http://blog.mcgrath.com.au en-us Tue, 15 May 2012 12:00:00 +1000 Tue, 15 May 2012 12:00:00 +1000 http://blogs.law.harvard.edu/tech/rss Weblog Editor 2.0 marketing@mcgrath.com.au (John McGrath) WebErrors@mcgrath.com.au (Johns Blog Admin) marketing@mcgrath.com.au (John McGrath) Tue, 15 May 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/88/ http://blog.mcgrath.com.au/blog/2/88/ Article I think anything pertaining to location or suburb, or position within a suburb, is the most critical decision you have to make when buying an investment property. You can generally change properties or decorate apartments but you can never change the location of the asset. My recommendation is if you're going for growth, you have to find a suburb that's going to outperform and therefore the selection of that area is critical. marketing@mcgrath.com.au (John McGrath) Tue, 08 May 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/87/ http://blog.mcgrath.com.au/blog/2/87/ Article There a number of things you need to take into consideration when you buy a property, for example what are you buying it for - growth or yield? If you're buying it for growth you need to be in an area that is going to outperform. Therefore you need to be indentifying the next fast growth suburb, preferably in a market near you. Once you've identified the location, which is by far the most important asset that a property has, you look at the individual characteristics such as the condition of the property and the rentability. Most people from an investment perspective will be renting their property out; therefore it needs to be easily able to be rented. Most importantly, do your due diligence before making any decisions and remember, the time you spend on good research is never wasted. marketing@mcgrath.com.au (John McGrath) Mon, 30 Apr 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/86/ http://blog.mcgrath.com.au/blog/2/86/ Article My personal advice on where to buy is generally closer to home, which means I like capital cities and major regions. I recommend buying closer to where you live as generally you have a better handle on the area and the location. Very few people that have held property in the medium and long term that I have known over the last few decades in real estate have lost money; those that have lost money have generally bought in areas they know nothing about and often are far away from where they live. I like buying closer to home - in big regional cities and big, metropolitan markets. marketing@mcgrath.com.au (John McGrath) Thu, 26 Apr 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/85/ http://blog.mcgrath.com.au/blog/2/85/ Article I don't think there is a perfect investment; I think there are really great investments and better investments. A lot of people often say to me, 'should I buy a house or an apartment.' It often comes down to their particular situation. I personally find that a lot of the time housing provides good, strong growth in terms of capital growth on the asset. However apartments are easier to manage and new apartments can often offer up good tax deductibility. I think you have to look at your personal situation, decide what sort of investment you want and ask questions such as are you looking for growth or are you looking for yield? marketing@mcgrath.com.au (John McGrath) Mon, 23 Apr 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/4/84/ http://blog.mcgrath.com.au/blog/4/84/ Video I had the opportunity to catch up with Peter Switzer recently on Sky Business Channel. Hope you enjoy the interview. Please note, the video is used with permission of Switzer Media + Publishing. marketing@mcgrath.com.au (John McGrath) Mon, 05 Mar 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/83/ http://blog.mcgrath.com.au/blog/2/83/ Article We're in a state of flux with ongoing uncertainty over the European debt crisis, job losses here at home and the banks signalling that the days of routinely following the Reserve Bank's moves on interest rates may be over. Despite these events, buyer enquiry is considerably higher with more people attending opens in January and February. Australia's largest mortgage broker AFG, reports a 40% increase in national mortgage sales in January (up 14.5% in NSW) compared to the corresponding period last year, when natural disasters significantly impacted sales. We are seeing buying enquiry up significantly. The under $1M market is still the strongest segment but there's new interest up to $2M and even beyond in Sydney and Melbourne where higher end buyers weren't around as much in 2011. While it's too early to tell whether this new enquiry will translate into sales, it's logical to think that if enquiry is up and new mortgages are up then we will see a good start to the first quarter. Fuelling buyer interest are the two interest rate cuts last year and vendors more aligned to the current market. There's also a sense among buyers that after waiting it out in 2011, now is the time to buy when lower rates allow greater borrowing power and excellent value remains on offer. While this show of confidence is encouraging, there are competitive forces at play. I believe the market won't have significant price increases until the Europe is resolved and we see further signs of recovery in the US. An improvement in the ASX would also provide a boost but this too relies on overseas developments. Locally, there are several issues that could stall the recovery in 2012. Unemployment is a concern, with several big companies announcing job cuts in recent weeks. While we're not seeing rising unemployment on any major scale at the moment, if it were to blow out significantly from here it would likely have a damaging effect on property values and rents. Also, the banks' campaign to separate themselves from the RBA will cause some insecurity among borrowers. When the RBA drops rates, it's a sign our economy needs a boost and in the past, home owners have been able to count on mortgage relief during these periods. But with the banks citing international pressures as the major determining factor for their home loan rates, consumers may no longer have the comfort of lower repayments when our economy slows. Market observations Preliminary RP Data figures for December indicate a steadying market, with capital city dwelling values down -0.2%* following an upwardly revised +0.4% in November. Regional house prices dropped -0.4% in December following +0.5% in November. Sydney has been the best performing market with dwelling values up 0.4% in December and 0.7% over the quarter*. Sydney is still the BHP of Australian property market. It has a major undersupply, excellent rental returns and a strong history of long term capital growth. *seasonally adjusted Many borrowers are choosing the safety of two-year fixed loan rates as low as 5.8%. AFG says 18.6% of all new loans in January were fixed, more than double that of six months ago. Borrowers are increasingly shopping around with 50,000 people reportedly refinancing last quarter. Buying residential real estate within 10km of the CBD in Sydney is an excellent choice, with outer suburban areas not doing as well as city hubs and the coastal belt. AFG says investors make up almost 36% of the market right now and I generally like buying in your own city. Investors seeking higher rewards might look to South-East Queensland this year. We're already seeing more activity on the Gold Coast, with investors coming from the local area, as well as Sydney, Brisbane and Melbourne. Markets like the Gold Coast and Sunshine Coast were significantly oversold during the GFC and depending on the level of mortgage sales over the next 12 months, should have very strong upside when they begin a real recovery either this year or in 2013. Rents continue on an upwards path in most capitals. Sydney was a stand-out in 2011, up 4.2% (houses) and 4.5% (apartments). Australian Property Monitors (APM) says the Sydney median has reached a record $500 pw (h) and $460 pw (a). Rents for apartments are increasing at a more rapid rate because more people are competing for the cheaper option and there's more apartment stock in favoured beachside and inner city locations. Rents will continue to improve, with Sydney's vacancy rate consistently around 1.5% (REINSW). Overseas investment continues due to our economic performance during the GFC and our outstanding education system. We are thethird largest provider of international education behind the US and UK, with one in five of our university students from overseas (of which about 20% from China alone) according to the Bureau of Statistics. Studying here allows their parents to fund the purchase of an established property for them to live in, as well as for investment. Families who can afford larger homes are seeing opportunity in today's softer prestige market too. There was a rush of first home buying in NSW in late 2011 due to the end of stamp duty exemptions from January 1. The ABS says first home buyers comprised 20.9% of all new owner occupied housing finance commitments in December, up 25.8% on December 2010. This should have a spill-on effect, as those who have sold are in the market to upgrade. John McGrath's Top Sydney Metro Picks - Best Buys for Future Growth Houses Apartments Balmain East Cammeray Coogee Coogee Hunters Hill Monterey Killara Ryde Palm Beach Sydney CBD Regional Markets There's been a notable increase in numbers at inspections, with local upgraders in particular seeing now as the time to buy after many sat on the sidelines in 2011. Vendors are increasingly willing to meet the market and Sydney buyers continue to seek investment opportunities and/or a lifestyle change. We're seeing a significant jump in enquiry in many of our markets, particularly Bowral, Ballina, Byron Bay, Wollongong, Thirroul, Newcastle, and the Gold Coast. While the lower end dominated in 2011, we're now seeing new enquiry in the middle to high price brackets as well. There seems to be a buyer consensus across many regions that prices have bottomed out and now is the time to get in. Adding to the demand are buyers who saw an opportunity to sell well during the first home buyer rush, are now taking in a position to upgrade. Our Wollongong and Thirroul offices recently sold three homes between $900,000 and $1.1M in one day. We're still seeing young Sydney families looking for better value and lifestyle in markets such as the Blue Mountains and Wollongong's northern train line suburbs, which both have easy access via road and train back to Sydney. Newcastle is also becoming steadily more popular with Sydney families who don't intend to commute but who want close proximity to Sydney. The Gold Coast market is not out of the woods yet but those who have the capital to buy and hold medium term will see this market recover more strongly over the next 3-5 years than most other markets hit hard by the GFC. A big change this year is the return of first home buyers and investors in the under $600,000 bracket in areas such as Labrador and the northern tip of Southport near the Griffith University campus and new hospital. We're seeing more buyers at opens across the board, as people are sensing that the bottom of the market is near. But a real recovery is probably still 12 months off, so buyers have time on their side. The Byron Bay region, also hit hard by the GFC, seems to have found an equilibrium and we're cautiously optimistic. The Ballina bypass is now complete, removing 1,500 trucks and 6,500 cars per day from local streets, according to NSW Government figures. This provides excellent scope for property price rises. We're seeing more buyers particularly in Byron Bay and Ballina, and instead of playing 'wait and see' like in 2011, they're making firm decisions. The Blue Mountains remains a strong market, with the new roadway highly likely to bring strong long term capital gains. Investors were absent in the last quarter due to high first home buyer activity but now they're back. Rental returns are strong and our office currently has a less than 1% vacancy rate. Upgraders are dominating in early 2012, with locals who sold well to first home buyers now stepping up into the middle price range of $450,000 to $600,000. Newcastle has a promising future for capital growth. Compared to Sydney, it offers incredible value and a variety of housing from beachside apartments and houses to historical homes and period architecture. We're seeing strong local enquiry as well as a variety of out-of-area buyers from Sydney, Far North Queensland, the ACT and Melbourne. Newcastle is becoming wealthier and the percentage of multiple property owners is high. It's a developing market that is yet to be truly appreciated for its excellent lifestyle and growing local economy, with the booming Hunter Valley mines also on its doorstep. John McGrath's Top Regional Picks - Best Buys for Future Growth Bowral Burleigh Waters (Gold Coast) East Ballina Katoomba New Lambton Dickson (ACT) Kambah (ACT) Lighthouse Beach Terrigal Thirroul Key points and predictions Buyer enquiry considerably higher in metro and regional markets, with mortgage sales up We're in a state of flux and some buyers are still waiting for more positive news before they act. The European debt crisis, banks acting independently of the RBA and Australian job losses all are 'clouding the water'. Metro property prices are steadying, with Sydney the stand-out performer in 2011 More borrowers are choosing fixed loans and shopping around for the best refinancing deal Rents remain on an upwards trajectory in most capital city markets, with Sydney rentsup 4.2% (houses) and 4.5% (apartments) in 2011 Key regional markets such as the Blue Mountains and Newcastle remain strong, with the Gold Coast offering outstanding buying for those who can hold long term for exceptional capital gains marketing@mcgrath.com.au (John McGrath) Tue, 31 Jan 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/80/ http://blog.mcgrath.com.au/blog/2/80/ Article As we enter the New Year and the possibility of selling your home, upgrading or downsizing in one of the busiest selling periods - choosing the best agent to sell your property is the second most important decision in real estate (after choosing the right property to buy). But from my experience many people are too casual in their approach to this crucial decision. They ring a couple of agents and choose the one who gives them the highest valuation or has the lowest commission. Create a series of questions that you want to ask agents, and interview a few as if you're considering them for a job. 15 QUESTIONS TO ASK WHEN HIRING A REAL ESTATE AGENT · What do you think my property is worth? How have you come up with that figure? · How does my house present? What can I do to maximise the sale price? · What's the best method for selling my property? Auction or private treaty? Why? · What's an approximate time frame? · What's it going to cost me? · Why should I hire you? · How long have you been working in this area? · What comparable homes have you sold in this area lately? · What's the state of the market? · How long is it taking you to sell well priced listings at the moment? · What marketing strategy do you suggest? Why? · How much will be spent on marketing? Why? · How much traffic does your website get? · What will you do to introduce buyers to my property? · Do you have a list of recent vendors I can speak to? marketing@mcgrath.com.au (John McGrath) Mon, 16 Jan 2012 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/79/ http://blog.mcgrath.com.au/blog/2/79/ Article I'm feeling optimistic about the Australian property market in 2012. We're not in for any major growth in prices but there are positive signs ahead. Two interest rate cuts will always stimulate the more affordable end of the market - which is a positive thing for the bulk of the population living in and buying homes under $1.5M-$2M. Recent figures from Australia's largest mortgage broker, AFG, show a big boost in the number of home loans taken out in the month of November following the first rate cut on Melbourne Cup Day. New mortgages increased by 18.4% nationally (26.7% in VIC, 20.8% in QLD, 16.4% in NSW) compared to October, and while that is partly due to November always being a high volume month, I think the interest rate cut probably gave buyers already in the market an extra shot of confidence to go ahead and make that purchase. The November loans were worth $2.9 billion, the highest number recorded by AFG since March 2009. It's funny what a shift in confidence can do for the property market. Two rate cuts is a big shot in the arm for people who perhaps delayed buying in 2011 because they were fearful of cost of living pressures and major economic concerns overseas. We're seeing evidence that Australians are feeling much more conservative about debt and in terms of housing demand, the lower end of the market certainly had the lion's share of buyer interest in 2011. Two rate cuts will certainly bring new confidence to the market but I'd also like to see a resolution in Europe, as I think those debt issues and their potential impact on the rest of us are a major concern for property buyers, particularly in the prestige sector. Banking and finance executives aren't getting the bonuses they used to and this is having a direct effect on property above $3M. The share market is also very volatile, also due to Europe, so resolving this large scale economic issue is critical for property prices in Australia. As always, when conditions aren't great, there are amazing opportunities for those buyers brave enough to buy when others are holding back. One of my favourite quotes from Warren Buffett - 'Be fearful when others are greedy. Be greedy when others are fearful.' The Australian property market has an outstanding track record for long term capital growth. If you can get in at a time when a relatively large proportion of the market is holding back, you could do very well for yourself. As long as you do a careful budget with a buffer and buy with a view to holding the property ideally for 10 years or more, now is a fantastic time to buy. This is particularly the case for investors, with evolving superannuation laws making it easier to buy using a self-managed super fund and exceptional rental returns being achieved in both metro and regional areas. AFG says 2 in 5 new mortgages were for investors in November, which is the highest number recorded in six years since AFG began counting. Investors were most active in NSW (44.6% of all new loans), VIC (39.8%) and QLD (37.7%). The QLD stats are very encouraging as there are many depressed markets in the Sunshine State (especially the Gold Coast) offering unbelievable once-in-a-lifetime value for buyers. A new year always brings a new psyche to the market. We finished 2011 on a good note with two rate cuts so I'm optimistic about this year's Autumn selling season, which will formally get underway in early February. Watch the market from February to April as this is a traditionally busy period so you'll get a good sense of where the market is headed for 2012. marketing@mcgrath.com.au (John McGrath) Wed, 14 Dec 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/78/ http://blog.mcgrath.com.au/blog/2/78/ Article We've noticed a marked improvement in buyer enthusiasm following the first interest rate cut but it won't be enough on its own to spark some serious growth. People are looking for more good news to regain their confidence to buy and sell. Interest rates are definitely an important factor in people's purchasing considerations, particularly in the sub $1.5 million market, but it's not the only one. There are other macro issues that are probably a greater influence on people's current psyche. The European problems are a big dark cloud and if they're resolved I think that will have a much greater positive impact on the actions of buyers than a quarter percent rate cut. While we continue to wait for more positive signals, green shoots of growth and new demand continue to emerge. The market under $1 million is strong due to first home buyer and investor activity and while there have been a few good sales at the top end, the prestige sector still lags. We need to see unemployment down, retail spending up, a resolution in Europe, improved bonuses and a good consistent quarter on the stock market for the prestige sector to move. I think we'll see people getting back on the horse in 2012, as buying opportunities above $3 million are exceptional. Australian buyers don't need to see a lot of price growth to regain confidence, they just want to know that home values have stabilised. A lot of people are sitting there with cash in the bank waiting for the signal that the market has leveled and now's the time to buy. The underlying demand is there, people are just waiting for the bell to ring and I think there's a good chance that will happen in the first half of 2012. Market Observations Attractive fixed rates are proving popular with three year deals as low as 5.94%. Australia's largest mortgage broker, AFG reports an increase in fixed loans from 7.9% in July to 17.2% in November. Many buyers are waiting for further evidence that interest rates are moving into a downward cycle so a second rate cut is needed to boost their confidence and prompt them into action. People are looking for some good news. Sentiment can turn quickly and behind the veneer of nervousness, there is a genuine desire to get into the market. A lot of people de-leveraged in the GFC and they are ready to buy again when their confidence is restored. RP Data figures suggest the window of opportunity to buy at the bottom is closing. Capital city home values recorded their best result in seven months in September, with falling prices slowing to only -0.2% seasonally-adjusted while regional houses rose 0.1%. First home buyer activity has surged and now comprise 16.4% of the market, up 27% on June this year and 40% on the same time last year. First home buyers stand to save almost $18,000 in stamp duty on a $500,000 purchase if they buy before Jan 1. With so many traditional asset classes appearing unstable at best or volatile at worst, bricks and mortar should prove to be a popular investment avenue, particularly with the significant baby boomer market. AFG says the percentage of new loans for investors hit a peak of 38.4% in November nationally (44.6% in NSW). There have been two big investment trends in 2011. The first is more people buying through self-managed super funds. The second is investment from the Chinese, who see Australia as a great investment market with a strong currency and business economy and excellent education opportunities. Traditionally, investors in Singapore and Hong Kong have always liked our market but interest from China has increased strongly since the GFC. There are exceptional buying opportunities in Australia's prestige sector above $3 million. In my experience, prestige home values can rise rapidly as soon as economic confidence returns. During the GFC recovery, prestige property prices jumped almost 20% in 2009 alone. In Sydney's Palm Beach, properties that used to be worth $3 million are now trading for $2.2 million, and it's a similar story in many other desired lifestyle locations. According to recent media reports, a record number of Australians aged over 55 are remaining in the workforce or actively looking for work following big super losses during the GFC. We've noticed less demand from retirees in coastal markets but this will inevitably pick up as the population continues to age. Canberra has been a powerhouse market for several years but is now taking a breather, with prices coming back 3-5% in recent months due to higher supply and caution among buyers. Great investment conditions remain with 5-6% yields and low vacancy rates. We're expecting a seasonal increase in activity at the start of the year as new government employees move in. Our new Woden office is noticing a preference for renovated homes over original properties. My Top Metro Suburbs Picks Houses Erskineville Redfern Rozelle Taren Point Vaucluse Apartments Bronte Little Bay Milsons point Ryde St Peters Regional Markets We're seeing increased buyer activity and general positivity in a number of regional markets as people begin picking the bottom and taking advantage of great buying. Renewed buyer confidence and vendors becoming more realistic after many months on the market is resulting in more sales. We're also seeing more Sydney investors and young sea/treechangers looking to buy in areas offering jobs and lifestyle. Out of area buyers are driving demand in lifestyle markets such as Byron Bay, Ballina, Bowral, Wollongong and the Blue Mountains. Our Blue Mountains and Bowral offices estimate 75%-85% of buyers respectively are from Sydney looking for investment, holiday homes and retirement properties. Sydney investors are increasingly looking at major regional markets offering lifestyle, improving infrastructure and jobs growth such as Newcastle/Hunter, Wollongong, Byron Bay and Port Macquarie. Rental demand, yields and capital growth prospects in these areas are excellent. The Gold Coast is showing new signs of life with vendors more realistic and buyer sentiment improving. However, it still has a long way to go in its recovery. The Commonwealth Games will be a shot in the arm for the economy with 30,000 new jobs anticipated. There is exceptional value available particularly with family homes in canal and riverside areas. A quality four bedroom home on the water is easy to find for less than $1.5 million. New villas/duplexes in Mermaid Beach and Miami are providing a rare opportunity to buy beachside for under $2.5 million. We're seeing new activity in the blue chip Byron Bay Shire and Hinterland market, one of the hardest hit during the GFC. Demand is increasing across all price points including the upper end. Prices are generally are 10-15% off at the lower end and 20-30% off at the top. Buyers are seeing great value with locals seeking to upgrade and Sydney buyers seeking holiday homes or investments. The holiday home market has been soft for many years but we're starting to see new interest from Sydney buyers in Byron Bay and Bowral. The Central Coast is another holiday home market ripe for the picking. In Terrigal, Avoca and Killcare - traditionally popular holiday home areas among Sydneysiders, the buying opportunities above $1 million are the best we've seen in 15 years, with twice the normal supply of houses and apartments now on offer. A proportion of young Sydney couples are continuing their sea/treechange to more affordable major regional markets that offer jobs (or easy commuter access to Sydney) and lifestyle. Markets popular with these buyers include Port Macquarie, Wollongong, Newcastle, Warners Bay and the Blue Mountains. My Top Regional Suburbs Picks - Best Buying Opportunities Ballina Burleigh Heads (Gold Coast) Charlestown Paradise Waters (Gold Coast) Wentworth Falls Burradoo Flynns Beach Lambton Mawson (ACT) St Huberts Island Key Points & Predictions Improvement in buyer enthusiasm following the first interest rate cut but it won't be enough to turn the market back to a positive situation in terms of some serious growth Macro issues such as the European debt crisis still weigh heavily on buyers' minds, as do rising cost of living pressures Market under $1M strong due to significantly higher first home buyer activity and a peak in investor activity.Buyers are taking advantage of very attractive three year fixed rates Exceptional buying opportunities above $3M but major economic changes are required for the prestige property sector to begin moving in a positive direction again There is new activity in many regional markets, with Sydney buyers a driving force. The affordability of property in lifestyle areas with strong local economies is attracting investors, young seachangers and a small number of holiday home buyers. There are fewer retirees in major coastal locations but buyer activity overall is strengthening Blue chip markets hit hard by the GFC including the Gold Coast and Byron Bay are showing definite signs of new activity across a broad range of price points. marketing@mcgrath.com.au (John McGrath) Wed, 16 Nov 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/4/77/ http://blog.mcgrath.com.au/blog/4/77/ Video I chatted with Peter Switzer this week about the QLD property market. I hope you find it informative. Please note, the video is used with permission of Switzer Media + Publishing. marketing@mcgrath.com.au (John McGrath) Wed, 21 Sep 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/4/75/ http://blog.mcgrath.com.au/blog/4/75/ Video I had the opportunity to catch up with Peter Switzer recently on Sky Business Channel. Hope you enjoy the interview. Please note, the video is used with permission of Switzer Media + Publishing. marketing@mcgrath.com.au (John McGrath) Tue, 30 Aug 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/72/ http://blog.mcgrath.com.au/blog/2/72/ Article It's predicted that Western Sydney's population will more than double in the next 4 decades, as Sydney grows to 7 million by 2050. An expanding business district, major new public art gallery, rail network improvements and upgraded sporting facilities are just some of the infrastructure required to draw the pressure away from our existing CBD and towards positioning the city of Parramatta as Sydney's second CBD. And there's a real buzz around Parramatta at the moment and it's got everything to do with the number of cranes in the sky and a very proactive council that is loudly broadcasting a big picture future for the city. I'm seeing a lot of commercial activity here, which is an important indicator for employment and as a result, an increase in demand for housing. Parramatta's most significant development to date is the revitalisation of Civic Place. Civic Place is critical to the transformation of Parramatta as it prepares to accommodate over 40,000 new residents and 30,000 more workers in the next 20 years. It will not only provide new apartments and offices but make downtown a more cosmopolitan and exciting place to be. There's enough momentum already to interest many investors in high-rise residential developments in Parramatta for which there is strong rental demand. And there seems little chance that supply will outstrip demand any time soon. marketing@mcgrath.com.au (John McGrath) Fri, 10 Jun 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/4/70/ http://blog.mcgrath.com.au/blog/4/70/ Video I chatted with Peter Switzer this week about the property market. I hope you find it informative. Please note, the video is used with permission of Switzer Media + Publishing. marketing@mcgrath.com.au (John McGrath) Wed, 01 Jun 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/68/ http://blog.mcgrath.com.au/blog/2/68/ Article There's no need to panic. Every few years, these so called property experts come out of the woodwork to generate headlines about the Sydney and Australian property market being 40% over priced. I've been in real estate for almost 30 years now and have heard these suggestions on at least eight occasions (seems like once every cycle). To date, I have yet to experience a market that has fallen more than 20%, and invariably within nine months, any market losses have typically been regained. In the meantime, property values have kept doubling about every eight years. I also remember an instance several years ago, when one loud academic promoter of the 'Chicken Little' theory had our company sell their apartment because they believed and publicised the market was 40% over heated. So we sold it and we got them a good price. They were relieved as they had avoided the 'Armageddon' mania perpetuated by these so called experts in the news. Since then property values in that particular area have increased by 25%. It's not my intention to criticise people for having a view. I'm just encouraging you to look at our history, look at the present and try to foresee the future trends - after all, we are the Lucky Country, rich in everything from resources to political stability and we're also on the doorstep to the world's two largest populations. I personally believe there won't be a major property correction. In effect, I think there is a 95% chance we will see healthy prime residential markets around Australia over the next 12-18 months. marketing@mcgrath.com.au (John McGrath) Wed, 25 May 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/62/ http://blog.mcgrath.com.au/blog/2/62/ Article Over 14 years ago, I started what was then a small conference for real estate professionals to learn from the best visionaries and practitioners in the world. Today AREC has grown enormously and this past weekend, AREC 2011 was held in Sydney. On the first day, two of the most outstanding keynote speakers, radio personality Alan Jones and former Mayor of NYC, Rudy Giuliani, set the tone for the next two days. Alan Jones, one of the most prolific rugby coaches Australia has ever seen, shares his views on 'The Attitude of Champions'. He told our 2,000 delegates in attendance that 'real estate was safest form of investment for young people'. His message plainly laid out the need for us all to not take shortcuts in life and accept that on the way to success there will be adversity. 'Quality has a price to pay' he said, and these are 'hard work, disappointment and envy'. If we stop making excuses and turn our efforts to persistence, success will be born. Rudy Giuliani, is a world leader who I have admired for more than a decade. When he agreed to speak at AREC I was thrilled and listening to him on Sunday, he exceeded our expectations. Giuliani served as Mayor of New York City for eight years, during which time he transformed NY from the most dangerous city in the US to the safest. Then came September 11, which in his words 'challenged every bit of common sense and ingenuity, and showed us that you never know what you are going to face'. During his hour on stage, he shared his thoughts on leadership. Here's a snapshot of his six principles: Leadership: Strong beliefs - leaders must have a clear and consistent vision. Big Vision can bring about Big Change. Small Vision brings about NO change. Optimism: People follow hope and the person offering to solve the problem. Embrace problems and suggest a way to turn them around. Courage: If you are not afraid you are not alive! Preparation: Relentless Preparation is the key to success. Every answer you need can be found in preparation, so practice until you're bored. Teamwork: Ability to recognise your weaknesses and compensate to overcome them. Balance your strengths and weaknesses with people who have those strengths: trust and learn from them. Communication: Leadership is a teacher and motivator. Get into the hearts and minds of people, and work with your organisation towards shared goals. These amazing individuals have achieved the level of success the rest of us dream of, but their philosophy and advice is simple and I hope it will resonate with you. marketing@mcgrath.com.au (John McGrath) Mon, 14 Mar 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/60/ http://blog.mcgrath.com.au/blog/2/60/ Article There has been some reports recently that suggest if there are two houses on the market that are quite similar, except for their energy ratings, the house with the high energy efficiency will command a higher price. With more general awareness of environmental issues and the rising cost of energy and water, there definitely is an increased interest in this space. Up until now green homes have made most people feel good but have not truly translated to better prices. It seems to me that the change is happening as we speak. I believe the demand for homes that are energy efficient is growing and the awareness of both the importance of this ecologically as well as the cost benefits financially is rapidly growing. If architects and home builders start upgrading new homes to above the minimum authority requirements, showcasing the best technology and building design that creates energy efficiency as well as being environmentally friendly, the added investment will start to pay off going forward. This must translate into better prices due to stronger demand and value add for buyers. I'm not sure that you can put a dollar figure on it yet, but I'm sure you will be able to over the next 24 months as awareness continues to grow. marketing@mcgrath.com.au (John McGrath) Wed, 02 Mar 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/4/59/ http://blog.mcgrath.com.au/blog/4/59/ Video I recently had the opportunity to chat with Peter Switzer on Sky Business Channel about the property market. I hope you enjoy watching it. marketing@mcgrath.com.au (John McGrath) Thu, 20 Jan 2011 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/58/ http://blog.mcgrath.com.au/blog/2/58/ Article It's the classic dinner party conversation between savvy investors - where are the bargains in real estate today? During the GFC, the Australian property market was ripe with opportunity for the few who had liquid funds. Here in Sydney, we heard many stories of wealthy investors buying up house after house in suburbs like Palm Beach, where prices dropped off substantially due to a mass holiday home sell-off. That's what a smart investor does - they look past the woes of today and take advantage of the silver lining. The affect of the GFC in capital city markets is basically behind us. We had a small correction followed by rapid growth as buyers sought value in the improving economy. In regional markets, it's a different story. Regional markets suffered more than urban markets during the GFC for three main reasons. Firstly, there was a major sell-off of holiday homes so supply began surpassing demand. Secondly, the major industry of regional markets - tourism, declined substantially and continues to struggle now due to the strong dollar making overseas travel very attractive. Thirdly, downsizers and retirees began delaying their seachange or treechange due to superannuation losses and a volatile economy. Today, our economy is doing much better and people are more confident. RP Data reports that property prices in capital city markets in financial year 2010 rose about 10.5 per cent on average but major regional markets were up only five per cent. I'm talking about major regional markets here - the strongest markets of all our coastal and country towns. These areas have a solid long-term history of strong growth so a five per cent increase is pretty low. And therein lies an opportunity for bargain buyers, but it won't last long - I'm tipping mid-2011. There are already signs of improvement in these major regional markets and that's exactly when you want to buy - on the cusp of an upswing. In NSW, some of our regional offices report a huge proportion of buyers from Sydney looking to purchase now for investment, a lifestyle change or retirement. Over the past few months, our Bowral office estimates 80 per cent of buyers have been from Sydney, in the Blue Mountains it's 60 per cent and in Port Macquarie it's 40 per cent (this also includes buyers from Melbourne and Brisbane). In terms of regional hot spots, I'm tipping the following locations as great buying now for future capital growth in NSW: Byron Bay, Warners Bay and Shelly Beach (North Coast); Towradgi (South Coast); Empire Bay (Central Coast); Wentworth Falls (Blue Mountains) and Burradoo (Southern Highlands). In QLD, I like the Gold Coast where there is incredible value particularly with waterfront houses along the deep canals. Generally, investors can't go too far wrong with beachside towns or regional suburbs with fast commuter access back to your capital city. Just don't buy in an area that is solely reliant on one industry, particularly tourism, to power its local economy. Any market linked to mining is definitely a good bet. In addition to prices, look at rental demand too. It's all very well to buy a bargain but if you can't find a tenant your investment will be seriously compromised. Start your research now and perhaps take a holiday in the regional market you like best for investment this month. Many agencies in major tourist towns are open during January for exactly this reason. Time is on your side and while recent sales can help you get to know a market you're unfamiliar with, you definitely need to spend time on the ground. Signs of a good regional market for investment include new infrastructure, a good local economy with a mix of major industries, busy shops and cafes, schools, clean beaches, recreational facilities and good public transport. marketing@mcgrath.com.au (John McGrath) Thu, 28 Oct 2010 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/56/ http://blog.mcgrath.com.au/blog/2/56/ Article I recently posted a blog about an upgrade in confidence in the real estate market. I'm starting to see a major increase in the number of new listings coming onto the market for sale this Spring in our biggest capital cities. Following strong results in September, temporarily stable interest rates and steady clearance rates in Sydney and Melbourne, the two biggest auction markets in the country, homeowners have got the extra shot of confidence they needed to pursue a pre-Christmas sale before the possible rate rises of 2011. And here's why buyer demand is strong. Firstly, interest rates have been steady for a few months so purchasers' buying power has stabilised and this has fuelled their motivation. Some of the banks have also loosened their purse strings and agreed to lend money to more property buyers. Secondly, supply and demand has been in the sellers' favour for a long period of time. When supply is low, it can take buyers many months to find their new home and this keeps demand high for sustained periods. Then there's the seasonal influence with November always a high volume month as people start appreciating the Christmas deadline and the convenience of moving house during the school holidays. Demand is strongest for family homes under $2m in the inner and middle rings of major capital cities like Sydney and Melbourne. These buyers are upgrading from smaller homes to accommodate growing families. Activity in the $2m-$4m range is fairly subdued but this will change as the share market strengthens. With fewer first homebuyers around and rents on the rise, investors are still active, particularly at the more affordable end of both the house and apartment markets. This weekend Sydney will host the Home Buyer & Property Investor Show and with confidence on the rise, now is a great time to be educating yourself on the real estate market either as a first home buyer, upgrader or investor. Top of their agenda this year is tackling the challenges of affordability in the Sydney residential market. I encourage you to check it out as there are many notable presenters providing factual and helpful information. marketing@mcgrath.com.au (John McGrath) Fri, 08 Oct 2010 12:00:00 +1000 http://blog.mcgrath.com.au/blog/2/54/ http://blog.mcgrath.com.au/blog/2/54/ Article Only two weeks ago (September 20) I wrote that the market was performing OK but somewhat nervous. Since then I'm feeling an upgrade in confidence that is now starting to extend beyond the Sydney metropolitan areas and into the regions. For example, our Wollongong office is delivering its best result since opening and has achieved significant sales in beachside development Manta, which had until recently been selling more slowly. Our Warners Bay office has just had two record sales including an almost $3m waterfront and most of our regional offices are recording significantly increased activity since the start of spring. It's hard to determine exactly what maybe driving this but I suspect there are a few things working in tandem: The Australian economy and population is starting to emerge from its cave. The light at the end of the tunnel is growing larger and brighter and the sense of new beginnings is apparent. Smart money is now starting to invest. Money that was in the bank is now buying quality assets at discounts and this is creating a surge of confidence. With the announcement of an Australian record sale at around $52m three weeks ago people are seeing the smartest money in the room being used for growth assets. Australia will undergo a severe housing shortage for several years to come. With little new building activity for several years now and a rapidly growing population, current demand far outweighs supply and this cannot be rebalanced over night. The mining boom is prevalent and we are seeing a huge overweight in top end homes being sold to people involved in the mining sector. So at both a macro and micro level, the current mining boom is assisting fuel the property recovery. Offshore buyers are seeking to secure Australian property. It means more than an asset to most. It represents a home, good education and political stability (most of the time anyway), a secure future, a hedge in the strong $AUD and so many more of the things we Australians have almost come to take for granted. Prices (in most areas) are still very cheap (check out the Gold Coast where some areas are down 30%-40% on 2007 values). As they say in the retail space 'never to be repeated prices'. I think most buyers will look back in 2015 and thank their lucky stars they bought good real estate in 2010. Prices are ready to move in 2012. When the confidence returns in these areas value will rebound and there will be the potential to see 10%-20% capital gains in the first year. The share market which is a big factor in homes in excess of $1m around the country is building towards 5000 on the ASX. This means that confidence is growing as is the balance sheet of most Australians. The talk of a double dip recession is quietening and the more prevalent opinion seems to be that is unlikely. The bears are still there in the background but the bulls are drowning them out of late. Stay tuned. This will not be a straight line recovery. There will be days the news is positive and days the bears will win. Overall the trend is upward and that means property will grow in 2011.