My crystal ball is saying the real estate market for the first quarter of 2011 looks like being a fairly tough place. Anecdotally activity in the last quarter of 2010 has been subdued in many areas of the state and building starts and finance approvals are also both down confirming this.
As always there have been pockets that have managed to miss the pain but it would appear that they are few and far between.
Latest comments by the R.B.A. give some respite as they indicate that it is unlikely that we will see any further interest rate movements until at least the end of the first quarter, cold comfort to a degree I know, as much of the damage has already been done with recently released figures showing housing affordability in NSW currently at one of its lowest levels in years.
Even the weather seems to be against us at the moment, with parts of the state experiencing flooding and extreme weather events as I write this article and the long range forecast is for more of this all through summer. I guess we should be thankful we are not farmers, they have it even worse.
On the upside, rental demand remains strong, with increased rents leading to higher returns in most areas. This will not only help our Property Management department profits but should see a continued influx of investors into the market chasing these attractive returns.
This next quarter will also see the introduction of the new Residential Tenancies legislation. As an industry I believe we need to talk to and educate our landlords as soon as possible in relation to these changes, before there is a quiet news week and some sensationalising journalists try to create panic for the sake of selling a couple of extra newspapers and we get left to deal with the paranoia.
E.A.C. has run a series of seminars on this topic in recent times and will continue to update you as regulations are firstly released and then tested at tribunal.
As Geoff Hunter showed in his seminars there are a number of positives for landlords in the new Act, it is not all bad, and we need to emphasis that to our clients before the scare stories start.
I believe the sales environment will stay tough in many areas, listings are down and look like remaining tight and now it seems as though prices are also dropping in certain areas. Managing vendor expectations will be of paramount importance in the coming months. All the good E.A.C. agents will be practising their scripts and dialogs in role plays I’m sure.
The upside for the good operators is that they tend to increase their market share in tough times and what doesn’t kill us will make us stronger.
Wishing everyone success in the year ahead and happiness throughout this festive season.
Dale Whittaker
E.A.C. Chairman
.JPG)
