Tips for selling your house

In the current tough economic crisis, the idea of speculating to accumulate (spending money to make money) is a prospect that many property sellers may find difficult, particularly those who are carefully watching the purse strings.

However, experience shows us that by focusing on some key improvements to your home, you can make up to $3 for every $1 outlaid, and sell your home in less time and with less stress.

Different categories of buyers can be spooked by a variety of perceived problems with the property – and a glossy brochure and professional photos can’t cover over damage to the walls or a garden that has turned to wilderness.

Pick your target market and spend wisely. You’ll see the returns.

First-Home Buyers

First-home buyers love that “brand-new” feeling, and when they fall in love with a property, they can become competitive enough to drive the price up significantly.

However, they are easily scared off by cosmetic damage, which can cause irreversible heartbreak in their romantic adventure.

If your property appeals to this market, fix any cracks in the ceiling, dripping taps in the bathroom and rust stains on the kitchen bench.

You may know that the ceiling damage is only cosmetic and not symptomatic of any structural problems, but it can enough to kill the love affair.

First-home buyers don’t require a glamorous renovation, but something clean, neat and functional.

Spending a little money on replacing light switches, power point covers and door handles can modernise the look of the property, which may be enough to secure the First-Home Buyers’ passion, and their desire to bid up on the sale.

Secure haven for families

Families with children are looking for comfort, safety and security. Renovations may be considered further down the track, but for the moment, the family wants to settle in to a comfortable home.

If you target this market, make sure the home has a fence to protect wandering toddlers from the street and install locks on gates.

Create open spaces within the home where the family can gather comfortably.

Borrow or hire a good quality swing set for the yard, include an outdoor dining table, and your buyers will be salivating over the prospect of backyard barbecues with the family in no time.

Easy life for empty-nesters

Couples in their advancing years are looking to downsize, and live in a secure and low-maintenance home.

They require plenty of storage for their lifetime of possessions, and possibly a spare room for the grandkids to stay over.

Ground-floor properties are particularly sought after, but they must not have high maintenance requirements.

Hedges that need regular pruning, expansive lawns and garden beds are going to be a turn-off for this group. Likewise, elaborate light fittings and cornices that attract dust and cobwebs are going to produce more work for couples in their twilight years.

Best to go simple and minimal with your makeover, to reduce the upkeep.

UK Housing markey shows signs of upturn

According to a recent survey commissioned by the Home Builders Federation, the housing market is showing the first signs of an upturn since 2006.

The HBF’s survey of the UK’s major home builders found sixty percent of those asked had seen an increase in sales when compared to the same period last year.

The Home Builders Federation says the industry has been through the economic equivalent of a tsunami, with an estimated quarter of a million construction jobs lost in the last 12 months. The MBF goes on to say that the biggest obstacle to recovery is now the availability of mortgages or lack of.

Chancellor Alistair Darling is to meet with the banks next week to remind them of their legally-binding obligation to lend more money to homebuyers.

Steve Turner, spokesman for the HBF, said the survey results were a welcome boost.

“It’s been a very difficult year, but what we are starting to see is a consistent set of modest but positive results now in terms of visitor levels, in terms of reservations.

“I think for the first time in a number of months the industry is starting to feel more positive.”

However, experts were warning that the industry was still fragile because although new home sales had increased, they were at an extremely low level last year.

Newhome loan applications at 16 month high

NEW home-loan applications soared to a 16-month high of 63,855 in May, but analysts warn the housing bubble will burst when lucrative government grants to first-home buyers are cut this year.

The average loan has risen 9.6 per cent in the past year to $266,900 on the back of soaring consumer confidence.

Owner-occupiers borrowed $17 billion, the highest monthly amount in 26 years, and a record level of first-home buyers accounted for more than 29 per cent of home loans.

Loans for new construction rose 8 per cent to 6334 – the highest level in seven years and 50 per cent higher than in December.

Erin Ronaldsen, residential research manager at real estate agency CBRE, said first-home buyers had helped prop up the market.

“In all likelihood the withdrawal of the first-home owners grant boost at the end of December, and state-based measures in July 2010, will have a dampening effect on the sub-$500,000 market,” she said.

“We expect falls could reach 10 per cent from the peak in some areas, depending on local market conditions.”

She said Victorian first-home buyers were getting better value than the national average.

The average value of the loan taken out by Australian first-home buyers has risen $20,400 since the introduction of the boost in October, but Victorian loans have risen an average $10,800.

CommSec economist Savanth Sebastian said almost 20,000 first-home buyers took out loans in May and banks were the big winners from the lending boom, writing almost 92 per cent of all loans.

“Consumer sentiment is well and truly out of the doldrums. The combination of rate cuts, fiscal stimulus and the perception that the worst is behind us has seen a substantial shift by consumers to being more optimistic about the future.”

But it all came back to job security, he said.

“With unemployment expected to rise in the next year, sentiment is likely to retreat from this exuberant level.”

Housing Industry Association senior economist Ben Phillips said the number of loans for new dwellings had risen for nine consecutive months, and he pointed to a modest recovery emerging for residential construction.

Melbourne house prices predicted to rise nearly 20% over next 3 years

AUSTRALIAN house prices will rise by nearly 20 per cent over the next three years, buoyed by the “current heat” in the market surrounding first home buyers.

A recent forecast from research house BIS Shrapnel’s Residential Property Prospects report – based on data from the Real Estate Institute, predicts that Melbourne house prices will rise by nearly 20 per cent over the next three years, buoyed by the “current heat” in the market surrounding first home buyers.

Angie Zigomanis said activity in the lower end of the market – buoyed by the boost to the first home owners grant and low interest rates – were generating “green shoots” of recovery.

The report says average house prices in most capital cities will grow by between 11 and 19 per cent over the next three years. In real terms (where prices are adjusted for inflation) the level of percentage growth is about half.

Mr Zigomanis, who said actual prices were more indicative than prices adjusted for inflation, predicts the boost to the first home owners grant combined with low interest rates would kick start further activity in the “upgrading” market.

“If the first home buyers are in the market buying, someone is selling it to them,” he said.

“We’re expecting that increased first home buyers activity to lead through to stronger upgrading demand for people upgrading to their next property,” he said.

Mr Zigomanis said once the (boost to the) first home owners grant expires, and first home buyers drop back out of the market, there’s enough activity in the market so it becomes self-sustaining.

The boost to the first home owners grant will finish at the end of this year.

But the research, based on Real Estate Institute data, said house prices would remain relatively stagnant until unemployment peaked around June 2010.

“Everything’s pointed at people jumping in the market”.

“At the moment we’re dealing with a confidence issue,” he said.

Weak economic growth and rising unemployment meant Australians were hesitant to jump into the market, he said.

The Government forecast in its May Budget that unemployment will rise to 8.5 per cent by mid-2011, leaving one million Australians out of work.

BIS Shrapnel predicts unemployment to peak “somewhere between 7 and 8 per cent” mid next year.

Mr Zigomanis said unemployment would impact house prices “more so from a confidence perspective”.

“Those people who have the means to buy property, and still have a job to buy property, they may be concerned about their employment outlook,” he said.

Melbourne Prediction:

• Median house price $425,000 in June 2009-06-12
• A fall of 6 per cent for the financial year
• Pick up in “upgrader” activity expected
• Nearly 20 per cent increase in prices to 2012

Australian home sales climb to thirteen month high

New home sales rose to their highest level in 13 months in March, as the first-home buyers grant buoyed demand.

Total new home sales rose by 4.2% last month to 8210, accelerating from the 3.9% growth pace in February, according to the Housing Industry Association. The increase marked the third month of gains.

”It is clear that in the first quarter of 2009 the project home building market was buoyed by the First Home Owners Boost for new dwellings together with very low variable mortgage rates,” said HIA Chief Economist Dr Harley Dale in a statement.

”The First-Home Owners Boost for new dwellings is clearly lifting residential building activity and securing jobs within the Australian economy,” he said, calling for an extension of the program past its June 30 cut-off.

Federal Government leaders, including Prime Minister Kevin Rudd, have hinted they intend to scale back incentives for first-home buyers, announced as part of the first round of stimulus spending aimed at reversing the economic slump. The current grant rises to as much as $21,000 if the purchase is for a newly built residence.

Among the states, detached home sales jumped 4.1% in March, led by New South Wales, where they increased 15.2%.

”While the rate of growth in sales reflects to an extent the low base from which a recovery is emerging,” the HIA report said, ”there is no doubt that the previously mentioned triple boost from low interest rates, stimulus to first-home buyers, and builder discounts have injected some life into a previously moribund new home building market, especially in Sydney.”

Sales of detached houses also jumped 14.6% in Victoria and 7.3% in Western Australia, the HIA said.

Low interest rates and the first-home owners’ boost are having a targetted effect, spurring house sales but leaving multi-unit sales ”at very weak levels,” the HIA said.

Sales of apartments rose 4.7% in March, following a flat February and four straight months of falls, HIA said.

”This reinforces the fact that while investor enquiries have increased in recent months, actual building activity in the residential investment space is still heading south, a concerning sign for low and lower middle income rental households.”

Australian interest rate remains unchanged

The Reserve Bank of Australia held it’s monthly meeting today and decided to freeze interest rates, leaving the official cash rate unchanged at 3.00%.

The RBA said confidence remained fragile but there were some signs economies around the world were stabilising.

RBA governor Glenn Stevens said Australia’s economy was poised to benefit from the significant cuts to interest rates made so far, combined with the Federal Government’s fiscal stimulus. “Market and mortgage rates are at very low levels by historical standards and business loan rates are below average, reducing debt-servicing burdens considerably,” he said.

“Much of the effect of these changes is yet to be observed. “The stance of monetary policy, together with the substantial fiscal initiatives, will provide significant support to domestic demand over the period ahead.”

Domain spokesman, Anthony Ishac commented, “The official cash rate remains unchanged at the current level in response to signs of a stabilising world economy. However, the RBA remains vigilant, maintaining enough scope on rates to manoeuvre in anticipation of forecast rising unemployment later in the year. Any future action will also need to factor the reluctance of the major banks to pass on rate cuts in full to mortgage holders”.

Most economists had not expected interest rates to come down again.

“In pondering the cash rate level … the RBA board will likely be persuaded by both international and local developments since the April decision to leave the cash rate unchanged,” said HSBC chief economist John Edwards yesterday.

“The downturn in China has been arrested. In a number of other major economies, including the US and Japan, the rate of deterioration is slowing.”

Earlier today, building approvals posted a stronger-than-expected 3.5 per cent jump for March above the market expectations of a 2.3 per cent rise.

Economists said the building sector could be recovering.

“It had been expected for some time that the tight rental market, low interest rates and soaring population growth would translate to stronger building activity, and it now appears to be taking hold albeit from a very depressed level,” said Commsec chief economist Craig James.

“It is important to remember that it does take awhile to for approvals to follow the improvement in economic conditions.”

US mortgage rates lowest in nearly 40 years

Long-term mortgage rates this week reached the lowest level since at least 1970, falling for the third consecutive week.

Freddie Mac’s weekly rate report said the average 30-year, fixed-rate mortgage fell to 4.78 percent, matching a low set April 7. It is the lowest rate on such mortgages since Freddie Mac started keeping track in 1970.

Adjustable-rate mortgages also eased, but one-year, adjustable-rate mortgages are averaging rates nearly the same as 30-year fixed rates, at 4.77 percent.

Freddie Mac said borrowers who refinanced their mortgages in the first quarter reduced their combined mortgage payments by about $2.5 billion over the coming year.

UK housing recovery? maybe not

In March, the number of homes sold in the UK jumped by 40% from the previous month, (according to figures from HM Revenue & Customs). There were 60,000 property sales worth at least £40,000 each, compared with 43,000 in February. The figures seemed to indicate that the slump in home sales seen in the past 18 months may have been coming to an end. Even when the figures were adjusted for seasonal trends, they still showed a rise from 54,000 to 61,000, a jump of 13%.

However, come April and it was back to bad news. In April, UK House prices fell by 0.4%, reversing some of the rise seen in March, (according to data supplied by the the Nationwide).

The Nationwide’s figures show that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago. The price of the average property in the UK was £151,861 in April.

Figures from the Land Registry relating to March, also published on Thursday, showed different price shifts in different parts of England and Wales. The figures suggested typical property prices rose by 1.8% in the North East of England in March compared with February, but fell by 2% in the same period in the West Midlands.

The Nationwides’s Figures showed that prices fell 3.1% in the quarter to the end of April, compared with the previous quarter.

This was less of a decline than than the 4.1% fall, using the same measure, seen a month ago.

The building society surprised many homeowners last month when it announced that prices rose by 0.9% in March compared with February.

But it warned at the time against reading too much into the change, saying that it was not a sign that the market had turned.

In a speech a week ago, Matthew Wyles, chairman of the Council of Mortgage Lenders (CML), said that the mortgage market remained “highly dysfunctional” and that 2009 would be a tough year.

Melbourne real estate in a flux

Recent data from the Real Estate Institute of Victoria (REIV) reveals that residential property in the more affordable Melbourne suburbs are appreciating faster than those in traditionally affluent areas such as Toorak, Canterbury and Camberwell.

The REIV’s quarterly house price figures show that fifteen of Melbourne’s “top 20″ growth suburbs for the first three months of the year had a median price below $500,000.

Real estate industry executives say this is because of falling interest rates and first home buyers’ grants.

Suburbs with the fastest growing prices included Mount Martha, up 16.3 per cent to $500,000, Keysborough, up 12.9 per cent to $390,000, Epping, up 8.1 per cent to $303,000, and Boronia up 6.9 per cent to $355,000.

However, the overall Melbourne median house price fell 3.1 per cent to $410,000.

Prices for the cheapest 25 per cent of houses also fell, down 1.4 per cent, while the most expensive 5 per cent of houses dived 12.9 per cent.

That compares with data yesterday from rival analyst RP Data-Rismark, which is used by the Australian Stock Exchange, and which showed Melbourne houses rose 2.4 per cent to $426,423.

REIV chief executive Enzo Raimondo said the institute collected its data directly, and the results reflected about three-quarters of total sales.

He said the figures showed that while the first home buyers’ boost was clearly working to stimulate activity, it was not dramatically inflating prices, as some industry commentators had suggested.

“Everybody’s saying that the first home owners’ grant is pushing up prices but I think what’s happened is it’s helped activity, not necessarily driven prices up,” he said. “Growth actually slowed in all the parts of the market, whereas last time it was only the top.”

The number of transactions in the first three months of this year was about the same as in the December quarter, at just over 12,000 — even though January is traditionally very quite in real estate because of school holidays.

He said the financial crisis meant people were reluctant to sell their homes and stock levels were extremely low compared with the 2007 real estate boom.

Mr Raimondo said stock levels and transactions could drop further if governments removed their first home owners’ boosts as suggested after June 30.

The Federal Government has doubled its grants to $14,000 for existing homes and tripled them to $21,000 for new homes, while the State Government is offering $3000 for existing homes or $5000 for new homes.

However, Prime Minister Kevin Rudd last week suggested the boosts would expire as planned on June 30. Developers are calling for the boosts for new homes to stay, arguing that it is better to direct money towards construction than to owners of existing homes.

But Mr Raimondo said the removal of grants for new and existing homes would mean a drop in economic activity and employment.

“It’s going to affect transaction numbers, it’s going to affect competition, it’s going to affect how many people are going to be employed in real estate after June,” he said.

Australian Housing Market Outlook

John Symond, gives his views on the state of the Australian Residential property market. He discusses the future of the first home owner grant and talks about why the big 4 banks are justified in not passing on the latest interest rate cut in full.

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About Me

Kate Williams has extensive experience working in property valuation and property rental in the UK and Australia over a 10 year period. Kate is now the Managing Director of a Melbourne based Relocation company which initially finds short term fully furnished rental accommodation for new arrivals to the city.

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