Why Is It A Sellers Market?

Looking at the Inner Melbourne real estate market. An extreme shortage of available listings has made this the fastest-moving market of recent years. There is strong competition in the luxury market combined with scarcity. As real estate becomes more scarce in prime areas of our city, it become more and more desirable, and expensive.

Demand is high at all price points in and around a 10km radius of Melbourne. Inventory is low and we are seeing more bidding wars and higher prices per square meter than ever before. Auction clearance rates are over 90% in some inner Melbourne suburbs, that’s 9 out of 10 property’s selling at auction.

Another reason why bidding wars are erupting is due to the rising trend of Chinese investment. The impact of Chinese investment in Australia residential property has become increasingly recognised. You might be thinking why Victoria? Investors are spotting value in Melbourne real estate in comparison to big brother city Sydney. The median house price in Sydney tipped over $1M last year where Melbourne is hovering around $750K.

Population growth is another contributing factor of rising real estate investment. Over the past 12 months, Melbourne has recorded the fastest rate of population growth at 2.1%. Elsewhere, the annual rates of population growth have been recorded at 1.7% in Sydney, 1.6% in Brisbane, 0.9% in Adelaide, 1.6% in Perth, 0.8% in Hobart, 1.9% in Darwin and 1.4% in Canberra.

Mark Ribarsky is the Director of Wise Real EstateAdvice, a buyers agency that services inner Melbourne suggests ‘the real estate market is experiencing a stage in an up and down cycle.’ Property cycles usually run in "seven year cycles" hence is often referred to by property market commentators and refers to the swing in house prices through the phases of boom, bust, bottoming and recovery. Overall, price gains are likely to be constrained and over the long term, given that house price-to-income ratios and debt levels are very high and given we have just seen a period of very strong gains.

Help for First Home Buyers.

If you have bought or sold property you come across a real estate agent. The sales people who are engaged by a seller to help them market and sell their property. But a “buyer′s agent” a person engaged by a buyer to help them find, negotiate and purchase a property whom are engaged by the buyer to secure the best deal possible.

I believe that many property buyers need greater support and professional advice when making a purchasing decision, to ensure they are fully represented in the purchasing process, especially first home buyers with minimal exprience. 

Purchasing a home or investment property is a huge decision and it is most likely going to be the biggest financial decision you ever make, so you cannot afford to get it wrong.  A buyer′s agent can provide you with all the knowledge you need to be able to make an informed decision about a property cutting out real estate agent spin and help you avoid costly mistakes. 

Take the negotiating a property sale for example, it can be a difficult task and requires great skill. Experienced buyers agents are negotiating for their clients constantly so they understand the process and have strategies. Also they are fully aware of the methods used by sales agents. Buyers Agents understand the time demands and the stress when searching for a home or investment, so they help eliminate this as much as possible.”

Some of the main reasons why people have hired Wise Real Estate Advice: 

·       Save time and Money - these days everyone is run off their feet trying to keep up with their busy work, family and social schedule. Many clients simply don’t have the time to do the necessary research to make informed decisions.

·       Property appraisal - we work out what a property is actually worth in today's market. This means no guess work when beginning negotiations.

·       Silent Listings: WRA inspects properties that are not marketed publicly because of our long established selling agent relationships – these are properties that our clients would otherwise never hear about.

·       Strategic property negotiation – We are experienced real estate agents that have sold hundreds of properties, we know how to negotiate the lowest possible price that the vendor will accept. Our clients don't pay any more than they need to.

Mark Ribarsky

Melbourne Real Estate Market Update

Melbourne Real Estate Market Update

Melbourne property market is buzzing, showing strength in all indicators, from open home attendance to auction clearance rates.

Agents report that prices are rising strongly and the market is in favour of sellers in most regions.

A net 76% of agents said they were seeing more people through the doors of their open homes, and a net 43% report sales going unconditional, up from 5% in December.

Surveys shows that auction clearance rates are up in 2016 but the rising number of agents reporting more potential vendors inquiring about appraisals is not expected to generate any increase in supply of homes for sale.

Agents said more investors were looking to purchase but there had been a slight easing in the number of first-home buyers, although it is still at near-record numbers. A net 56% of agents said they thought prices were rising, the second-highest result on record. Buyers were seen as more motivated than sellers.

We welcome your questions and feedback. If you would like to ask a question or leave a comment, please email info@wiserealestateadvice.com.au

Mark Ribarsky

Components Of Investment Return

Most people purchase real estate in hopes of earning wealth from their purchase, just as they would with any other asset.

However, real estate is unique in that it has three components of return:

• appreciation in value
• cash flow
• income tax benefits

Many people lose money due to insufficient research and analysis, as well as through unmitigated risk issues. Do your homework before investing in real estate.

Appreciation in value

Most people buy investment properties with the thought that “it will appreciate in value and I’ll get rich.”

Over long periods of time, say 15 to 25 years, real estate seems to perform well and has earned much wealth for many long-term holders. It’s only realistic to assume a real estate asset will experience at least one market decline over this period.

Be aware, though, that appreciation does not pay the bills. It is better to invest based on cash flows, the next noted component of returns.

Cash flow positive

Do your sums, this means putting conservative estimates of rents and expenses down on paper and making sure that the rents, less all the expenses, leave the owner some cash in the bank. We call these “cash flow positive” properties.

Buying properties with true positive cash flow is the best way to ensure that your investment will add to your wealth. Far too many buyers purchase negative cash flow real estate and take additional monies out of their bank accounts each month, for years, to cover the deficit. That is no way to invest your hard-earned capital.

Income tax benefits

There are potential income tax benefits from owning rental properties. “Benefits” means that as a result of your ownership, you pay less in taxes than you would have if you did not own the property. Unfortunately, few investors really understand how this works.

If you are self-employed and pay little in taxes or you have income greater than $150,000, you probably have little tax benefit from your real estate ownership. Before you start banking on the tax benefits you’re going to get from a real estate investment, consult with a tax pro who can tell you whether or not you will actually save a dime.

Recap

While all the investment returns may help your long-term wealth, the cash flow component is the most important. Cash feels nice in your hands, it pays the bills and, most importantly, it accumulates in your bank account and earns interest.

If your investment doesn’t generate cash, you won’t be able to pay the mortgage, you’ll likely lose the property and you’ll never realise the returns you’d hoped for.

Melbourne's Most Valuable Suburbs

If you rank Melbourne’s most expensive suburbs simply on the median house price, the Eastern Suburbs come up year after year in the top ten. It was no different in 2015, with almost all the median house prices in the top ten over $2M.

So if your looking eastern suburbs, then you have to prepare as Melbourne’s median house value is in excess of a couple million once you pay your stamp duty bill with Toorak being at the number one spot.

So, here are the top 25 most expensive suburbs in Melbourne, ranked 25 to 1.

25. ELWOOD $1,550,000
24. HAMPTON $1,580,000
23. MALVERN EAST $1,599,000

22. BRIGHTON EAST $1,600,888
21. SOUTH YARRA $1,662,500
20. ALBERT PARK $1,710,000
19. KEW EAST $1,749,500
18. EAGLEMONT $1,765,000
17. SURREY HILLS $1,800,000
16. GLEN IRIS $1,842,500
15. BRIGHTON $1,860,000
14. KEW $1,860,000
13. PORTSEA $1,862,500
12. MONT ALBERT $1,877,000
11. CAULFIELD NORTH $1,927,500
10. HAWTHORN $1,932,500
9. BALWYN NORTH $2,000,000
8. HAWTHORN EAST $2,040,000
7. ARMADALE $2,053,500
6. BALWYN $2,105,888
5. CAMBERWELL $2,114,000
4. MALVERN $2,345,000
3. CANTERBURY $2,499,000
2. MIDDLE PARK $2,840,000

1. TOORAK $3,400,000

How Property Inspections Reduce Risk

Building inspections are one of the most important elements of purchasing a property and also one frequently overlooked. Both structural and pest inspections provide a valuable insight into the condition and additional costs associated with a property’s purchase.

Many people are unaware of their right to add inspection clauses in contracts of sale, and others fear the addition may cost them a potential property. Buyer apprehension is easily avoided with the support of skilled buyer’s advocates. The real estate background of skilled advocates makes them the ideal negotiator to include favorable clauses in contracts without jeopardizing a sale.

1.  Identify costly repairs

As mentioned above, a pre-purchase property inspection lets you know of any serious damages or repairs that will need to be made in the future for instanc: Leaky ceiling, wall dampness and pest infestations.

2.  Ability to negotiate purchase price

When you invest in a property inspection, you gain knowledge and awareness of the property’s overall condition, including areas of the property that may need improvements and repairs. 

You can use this information as a tool to negotiate an appropriate, discount purchase price based on existing property damages and repairs that need to be carried out.

The seller could potentially be more likely to reduce the price, or in some cases, even pay for necessary repairs.

 

3.  Avoid safety hazards.

A property inspection shines light on unsafe areas in a home, such as presence of asbestos, mold, or any other harmful materials, which could lead to extra expenses in repairs and possible medical bills - which can easily be avoided.

Wise Real Estate Advice is influencing the new breed of Australian buyer’s advocates with their commitment to providing clients with effortless purchasing. “At WRA we believe that a property is more than just land, it is a future; and we help our clients avoid buying a problematic or costly future” says Mark Ribarsky. WRA’s full-service firm goes beyond the contract clauses and offers assistance with organising and reviewing building inspections. Cost and value analysis is conducted in consultation with clients to ensure they make informed purchases.