Every week more properties are being put up for sale while fewer are being actually sold. Many vendors are still carrying pricing expectations from 2010, whereas 2011 has come in with value revisions in quite a number of areas.
Properties are taking longer to sell, with asking prices being dropped simply to achieve a sale.
The situation today is not dissimilar to that of the 1990s, when the residential property market stayed sluggish for a number years. People bought and sold dwellings based more on life changes than investment decisions. Many investors became disillusioned and completely left the market.
There was little real growth in end prices or rents for several years.
Currently there are about 245,000 dwellings for sale across Australia – a 20 per cent increase in numbers on this time last year.
Just over 400,000 residences sold across the country during 2010 – down from half a million compared with 2009.
Based on information provided by RP Data, it takes 49 days on average to sell a residential dwelling, and these are selling at about 6.5 per cent below the initial advertised price. Home owners tend to hold on to their properties for longer – now an average 8.3 years, which is up 1 1/2 years on a decade ago.
Of course one must remember that the Australian real estate market is not a single market, rather many sub-markets.
In southeast Queensland, for example, one market might be doing well – such as inner-city apartments – and another down the road, such as apartments on the Gold Coast, not doing well.
Over the past 12 months, housing values rose 3.4 per cent across our capital cities, with the largest increases in Melbourne (8.4 per cent); Sydney (6.4 per cent) and Darwin (3.4 per cent).
The worst performer was Perth, with a 1.4 per cent drop, followed by southeast Queensland, with a fall of 1.1 per cent.
But in the scheme of things, this slight slide is small compared with the 27 per cent lift in local values since 2007. It pays to take a long-term view. Residential property values have risen across Queensland by just over 10 per cent each year over the past decade.
It is becoming clear that property values are heading south. It is not a crash, simply a correction. With this in mind it is really a great time to consider property investment. While many only think of purchasing when the market is overheated and the newspapers are full of very high sale results – professional investors stay away until prices begin to fall.
It is of-course important to ensure that you buy well. However if you wait for the market to crash – it is not looking like a possibility in the near future.
Remember to ensure that you consider your finances before making a commitment. We recommend that you obtain a home loan pre-approval before signing any contracts. Just because your Mortgage Broker told you last year that you are fine to buy – this will mean nothing today in the post – National Credit Law landscape in Australia. However if your loan is approved, there are some bargains to be had – it is a buyers market.