fact of the matter is that the property has only been discounted to what it should have originally been priced at.
A 'bargain' in any industry isn't always good value for money and the real estate industry is not excluded from this. It pays to do your research. If the constant scanning through online real estate sales is not for you, then we can help to some extent.
SQM Research has a house price estimator online tool that takes into account comparable sales as well as quality aspects of individual properties to calculate an approximate sale and rental value of your chosen property. Last sold prices of similar houses in the location of your chosen property are also available through this tool and can be handpicked by the user in order to calculate the most accurate estimate possible.
Check it out at - http://sqmresearch.com.au/sqmvaluations.php
Black Dragon's comments for this week -
"There is nothing so useless as doing efficiently that which should not be done at all."
- Peter Drucker
That is all from the team at SQM Research for another week. Join our community on facebook to receive regular updates about what we are talking about in between newsletters or follow the managing director of SQM Research, Louis Christopher on facebook and twitter as he regularly posts his opinion on the state of the current housing market.
Happy House Hunting!