Confidence & the housing market

There is a lot of speculation about the housing market in the daily press at the moment, with a lot of talk re “price bubbles’ and the market taking off. For a more detailed review, attention needs to paid to leading key performance indicators (KPI`s) rather than current or last week`s auction clearance rates to allow a realistic assessment of trends. One of these is measures of consumer confidence, where we have a database over an extended time frame that enables comparisons with earlier periods where the outcomes are known. Michael Matusik in his Matusik Missive dated October 15th 2013 discusses the Westpac Melbourne Institute Consumer Confidence Index and reports as follows: Confidence The theory was that confidence would lift after the federal election, but the Westpac Melbourne Institute Consumer Confidence Index actually fell by about 2 per cent during October. The index now sits at 108.3 – which actually means little to most of us – but if I put it another way, 100 means that half the community are optimistic & half are pessimistic. So, a 108.3 reading means that slightly more see the glass half full rather than half empty. But not a lot more of us are seeing the sunny side of the street. Another surprise was the fall in the ‘whether now is a good time to buy a dwelling index’. This score fell 10 per cent from 140 index points to 135, with the biggest falls in NSW (down 23 per cent) & Queensland (down 11 per cent). There were similar falls in April this year, following media speculation about interest rates moving upwards. October’s decline comes on the back of talk about a housing bubble; declining affordability & pending market correction. But as we pointed out both here & here – in our opinion at least – no such bubble conditions (yet) exist. If we are not careful, we will talk ourselves out of a good thing. The Westpac Melbourne Institute Good Time to Buy a Dwelling Index is a near prefect bellwether as to the future direction of the housing market. If this current slide in confidence continues, expect the recent gains made in housing prices & sales to plateau & maybe even fall in about six months’ time. Acknowledgement – extract from the Matusik Missive, October 15th, 2013

Massive plans horrify residents - Coolum Domain October 11th 2013

Residents and community groups are preparing for a battle over plans for a major development at Yaroomba that involves taking building heights to a maximum of 12 storeys. This is something that Coolum Beach real estate interested parties have long fought against. Check the Newsroom and Blog tab at http://www.geoffgrover.com.au

Is the price right?

We are obviously through the worst of the housing price downturn and in general the number of properties nationally for sale are at very low levels , leading the major press to be filled with reports of a house price bubble, significant price growth, etc. These comments focus on capital city movement in the main, and bear limited relevance to regional centres. The astronomical price growth in capital cities was mainly led by the “gentrification” of inner city areas as the urban landscape changed. Poor working class suburbs became much sought after. Re article on this on my website. So direct comparison with capital city price movements is somewhat tenuous as regional property prices are subject to different factors. What is a major factor in our area is the price segmentation that has led to a disproportionate number of upmarket properties being listed in the belief “the price is right”, the market has changed, everything is selling A detailed analysis of Mt. Coolum & Yaroomba reveals that in 2012 and 2013 YTD, 66% of all house sales were under $500,000 Yet houses for sale today in these suburbs at these prices are at 19% & 15% as reflected in the table - by far the bulk are the expensive properties with much fewer interested buyers. House Sales - Jan to July 2013 Under $500k Over $500k No. % No. % Mt Coolum 25 68% 12 27% Yaroomba 12 67% 6 33% Housing stock for sale as listed on realestate.com.au shows as at 24th September Houses for sale Under $500k Over $500k No. % No. % Mt Coolum 5 19% 22 81% Yaroomba 2 15% 14 87% In reality we still have a wide choice for the upmarket properties, strong competition but a desperate shortage of the popular price points. Negotiation strategies for both groups then become quite different. The under $500,000 sellers & buyers need an agent who understands local area values, establishes prices accordingly & negotiates firmly around this - agent skill sets become the predominant factor as this leads to a win-win scenario for all, the seller achieves the price, buyer does not miss out.