IF THE PRICE IS RIGHT!

IF THE PRICE IS RIGHT!

Aside from proving the obvious, it is amazing how much attention was given to the property market for the September quarter, especially just one month away from Christmas Day. If you have been observing the market, you would have realised that gradually, the property choir would start singing in tune and that is exactly what happened. Yes, the highest number of house sales were recorded since the previous peak in September 2003 and a 25 per cent increase on the same quarter in 2004.

The fact is, that for our markets, the December quarter will prove to be even stronger than the September quarter. The problem is, that you won’t be told officially until early next year, by which time most will say “who cares”!

This week we exchanged $22,240,000 worth of property and we have quite a few more pending, which is proof that the market is back trading with serious attitude. No longer available, a mystery property in Seaforth, Lavoni Street Balmoral, Armstrong Street Cammeray, Plunkett Road Balmoral, Glenferrie Avenue Cremorne Point, Lodge Road Cremorne, 6/82 Avenue Road Mosman and 7/45 Wolseley Road Balmoral.

It is not a matter of whether or not the property markets have bottomed out, it is more about adjusting the values to suit current market conditions which are based on buyer demand. Fortunately, we can rely on our market telltales such as Internet traffic, telephone enquiries, inspection numbers and market intelligence, to assist us. While many blame the market performance on a lack of sales, the one common denominator that often goes unchecked is simply that of price. Presently we are seeing across the market, price reductions as great as $500,000 as vendors try to meet the market in a last ditch effort to secure a sale before market closure in 2005. While most would say that $500,000 is a significant reduction, if the truth be known it was overpriced by $500,000 in the first place. Next year when 2005 homes that failed to sell are re-branded and back in the market place, we can expect the same old adjudication system, when the previous asking price will be compared to the sale price. Then we hear, “my goodness, that is a thirty per cent price fall when compared to what they wanted in 2005”. It isn’t difficult to make a mountain out of a molehill – just add dirt !!

The property market has always been fickle because it can change overnight. This more often than not can be confusing as it allows a short term market perspective to cloud a long term view. As long as businesses continue to post profits, the property future looks bright, although yet again we need to come to terms with the reality that at the top-end we will continue to experience volume declines. These days, many take a view that these properties are their superannuation policy given that they are tax free investments. This has been clearly identified over recent years when you look at who has been buying the top-end properties. Another clue is that if you take a look at a few recent sales at the top end, some had been on the market for a considerable time. This then could cause one to draw a conclusion that prices are set to re-ignite in 2006, although we are suggesting a flame, not an inferno. The property flame has continued to burn despite a serious number of attempts to blow it out. Next year will also see a continuation of the greatest run we have ever witnessed with our property market celebrating ten great years. Who would have ever thought!! With good news there also comes bad news. We will continue to see the volumes decline given that most who have purchased have no intention of selling for quite some time. Given that Mosman has just 4,900 homes to trade with, we can expect the number of sales next year to hit (maybe) 275, if we are lucky. That is down 200 on what we had ten years before when the market posted 495 sales.

With decreasing volume we can be assured that property values will increase marginally in the first quarter of 2006. When home owners go to bed at night, they are not thinking, what is my property worth today? What it was worth in a quarter that finished a couple of months ago has little or no bearing on what is happening in the property market this weekend. Cheers ^__^

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