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Archive for February, 2012

Posted by Rob Honeycombe on 22 February 2012

When it comes to predictions on home price booms or busts we admit to taking little notice. In our experience there’s a huge number of influences on what home buyers will pay and what sellers will be prepared to accept. The general ‘mood’ of the market right now suggests prices in Brisbane’s inner-city are flat and not moving much in either direction.

Not many sellers have guns at their heads and there’s solid buyer enquiry for most types of property (definitely busier than most of 2011) = limited downward pressure on price.

Investors are back in the market but are ‘scavenging’, interest rates are down but may be flattening and while buyers have job confidence they’re still saving their pennies = limited upward pressure on price.

In a recent survey through this newsletter we had 109 of you share your thoughts on Brisbane home prices. A happy 28% said prices have bottomed, the cautious 26% said they’re still going down – and a fence-sitting 46% of you said you couldn’t be sure!

We love a good graph and the Real Estate Institute of Qld produced this one this week. It’s been a rollercoaster few years but it feels like the next couple might be more of a steady locomotive.

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Posted in Brisbane's sales market, trends in Brisbane property | No Comments »

Posted by admin on 21 February 2012

Median rents in Brisbane’s inner city did not go up once during the March quarter of the past 7 years.

It’s been a long-held belief amongst landlords: target the start of each year for your leases to expire and the frenzy of new tenant arrivals will get you the best rents. Over the years we’ve had landlords offer all sorts of deals to make sure their rental homes were on the market in January and February. These are seen as the busy months, the peak time to squeeze the market and achieve maximum rents. And that’s such a widely-held view that we often hear agents repeat it.

But in Brisbane’s inner-city it just doesn’t ring true to us, so we decided to analyze the stats and find out the full story once and for all. And here’s the simple findings: The start of each calendar year is the busiest but it is the worst for rent increases.

We looked back over the past 7 years of bond lodgements with the Residential Tenancies Authority and on average 31% of each year’s tenancies started in the March quarter. It’s busy and probably too busy.

On average rents drop during the March quarter (-1.2%) and the biggest growth actually happens from April to June, which is also the quietest period. The stats showed the June quarter had just 21% of the year’s new tenancy starts and accounted for an average 6.4% rent increase.

So how did we end up with this ‘March quarter myth’? Historically the universities had a huge impact on our inner-city rental market and in St Lucia for example, rents do still have their biggest jump at the start of the year (averaging 5.2% in the 7 year study compared to 2.6% in the June quarters). But Brisbane’s inner city is a much more diverse market today with tenants from all walks of life, all arriving in Brisbane at different times through the year.

There are more tenants out there looking at the start of each year. But there’s also a huge number of available rental homes and the stats show supply has often exceeded demand. Agents’ resources are stretched to the limit and despite the rush of prospective tenants some landlords overshoot the market demand and end up with extended vacancies.

It’s worth talking this one through with your property manager.

Note for the stats lovers: The RTA record the median of rents for all new bonds lodged in each postcode. We looked at the 2 bed apartment sample (by far the largest rental property category) and focused on their “City Inner” data for the 24 suburbs surrounding our CBD.

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Posted in Brisbane landlords, Brisbane's rental market | 1 Comment »

Posted by admin on 18 February 2012

Wondering what went wrong for you this Valentine’s Day? You haven’t bought a home yet!

An American survey has found that singles prefer to date home-owner rather than renters. South Florida Real Estate News reports that in a survey of 1,000 singletons conducted for Trulia.com more than a third of women and 18% of men said they would much rather date a homeowner than someone who rents their apartment.

It gets worse for the tenants unfortunately: Just 2% of women said they preferred to date a man who rents, while only 3% of men said they would choose a woman who rents over one that owns her home.

And then, if there was any doubt the single people of the US are a shallow bunch, the survey asked which features in a home, ummm… pushed their buttons.

“To really turn on the charm, a simple mention that your house has a master-bathroom can do the trick, the data shows. About two thirds of men said they dug a woman with a master-bath , while 75 percent of women said it might be a deal-maker. Walk-in closets are also high in single folks’ lists of desirables.”

Easy to laugh at our American cousins but I’m betting a local survey would get the same result…. Those walk-in closet installers are about to get busy!

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Posted in just for fun! | No Comments »

Posted by Rob Honeycombe on 16 February 2012

Here’s a tip agents forget to tell home buyers. Almost every real estate contract includes a finance clause, designed to protect a buyer in the event their lender won’t come to the party. The most common contract (authored by the Real Estate Institute and the Law Society) asks the buyer to nominate their finance amount, lender of choice and the time needed to confirm an approval.

Most buyers, and plenty of agents, will simply write “sufficient to complete the purchase” for the finance amount. In other words, “however much I think I might need I want the contract conditional on me getting that.”

So when the agent sits in front of their seller client they’re asking them to take the place off the market pending you getting approval for a completely unknown amount.

Maybe you’re only going to borrow 60-70% of the price and the banks will fight for your business. But maybe you have a car loan that needs paying out first and you’d need to be able to borrow 120% of the price. A good agent will ask some discrete questions to get a feel for how likely your approval will be.

You don’t have to hand over your tax return and bank statement to the agent – but if you want your best chance of negotiating a good price it really is in your interests to share a little. Explain who you’ve spoken to, what feedback you’ve had and if you have a pre-approval letter show it to them (even though they’re full of bank backside-coverings they do prove you’re a fair way down the track).

Good negotiating is about overcoming the other sides’ fears. Reduce a seller’s sense of risk and they may just surprise you with their price flexibility. This is a buyers’ market and there is some good buying about. You can make it even better for yourself by adding some detail to your offers.

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Posted in Brisbane's sales market | No Comments »

Posted by admin on 13 February 2012

Often we’re asked to take on the property management of an investment and the owner asks us to collect the file from the current agent immediately. We love helping new clients and are keen as mustard to take on new properties to manage. But there’s one time constraint we have to work with when a landlord is terminating their current agent’s service.

The Property Agents and Motor Dealer’s Act says a property owner and an agent must give eachother a minimum of 30 days notice to part company. Writing in the REIQ’s Journal this month Carter Newell Lawyers’ Paul Hopkins confirms that, ready as an owner might be to get a new agent underway, Section 114(4) of the Act requires that month’s notice.

“It is not possible to contract out of the statutory minimum notification period and any attempt to do so may potentially expose the property manager to formal disciplinary action by the Office of Fair Trading, which may result in severe fines or penalties. ”

“Relevantly, a property manager will continue to be responsible for the property throughout the entire period of the appointment (up to and including the whole of the statutory termination period). This will remain the case, regardless of whether or not the property manager has access to the property. ”

Paul Hopkins also explains that a common industry practice of paying out the agent for their 30 days’ fees is not a way around the 30 day law. “The acceptance of monies for a service which is no longer being provided will expose the property manager to a breach of sections 133 and 139 of the PAMDA, which states that commission may only be claimed in relation to actual amounts collected by the property manager on behalf of the landlord client.”

The requirements of the Act might seem onerous, especially if you’re really unhappy with that agent. But for the time being it’s the law they’re obliged to comply with.

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Posted in Brisbane landlords | No Comments »