With clear signs that the real estate market is smoldering, some areas are still threatening to re-ignite as the Summer heat starts to close in on the most observed market in Australia. The June quarter figures are soon to be released, and we expect a mirror image of the March quarter which revealed that home sales dropped 30.7 per cent, units by 34.4 per cent and land by 30.1 per cent. Restricted supply is actually a positive sign for the property markets as it all but guarantees stability in the overall values of real estate. The Winter months have come as a welcome relief for the market as it allowed it to re-align itself. The simple reality of this market confirmed yet again that there is a better chance of photographing Loch Ness Monster, than witnessing that elusive ‘bubble’.

The coming months will be very interesting given that the United States has embarked on an interest rates gradual increase policy, a policy to gradually increase interest rates which no doubt will be introduced here at some stage this year. If one looks back at the increases of November and December all they did was wind the market and after seven months of erratic breathing it would appear that the stride of confidence is set to re-appear. This is even better defined when one looks at the subject of housing affordability which has been described as “being at its worst ever level”. It is as clear as day that the only thing that has the power to tame our property market, then bring it to its knees, is a recession, where the combination of high rates, unemployment and business mayhem become the volatile cocktail. This could become a reality with the forthcoming election as Mark “Achey Breaky” Latham rolls out his Big Band !!

What the housing affordability debate identified is that the figures applied, are in the wrong time frame as the 1994 – 2004 comparison is fraught with danger. What was not identified was that in 1994 we were in the first stages of climbing back out of the “recession we had to have”, and the property market was still very fragile, as many were curious to see if it would fall further. Back then we sold a home in Tivoli Street for $1,375,000. It has since been renovated and today would be worth around $5,000,000. A home in Superba Parade was sold for $1,780,000 which was $280,000 above reserve. This auction was the subject of much debate as the property voyeurs debated that the market was on the road to recovery. We sold a home in Wolseley Road for $629,000 which today would be worth approximately $4,000,000. An apartment in Ben Boyd Road sold for $185,000 which today would fetch around $585,000. In 2004, our economy is totally different to that of 1994. I bet the ‘Multi Millionaires’ at the Macquarie Bank Factory, were not celebrating a record profit of $494 million back then.

The market that is totally confusing is the apartment market, given that in the past ten days we have negotiated the sale of ten apartments. This is amazing as we will move the stock levels down from twenty seven to seventeen properties. It is the first time ever, that we have moved such a quantity of real estate in such a short period of time.

It is that time of the year for me to take a break, so I am off to look at housing affordability in Bali !! So, for the next couple of weeks we are handing over ‘VRN’ today, to our latest recruit, Geoff Grist, who is the author of the successful book ‘500 Award Winning Small Business Secrets’. Even so, I still made him read this (kindly forwarded to me by a subscriber) Geoff Please Read Cheers and clink – Bali Hiiiiiiiiiiiii !!

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