While first home buyers and investors look likely to remain active in the months ahead, agents are expecting a relatively subdued December, new research has found.
Just over 40 per cent of the 164 respondents to the latest Real Estate Business straw poll expect business to decrease in December, while 31.1 per cent believe business levels will remain the same.
While December is normally one of the quieter months for agents, some industry professionals see positives in some buyer segments, in particular the first home buyer and investor markets.
Simon McGrath, principal of Abel McGrath Property Group in Claremont WA, said properties priced in excess of $2 million have performed poorly in recent months, however the $600,000 to $1.2 million market remains very active.
“Anything past the $2 million mark has been very slow and considering this is our main source of business, I’d estimate that our volumes are down 20 – 30 per cent when compared to last year,” Mr McGrath told Real Estate Business.
“But I have seen significant activity in the low to middle market, particularly in Kardinya [17km south of Perth] where I sold a property in the first two days of listing the home.”
“The Western Australia market is fascinating, the economy is awash with money, employment is high, interest rates are heading south and property prices are at their lowest levels in four years … but there is just no confidence out there.”
These comments were largely echoed by Raine & Horne chief executive Angus Raine last week. He said investors would likely re-enter the property market next year, buoyed by low vacancy rates, possible interest rate cuts and a shaky share market.
“We don’t expect an investor stampede in 2012, rather it will be more like a slow increase as savvy investors look for quality, well-located properties with long term growth and income prospects,” he said.
“We expect that investment activity will start in inner ring suburbs such as Bondi, Newtown and Neutral Bay in Sydney, as well as New Farm in Brisbane, and North Perth in the WA capital – and gradually spread to middle ring suburbs later in the year.”
LJ Hooker CEO Janusz Hooker told Peter Switzer on the SKY News Business channel yesterday that well-priced properties continue to sell, even in flat markets like the Gold Coast.
Mr Hooker also remained optimistic about the Australian property market in general, pointing to the limited supply of property, wage growth and a relatively strong economy as the reason for his positive outlook.
“Real estate has been a consistent performer,” he said, highlighting its resilience through the GFC as evidence of this.
“You’ve seen what the RBA did a few weeks ago [cutting interest rates], we’ve already seen consumer confidence boost up.
“Just last weekend, through all our open home inspections we had 10 per cent increase in enquiries. Consumer confidence is going to lead property prices to stabilize.”
But while many industry pundits are pegging 2012 as the year of the investor, this does not appear to be the case in South Australia, where mum and dad upgraders are driving activity forward.
“We are really struggling with first home buyers at the moment, as they don’t have the confidence to enter the market, but we are seeing strong activity in the second and third time buyer segment,” Scott Ellis, licensee of LJ Hooker Aberfoyle Park, said.
“Activity is strong in the $450,000 to $550,000 price bracket, and we are expecting this strong movement to continue over December.”
The LJ Hooker office, located 23km from Adelaide, is reporting similar results to Sandra Berry Real Estate, which deals with rural and semi-rural properties in Hahndorf SA.
“Two months ago we were receiving approximately 20 enquiries a week. That has doubled in recent weeks and I expect this trend to continue in December,” Sandra Berry, director of Sandra Berry Real Estate, said.
“Upgraders are particularly strong at the moment. Most of our activity is made up of mum and dads looking to move into a bigger home. First home buyers are definitely quiet and I don’t really see this changing anytime soon.
"There are a lot of people out there looking to buy, they are just not sure where to buy and how to buy.”