There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some weekend reading.
How Melbourne house prices of 1997 compare to 2017
Then and Now – how much have things really changed when it comes to property prices?
An article on Domain.com.au looks at the changing prices of Melbourne houses in the span of 10 years.
When a loveable bogan hit Australian big screens and asked “how’s the serenity?” the story of a man’s quest to keep his home was cemented as a cult classic.
Michael Caton’s character in The Castle, Darryl Kerrigan, was not going to stand for the forced purchase of his home for a mere $70,000 – but that was the going rate for a house in Broadmeadows, just south of the Kerrigan house, and then Melbourne’s cheapest suburb.
The year was 1997.
Hanson’s MMMBop topped the charts and was forever stuck in everyone’s head, Titanic had movie-goers in tears, Harry Potter and the Philosopher’s Stone was released (the book, not the movie) and Melbourne’s median house price was $177,500
Just over 20 years later, things have certainly changed at the bottom end of the market.
Melbourne’s ever-expanding boundaries have meant suburbs up to 70 kilometres from the city have pushed Broadmeadows (2017 median $575,000), Heidelberg Heights ($731,000) and Sunshine ($780,000) out of the 10 most affordable suburbs list, according to Real Estate Institute of Victoria data.
Melton was the only suburb to stay in the most affordable ranks with a median of $360,000 – more than four times what it was in ’97.
MOST AFFORDABLE SUBURBS 1997
SUBURB MEDIAN HOUSE PRICE Broadmeadows $70,000 Heidelberg West $77,000 Melton $85,500 Sunshine $92,250 Frankston $94,500 St Albans $96,000 Dandenong $97,000 Deer Park $98,000 Werribee $102,500 Sunbury $108,000 REIV president Ricard Simpson said Melton was still growing, with surrounding suburbs to the west and south popping up in the past 20 years.
“Kurunjang is actually Melton north,” Mr Simpson said. “It’s still in the bottom really because of where it’s located – so far away from the city centre.”
MOST AFFORDABLE SUBURBS 2017
SUBURB MEDIAN HOUSE PRICE Millgrove $343,000 Melton $360,000 Kurunjang $368,000 Melton South $389,000 Melton West $405,000 Warburton $415,000 Brookfield $416,100 Crib Point $440,000 Wyndham Vale $457,000 Dallas $460,000 At the top not much changed.
The four most expensive suburbs 20 years ago are the same today – Toorak, Canterbury, Brighton and Malvern. Camberwell and Middle Park also made the top 10 both ’97 and 2017.
But you’d be dreamin’ if you tried to pick up a home in these exclusive ‘burbs at 1997 prices.
Toorak’s 2017 median was six times what it was 20 years ago at $4,475,000 (yes, back then you could buy for $739,000 in the posh locale – just under what you’d pay in Heidelberg Heights today).
Location, land size and top-notch schools were what kept the same players in high-demand, Mr Simpson said.
“They’ve all got what you’re looking for, access to public transport, not too far from the city, all good schools – private as well as public and that drives the growth,” he said.
Suburbs that missed the most expensive list in 2017 were Armadale, Kew, Black Rock and South Yarra – but each had still had medians at least five times greater than 20 years ago.
Balwyn, Hawthorn, Hawthorn East and Caulfield North were newcomers to the top 10, each with medians above $2.2 million.
MOST EXPENSIVE SUBURBS 1997
SURBURB MEDIAN HOUSE PRICE Toorak $739,000 Canterbury $460,000 Brighton $445,000 Malvern $432,000 Armadale $405,000 Camberwell $360,000 Kew $358,000 Middle Park $358,000 Black Rock $347,500 South Yarra $344,000 Mr Simpson said no one could have predicted the rapid price-growth across Melbourne over the past 20 years.
“Melbourne’s median house price has gone up by over 300 per cent in 20 years – which is amazing – but weekly wages have only gone up 121 per cent,” he said.
MOST EXPENSIVE SUBURBS 2017
SUBURB MEDIAN HOUSE PRICE Toorak $4,475,000 Canterbury $3,000,000 Brighton $2,725,000 Malvern $2,625,000 Balwyn $2,330,000 Hawthorn $2,317,500 Hawthorn East $2,292,000 Middle Park $2,287,500 Caulfield North $2,280,000 Camberwell $2,252,000 He predicted that in another 20 years, the same suburbs would still feature in the top.
“They’re not making any more land in Toorak, so it’s going to keep being a high demand area and it’s going to have high prices – no doubt about it.”
Read the full article here
Building boom!
It looks like our construction market is booming.
This Blog by Pete Wargent shows the statistics.
Construction bonanza
Melbourne undertook more dwelling starts than ever before through last year.
But at the state level there are few signs of a structural oversupply, with the population growing by somewhere close to 150,000 per annum according to the latest estimates.
The New South Wales building boom has been something else, with more than 70,000 dwellings kicked off over the year to September 2017. Wow!
Read the full article here
How to buy in Sydney
For some time now it’s been considered almost impossible to get into he Sydney property market.
But it looks like things may be changing…
In this article for Switzer, John McGrath looks at how to approach the Sydney market to find your next property.
Sydney property values fell into negative annual growth territory for the first time since 2012 last month.
According to the latest report from CoreLogic, Sydney home values softened by -0.5% over the year to February 28.
All this means is it’s getting a bit easier for buyers.
There’s more stock on the market, buyers have a bit more choice and some new negotiating power.
Auction clearance rates have softened a bit as volumes for sale increase and buyers become more discerning.
I expect this to continue for a while.
Usually when Sydney comes out of a boom, it returns to normal market conditions pretty quickly and it’s a new ball game for both buyers and sellers.
So this week, I’m going to talk about how to buy at this point in the cycle.
While buyers might feel buoyed by the market slow down, reality is we’re still only just past the peak of a boom in which property values grew by about 75%.
It’s therefore understandable that some buyers would be worrying about paying too much in today’s market.
So, what do you do?
Wait a while to see if prices go down, or just get on with buying?
The most important lesson from other booms in Sydney is that prices don’t go down much afterwards.
The city has very strong fundamentals holding prices up (eg strong economy, undersupply, population growth, migration), so buyers shouldn’t expect a big change.
In addition, real estate should always be a long-term play, so even if you do pay a bit of a premium (within reason) today, it’s not going to matter much in 10 years’ time when property values will have probably doubled.
In many pockets of Sydney, we are still seeing properties sell well above reserve.
This isn’t happening as much as it was but we are certainly still seeing it with the better-quality homes in the best locations.
So, if you want to buy a great new home, you might still have to pay a premium price.
However, with interest rates remaining as low as they are, this remains manageable.
Owner-occupiers can still lock in fixed rates around or even below 4%, so that should help a lot.
Here are some specific tips on how to get ahead of other buyers, make offers and bid at auction.
How to get ahead of other buyers
Every buyer is online these days, so when a new property listing is uploaded the chances are you and every other suitable buyer will receive an alert to it.
At this stage, you’re all on an even playing field.
It’s different when you’re a ‘database buyer’.
Database buyers have registered their buying criteria directly with individual agents and they are often notified of new listings prior to them going on the big portals.
This gives you an advantage.
Agents often conduct pre-campaign inspections with database buyers too, so you can get a look at the property and perhaps even make an offer before public advertising begins.
You can also get ahead of other buyers by doing thorough research on the local market – so you’ll be able to recognise and act on an opportunity sooner; as well as getting your finance approved, as this is a powerful demonstration of your commitment to buy.
Tips for bidding at auction
- Be clear about your walk away price
- If you’re going to start the bidding, start low
- Project confidence – make the other bidders think you have no limit
- Make your bids fast and assertive. Agonising over your next bid is a sign of weakness
- Call out your offer in full (i.e. say “$350,000” instead of “$5,000”). When the bidding is down to small increments, it’s easy for buyers to lose sight of the amount of money being bid. Calling out the full amount is a reality check for your competitors
- If it’s going to pass in, make sure you are the highest bidder so you get first right to negotiate after the event
- Stick to your walk away price. Short-lived disappointment is better than long-lasting remorse
- If you miss out, accept that it wasn’t meant to be and look forward to finding something better soon!
Tips for buying pre-auction or via private treaty
- On auction campaigns, ask the agent if the owners are willing to consider pre-auction offers
- Tell the agent you’re interested but don’t let on that you’re attached to the property
- Don’t start negotiations with your best offer, as it is always assumed your first offer is not your best (or your last!)
- The best way to show you’re serious is by signing the contract and attaching a cheque for the deposit. This makes your offer a lot more seductive!
- Put a deadline on your offers to encourage a decision – 5pm the next day is fair. Extend the deadline if the vendor hasn’t decided by then
- If your first offer is rejected, pick an odd amount to offer next. I have done this myself with great success. For example, rather than offering $460,000 or $465,000, I’ll offer $463,500. I’ll tell the agent: “I’ve looked at the comparable sales as well as my finances and costs and I can offer $463,500.” An odd amount implies you’re at your financial limit
- Respect the vendor and seek a win-win. Common ground between you – such as the desire for a long settlement, can incentivise the vendor to accept your offer
- Don’t make negative comments about the property. Vendors are influenced by their emotions, too!
Read the full article here
First-time homebuyers are facing a ‘perfect storm’ — and there’s no relief in sight
There may be more bad new for first home buyers looking to get into the property market.
According to an article on Business Insider home prices are at a 6 year high, making it even tougher for young buyers.
It’s tough out there for anyone trying to buy a home for the first time.
Starter homes are smaller, scarcer, and more expensive than they have been in at least the past six years, according to a report from Trulia released on Wednesday. The report described this combo as a “perfect storm.”
That’s no good for millennials, who are starting their own families, and, in some cases, trying to flee expensive urban centres to settle down in the suburbs.
Here are some of the worrying statistics via Trulia: In the first quarter of 2018, the inventory of starter homes – the cheapest, smallest homes that first-time buyers can usually afford – was down 14.2% from a year ago.
New residential construction in the US rose to a 10-year high last year, but that’s not been sufficient to meet the demand for starter homes.
The median listing price of such homes rose 9.6%, faster than the rate of growth for luxury houses.
The cheapest houses required the largest share of buyers’ income – about 41.2%, which is above the 30% maximum that experts recommend should be spent on housing.
And that’s not all.
The square footage of starter homes shrank by 2% since 2012, while more expensive homes grew by nearly 9%.
And yet, starter homes were the most in need of repairs and least ready for move-in.
Meanwhile, mortgage rates are on the rise, although they’re still well below levels that prevailed in the 1980s and 1990s.
But that’s little comfort for millennials who want to make the leap from renting or living with their parents to buying their first home.
Read the full article here
Don’t judge a book by its cover: The £2.2m Bradford home that looks like a bungalow at the front… but a sprawling country manor at the back
They often say looks can be deceiving – the same principal is often used in property.
This article on the dailymail.co.uk goes behind the doors of one ‘modest looking’ home – to find so much more…
House hunters searching for property in Bradford might be shocked when they stumble across what looks like a bungalow for sale with a £2.2million price tag – but all is not as it seems.
At first glance, the West Yorkshire home seems to be spread across just one level, with only a large front door and electric gates suggesting it’s nothing more than a decent-sized family bungalow.
However, take a peek around the back and the true proportions of this enormous detached property are revealed.
Called Treetops and built on a slope that disguises its grandeur, it might be the ultimate Batcave, in West Yorkshire.
First impressions: At first glance, the £2.2million Bradford property seems to spread across only one level
The stunning home extends across three floors and could be described as an ‘upside down’ house, with the living areas on the top level – including a kitchen, dining room and prayer room – to take advantage of the stunning views over the expansive landscape gardens.
On the next level down, there are no fewer than six bedrooms to choose from.
Move to the lowest level of the property and you’ll find a gym and sauna – ideal for Bruce Wayne types looking to work themselves into shape.
As well as an impressive granite central staircase, other fixtures and fittings include German fitted Hulsta bedroom furniture, Grohe taps, Indian polished granite tiling and America white oak flooring.
Take a tour around the back of the property and the three different levels are clearly visible
Even within the electric gates at the front, the property resembles a one-storey property – but it drops away to deliver more
The property has a sharp drop at the back towards a large secluded landscaped garden, with enormous lawns
The outside is equally as impressive.
Leading down from the rear of the estate is a large staircase to the enormous lawns and a stream at the foot of the plot.
Buying agent Henry Pryor explains that the while the property may not be to everyone’s taste, it will attract interest for being a modern family home.
He said: ‘When I started in the house selling business 30 years ago the best house in Bradford would have still had an outside privy. How times and tastes have changed.
‘This is a house fit for the Northern Powerhouse – an answer to the mansions in the south and it will provide the kind of home worthy of a 21st century family whose roots no doubt are buried in the Pennines.
‘As with the larger homes around Ascot, in north London or along parts of the South Coast, this will not be a home for all tastes but it will be a fine residence for the right buyer who is looking to make a serious statement.’
The unusual shaped property covers three levels, with the main living areas on the ‘top’ floor
There are several balconies, including one with an entertaining space and a B&Q area
An aerial view reveals the extensive grounds at the back of the Bradford property
The beautifully landscaped gardens include several staircases and a stream
The colourful kitchen includes modern appliances, tiled flooring and a separate dining area
Mr Pryor added: ‘It is a pity perhaps that Bradford doesn’t have a premiership football team, but with communication links both east and west there may well be a sportsman or businessman who appreciates the location.
‘Standing at the gateway to the Yorkshire Dales, this is a home that will attract the local and national interest. A fine testament to the new optimism that is sweeping the north.’
The main entrance is on the ‘top’ floor and includes wood flooring and panelling
The main dining area looks out onto one of the many balconies overlooking the garden at the rear
There is an impressive staircase that winds up through the three different levels
There are six bedrooms, including a large main bedroom with a dressing room and plenty of light
There is a large Jacuzzi shower with coloured polished granite walls and flooring
Weekend video: The Psychological Biases Of Change – Why We Don’t Like Change
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