Investing in housing sink to record low

Does this mean there will be more buying opportunities for astute investors?

IIRC, Matusik predicts rental growth to be approx. 10% higher than property growth until 2010... this is only from memory though, I think it was some figure in an email from Doug Disher in Toowong whose email list I subscribe to. The Matusik figures were 25% capital growth to 2010 with 35% rental growth to 2010.

Of course this is just a prediction, and also a generalisation of the whole market, not to mention the figures are being pulled from my memory which is not 100% accurate at times ;-)

 

I think it represents opportunity, Merlin, depending on where and what you're buying, naturally

Michael McNamara (General Manager of APM) had some interesting views on the current market recently in the Property Watch column from the SMH:

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Buyers should be rubbing their hands with glee. With the rapidly rising number of properties on the market, the 2008 property market will offer choice and value for the astute purchaser.
One measure we look at very carefully is the amount of properties for sale on the market at a point in time. Analysts call this "unsold inventory". The number is a very useful "dip your toe in the water" indicator. It is also a core variable in APM forecasting model.
Put simply, the effect of lots of property on the market is to dampen competition among buyers- when there are more properties to choose from, buyers are in a stronger negotiating position.
When buyers have more choice, they become more discerning and patient. In this way, vendors suffer a double whammy.
Not only are buyers able to better use their bargaining platform to their advantage, there are fewer buyers to go around.
The market is weighed down by stock right now. There are 80,629 listings on the market in NSW, an increase of 29% from the 62,520 listings recorded for the same time last year.
You wouldn't exactly say this is a positive sign for the market but it will create opportunities for buyers who, currently, are spoilt for choice.
So, why is the level of unsold inventory so high?
There are two reasons that contribute to the growth of stock on the market- fewer buyers and/or more sellers. I say we are experiencing a combination of both.
Agents tell us that buyers are only attending open for inspections in dribs and drabs. This is in stark contrast to last year, when attendance sheets were filled with 20 or 30 buyers at a time.
Fewer buyers means a lower turnover which, in turn, creates a kind of bottleneck effect. In other words, properties are coming onto the market faster than they are being sold, creating a build up of properties for sale and putting pressure on prices.
Despite there being fewer buyers, more people are also selling. Given that mortgage rates have risen about 130 basis points (1.3%) in 6 mths and are not set to fall any time soon, it is hardly surprising tht more distressed vendors are selling.
The conditions are ripe for investors and first home buyers to cherry-pick from the oodles of Sydney property (especially apartments) on the market. At the risk of sounding like an industry spokesman that always thinks it is a good time to buy- I actually think it is a good time to buy.
I believe that those who sit on their hands will look back in five years time and lament how cheap Sydney apartments were in 2008.
(April 2008)