The real estate market is stronger than it has been for several years but as yet we are not in boom conditions. Some exceptional results are being achieved but at best you would describe it as robust. At many auctions buyers are paying 10% above the perceived value of the property. I don’t see this as any need for alarm. We often suggest to some clients that if they pay within 5% of what we believe the property is worth and it is a house that they love then they should buy it. It is where people are paying 20% and above the assumed value that there is need for concern, as this makes lenders nervous and in some cases may prohibit the full loan amount being activated if the variance is too great - yes even an auction result. Current monthly house price growth of 2.4% and 5% per quarter will soon eclipse the values of 2010 but is, as we have learnt in the past, unsustainable. So you would expect next year that prices will ease and interest rates to rise. As mentioned last month I believe the interest rate has hit its lowest figure for this year and most likely for the foreseeable future. If you are waiting to lock in I would do it soon, as the next movement is most likely be up! Another cut would just add unnecessary fuel to an already potent fire. With private sales accounting for at least sixty percent of property transactions each week and becoming more common with $1million plus properties, the auction clearance rate is becoming less of an accurate barometer for the overall activity in the real estate market. I feel soon there will need to be some focus on private treaty results on a weekly basis, especially as the $5million plus properties which are sold weekly are rarely auctioned.
Posted on: Mon, 07 Oct 2013 08:25:49 +0000
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