Quarterly Property Market Update – June 2012

Based on The Age Sunday Results*

Property Sales Remain Fair To Good – A Buyer’s Sorry Story

The second quarter of this calender year has seen a continuation of the improved success rate at auction sales across Melbourne. Those buyers waiting for a collapse of prices may be disappointed. What 2012 has produced so far, with few exceptions, is a success rate that has remained over 60%… higher than some may have hoped.This is a considerable improvement on the second half of 2011.

Making accurate predictions combined with timing can be a challenge and has the capacity to make us look a little incompetent when we get it wrong… During thirty-five years in real estate I have had many expectations of “where the market is going”. Looking back, these judgements have been as often wrong as right (which sadly, statistcally, my dog could manage with similar accuracy … scary!) … I persist nonetheless in having them by the way.

In relation to picking the market, the best approach may be not to wait for something that never comes, but rather, just do it – if the timing is right for you. The negative impact of mis-judging a market is illustrated in a true story of one property buyer’s decision some years back … No doubt this has been repeated by others at different times.

A prospective future home buyer contacted me back in the late ’90’s. The enquirer had just sold her property because the market had risen strongly up to that point. The firm belief was that by selling now, she would be able to “buy back in” the next year, at much lower levels. This was the only reason for the sale. I was not sure if I agreed with the strategy, but the logic was easy to see. What happened subsequently is history… The market moved strongly upwards for the next several years; it never went lower as the hopeful client had anticipated. Although there was no contact again with that buyer, I am sure there must have been much anguish over those actions. A telling example of wrong opinion and timing.

To Buy Or Not To Buy

Mortgage rates are as low as ever and they may get lower still. Buyers should consider there is a real possibility that very low interest rates may keep the property market bubbling along for some years to come. Prices may even rise again. Those sitting it out for a price “collapse” could have a long wait; and a long wait also to fulfil their home buying dream – at historically low interest rates. The future direction of markets is never certain. No-one knows.

To buy now or wait (for ???) is what some home buyers are wondering… Surrounded by the clutter of market commentary, adding to uncertainty, this cannot help buyers with their decision. (It does however help to make the market much better to buy in!!)

“IS THIS THE RIGHT TIME FOR YOU TO BUY?” … This is the most meaningful question -now, or at any time… For the following unrivalled reasons:

Home buying is a long term, sound financial decision; providing your own place to live, and with it, the safety and security that goes with home ownership. It is the most important security decision a person will ever make.

Transit of Venus 6th June 2012 Photo taken at 2.24pm by Bruce Renowden