State of the market
 
 
 
While markets remain soft, investors with market knowledge, a holistic buying strategy and strong support can realise good results.
 
 
 
In the past few months, transaction volumes in the real estate market have slipped to 20 per cent below long-term averages.
 
Why? It’s simple, according to RP Data’s research director, Tim Lawless.
 
According to Mr Lawless, Australians now prefer to save their dollars rather than spending them on property.
 
“Consumers are well and truly focused on saving, not spending,” he says. “Despite the low rate of unemployment and the strength of the resources sector, it is clear that the average Australian is content to pay down debt and wait for some economic security to return.”
 
Saving, it seems, is popular again for Australians.
 
But what impact will this have on property prices? A negative one if you look at RP Data’s latest Home Value Index.
 
According to the index, capital city home values have fallen each month for the past five months.
 
In the three months to May 2011, dwelling values in Australia’s capital cities fell 1.2 per cent, seasonally adjusted. In raw terms, dwelling values fell 1.3 per cent.
 
In addition, in the 12 months to the end of May, Australian capital city dwelling values fell by 2.3 per cent.
 
Perth and Brisbane recorded the greatest price slumps of the capital cities, with values falling 7.5 per cent and 5.9 per cent respectively.
 
But while the drop in Brisbane was widely anticipated, the fall in Perth prices was surprising given the state’s strong fundamentals.
 
“For a city that is recording rapid population growth, low unemployment and a large private capex boom, house prices have nevertheless been contracting since late 2007 after years of above-average capital growth in the pre-GFC period,” he says.
 
“Today, the critical piece of the puzzle seems to be buyer demand.”
 
But Perth is not the only capital city in this type of situation.
 
In each of the capitals, auction clearance rates are now 30 per cent below their 2008 averages, and listings are 25 per cent higher than in 2010.
 
Of course, the news isn’t all grim – especially for astute property investors.
 
There’s little doubt that we’re firmly in a buyer’s market. With sellers currently outweighing buyers in many locations, buyers are well positioned to negotiate on price or seek more favourable settlement terms.
 
In addition, with more stock on the market purchasers are better able to identify properties that meet their buying goals and aspirations.
 
George Obank Pty Ltd As Trustee for The Obank Family Trust T/A Citrus Finance is a credit Representative (Credit Representative No. 397552) of BLSSA Pty Ltd (Australian Credit Licence Number 391237)