Lucky they’ve got the government

Real estate agent watching is becoming a bit of a sport in Queensland. As the market turns the level of desperation is slowly rising. I get quite a few e-mails from readers informing me of their local agents antics. It may surprise you just how much your local agent knows about macroeconomics, microeconomics, forex markets, gold prices, equities and/or chinese astrology and is willing to impart this wisdom on you just so you are aware the housing market can never fall in value.

I usually don’t bother posting about these anymore, there are plenty of other sites around where people discuss this sort of thing. But once in a while one comes along that is so amusing I just have to share it.

Here is the first section of a real estate newsletter from a reader from an area in South Brisbane.

NEWSLETTER FOR SATURDAY APRIL 9TH 2011

Hello Everyone

Continuing on last weeks subject of confusing data in the Real Estate World and how it may affect you, this week I would like to comment on current media reports that the market is falling and we are overdue for a major price correction.

The first point to establish is just what exactly is the “market”.

Don’t forget that that the Australian real estate market actually comprises many different markets. The media uses national figures to get an idea of what’s happening nationally, but remember, if you are in Carindale or Wakerley, and you are buying or selling, then you must consider only what is happening in your local market, because that is all that is relevant to your situation.

In Brisbane for example some suburbs (such as those recently flood affected) are particularly slow at the present whilst other suburbs (such as Carindale and Wakerley) are in high demand and prices are holding well.

Platinum Private is happy to report that in both Carindale and Wakerley, buyers far outweigh sellers, attendance at Open Homes is above average, and sales are being made regularly.

More confusion exists when a prospective buyer sees a property advertised for sale at a certain price say $1,200,000 and within a few weeks sees the same property sold at a much lower figure – say $840,000. Again this situation does not necessarily mean the market is falling. This type of repricing can occur when an inexperienced agent overvalues the property to begin with, or when an out of area agent “Buys” the listing by intentionally overvaluing the property. In both cases a complete lack of interest by prospective buyers forces the property to fall in price back to its correct market price.

One important fact that a property investor should never lose sight of is that property investment is a proven long term investment – residential property values have risen across Queensland by over 10% per year over the last 10 years.

If you keep putting off buying because you read in the media “the market is about to fall” – the danger is you will end up NOT buying – and as the figures in the previous paragraph prove – that could be a very expensive mistake in the longer term.

FEATURE PROPERTY OF THE WEEK

5 Chelsea Court, Carindale $795,000+

Now just keep that bold text in mind as you read the original listing price  for the feature property of the week.

Luckily Admiral swan is providing even more tax payer support to this industry because they really aren’t doing themselves any favours.

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Comments

  1. Platinum Private? sounds like a good name for a brothel. Maybe the real estate office can double as one when times get really tough.

  2. It’s not just Queensland, in Sorrento WA
    two homes, both large 4 bed 2 bath with double lock-up garages just sold for low $700,000. Both homes where on the market for over 6 mths and were listed for mid $900,000.(a realistic price a year ago) The real-estate market in WA is well and truly “on the skids”

  3. The market is shot. Its sliding every weekend. Id hate to be an agent, Id hate to be a vendor even more.

  4. A 30 sec search on http://www.refindhouseprices.com indicates that 47 of 155 homes on sale in Carindale are currently reduced in price.

    Some significantly too – $20K, 40K, 42K etc. So given I am “considering only what is happening in your local market, because that is all that is relevant to your situation” – the market still looks very unappetizing.

    Wakerley is a similar story 33/153 homes discounted.

  5. I had the same “it’s different here” nonsense yesterday from an agent in Far North Qld, who scolded me thusly:

    “Your assessment of the market does not bear scrutiny as we see it here in our area. Your references to financial commentators like The Economist, the IMF and Jeremy Grantham – they often refer to the markets of the cities and major coastal areas. Ask them where the Atherton Tablelands is? As I’ve mentioned before, at the time of the boom, 2006 +, despite cyclones and the wet, the market might have slowed but prices held. Because back in the boom to buy here, a buyer had to have security or a decent deposit due to the zoning and mortgagee insurance risk rating. Prices have dropped to meet the GFC but it’s been slower due to the fact that banks are not foreclosing on owners here. I could bet that 99% of the mortgagee sales/auctions are a divorce case and one of the 2 have stopped paying the bills. We have had a very good sale rate for March, April is looking good. Yes buyers are looking and evaluating, but those that have hesitated to make an offer are still looking while someone has moved into the one they thought was theirs.”

    Did anyone spot the “buy now or miss out forever” in the last line?

  6. Exactly! Homes4Aussies ( and Kiwis too…). I don’t think I’ve been into any branch of any Real Estate firm, where even the office cat didn’t have an ‘investment portfolio’. Having or acquiring ones own portfolio must be a pre-requisit of being an ‘real’ agent.

  7. I received this little peice of propaganda from an agency at Toowong:


    Dear _____
    Leave the herd and profit from a buyers’ market

    Terry Ryder, The Australian | 2nd April 2011

    They say death and taxes are the only two things we can be sure about. Here’s the third thing.

    We can be certain most Australian property consumers will do the opposite of common sense.

    The regularity with which buyers and sellers thumb their noses at logical behaviour is the reason we have market cycles.

    Peaks and troughs happen because people flock to buy when sensible folk would stay away, then retreat in droves when the buying is good.

    Sellers, meanwhile, sit tight when buyers are active (possibly awaiting some mystical signal for the optimum time to sell), then rush to sell after the excitement has died.

    This is why so many Australians dream of real estate wealth but few achieve it.

    Only 13 per cent of taxpayers own investment properties.

    Nobody ever became rich by following the pack but property consumers have strong herd instincts.

    Heres some evidence.

    There are at present more homes for sale across Australia than at any time in the past two years.

    According to SQM Research, there are about 340,000 houses and units for sale. You have to go back to March 2009 to find the last time there were more.

    At the same time RP Data tells us there are fewer buyers, with home sales levels dropping 20 per cent last year.

    Housing finance for owner-occupiers is down 20.5 per cent compared with a year ago (although loans for investors are up slightly) and median price growth in most capital cities has evaporated.

    What do the elements of this equation add up to? They equate to a buyers market.

    No sensible property owner wants to sell into a buyers&#8217 market, but hundreds of thousands are trying to do so right now.

    That&#8217s great for buyers. Smart investors get active when a buyers&#8217 market comes along, but buyers have gone missing, and myriad wonderful buying opportunities are going begging.

    The number of sale properties in Melbourne is the highest for any time in the past three years, and 50 per cent higher than the same time last year.

    This is odd because a year ago the Melbourne market was hot.

    So there were relatively few people wanting to sell when buyers were going ballistic.

    But now, with the market flat, more and more people want to sell.

    Based on the SQM Research data, the number of Melbourne properties for sale has grown steadily since the start of 2010.

    In other words, the quieter the Melbourne market became, the more property owners wanted to sell.

    Does that make sense to anyone?

    In Canberra you have to go back to late 2008 to find the last time there were so many homes for sale there.

    It&#8217s the same in Adelaide.

    Darwin has the same bizarre contradiction as Melbourne. There are more homes for sale now than at any time since July 2008.

    The number of properties on the market has grown steadily since the start of 2010.

    During this same period, the previously hot Darwin market has become cooler and cooler. Once again, most sellers stayed out of the market until the boom was over.

    Its like living in a parallel universe, where everything is the opposite of what youd expect.

    US billionaire Warren Buffett, one of the worlds most successful investors, says we should profit from folly, rather than participate in it.

    Australian investors willing to detach from the herd and act independently can profit from exploiting the buyers market.”

  8. Devilled Advocate

    Hmmm – does anyone expect them to say anything different.

    Vested interests anyone – they should at least be honest and gear for the downshift after all they make money on the way up and way down and they have had it very very good for a long long time.

    I think the next few years will really sort out the charlatans from the savvy operators. I have seen circa 20% reductions in a two blue chip suburbs we are looking at buying a family home in and when you are talking low to mid 7 figures its a very substantial incentive to sit on your hands.

    I for one love to hear the crickets when they call for bids….

    Interesting times ahead!

    DA

  9. in one breath the author says that there is no ‘market’ it is made up of many smaller markets; then in the next breath he says that “residential property values have risen across Queensland by over 10% per year over the last 10 years”

    well which one is it… is there a general market or several smaller markets ???

  10. Is there any chance that, following a precipitous decline in the property market, people actually start asking questions about what they were told by real estate agents, and the authorities actually think about addressing the fact that they can peddle whatever unsubstantiated tosh they wish without fear of repercussion? Bring on the law suits “but the agent told me property was a great investment”…