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Many people think that there is a correlation between putting a high initial asking price on an advertised property and achieving a high final selling price. 

“There’s certainly an expectation,” said Monika Bonet, Principal of Raine & Horne Glenelg. “But it doesn’t work the way many people think. In fact, the opposite is often the case. If a property is really overpriced, purchasers just sit back and wait to see what happens. If they’ve been looking around long enough to be ready to commit themselves, they’ve also made themselves very familiar with what they can get for their money.”

According to Ms. Bonet it is common for first time vendors to overprice their properties in the belief that the “right” buyer will eventually come along – someone who will fall in love with their property and pay more than the home is actually worth.

“People buy with their pockets as well as their hearts,” Ms. Bonet said.

“No one goes into a real estate purchase without making comparisons and weighing up all the factors. Buyers typically look at all properties in their desired suburb, regardless of the price so they can make an educated opinion of what’s value for money.”

According to Ms. Bonet many first time vendors make the mistake of thinking that no matter what price a property is advertised at, purchasers will always make offers. This can’t be further from the truth, because history shows that the more a property is overpriced, the less offers will be submitted.

“Put yourself in the purchaser’s shoes,” Ms. Bonet said.

“Buying a house is really stressful. Most people won’t let themselves get emotionally committed to something they feel is never going to come down to a realistic level. It’s easier to move on and make an offer on something that is more realistically priced.”

“It is wise to leave a negotiating factor when setting your asking price” Ms. Bonet said.

“But you must price your property to create a sense of competition so that purchasers will want to snap it up before someone else does, and the reality is the best price is nearly always achieved in the early stages of marketing.”

“Remember, the longer the property is on the market, the more buyers notice it’s not selling and the more they start to think that there’s something wrong with the property.”

If you’re thinking about selling your home in this market, it’s important that you call Monika to get an up-to-date and independent opinion of what price you should put on your home.

Call Monika today on 8376 8844.

2010 was a year of contrast for Australia’s residential property markets – in the first half of the year the market continued its 17 months of consecutive gains, however, come June it was a very different scenario. In the final RP Data Property Pulse for 2010, National Research Director Tim Lawless sums up where and what were the best performers for 2010 ranging from highest median prices, areas offering the best rental yields to where the highest gross value of sales were achieved.

Australia’s housing market changed direction in June 2010 according to rpdata.com research director Tim Lawless.  He confirmed that capital growth actually ground to a halt on the back of seventeen months of consecutive gains. 

Based on the RP Data-Rismark Home Value Indices, over the eighteen months to June 2010 the combined capital cities of Australia saw home values increase by 18.5 per cent after values fell by 3.8 per cent during 2008. 

Over the three months ending October, capital city home values were virtually flat (+0.3% seasonally adjusted) indicating a soft landing as the market left the growth phase of 2009/10.

Mr Lawless said that the cause for slower property market conditions is due to a number of factors with the most significant of them being higher interest rates.

From October 2009 to November 2010 the Reserve Bank increased rates by 175 basis points.  The market was also affected by the First Home Owners’ Grant boost which was halved in October 2009.  By January 2010 the boost was completely removed.

“Additionally, a general wind-down in the market cycle was at play.  The high rates of capital growth between January 2009 and June 2010 could not have been sustained – as interest rates rose, affordability constraints became a greater barrier and buyer demand began to fall.”

“For 2011, we are likely to see vendor expectations change as slower market conditions come into play.  The outcome will be that houses will take longer to sell and buyers will be negotiating much harder than they were in 2009 and the first half of 2010,” Mr Lawless said.

A variety of indicators are now suggesting that market conditions will continue to transition in favour of buyers.  The average time it takes to sell a house across the capital cities has increased from 38 days in October 2009 to 49 days in October 2010 and the average level of vendor discounting has increased from 4.7 per cent to 5.5 per cent over the year to October 2010.  Auction clearance rates across the combined capitals are now averaging in the low to mid 50% range as seller and buyer expectations diverge.   The low rate of clearance suggests that vendors will have to become more flexible in their price expectations if they want to make a sale. According to Mr Lawless, these factors provide the best indicator that buyers are becoming more empowered and vendors are losing some of their leverage in the market.

He said that despite the fact that the Australian housing market has moved out of the growth phase, it is not likely to result in any material declines in home values.  The base level fundamentals remain very strong.

The good news from RP Data for the coming year is that Australia continues to record strong population growth.  Overseas migration to Australia appears to have peaked, however total population growth remains well above average and the rate of population growth (1.8% per annum ) is amongst the highest of any OECD nation.  Such a high rate of population growth will continue to create a high level of demand for Australian housing.  Coupled with this, as a nation, Australia is building too few dwellings. The undersupply of housing is not likely to be corrected any time soon despite the recent peak in population growth.

RP Data analysts believe that strong economic conditions and consumer confidence are also likely to underpin the Australian housing market.  The unemployment rate, at 5.2 per cent in November 2010, is trending downwards towards ‘full’ employment and Australia’s economy is projected to grow by more than 3 per cent during 2011.  Both factors will be a strong influence of consumer confidence which is likely to remain high during 2011.

While capital growth is trending out of the housing market, rental rates are starting to show some upwards pressure.  Weekly rents softened during 2009 as a large number of renters decided to take advantage of the historically low interest rates and Government incentives, and purchase a home rather than rent.  Since peaking in mid 2009, first home buyers have fallen back to about 15 per cent of the overall owner occupier market.  The fall away in first time buyer numbers is now being reflected in increased rental demand that is starting to cause rents to move upwards again.

Over 2011 it is likely that rental growth will at least move back to the historic average of between 6 and 8 per cent year on year.  “That’s great news for investors, but not so great for renters,” says Tim Lawless.

“The improving rental market is also likely to see rental yields improving for investors.  As capital gains outpaced rental markets in 2009 and the first half of 2010, rental yields were sharply eroded.  We are now seeing the first signs of yield improvement which is likely to provide a further encouragement for investors looking to strategically position themselves in the market,” Mr Lawless said.

In summary, RP Data believes that the Australian housing market is likely to remain reasonably steady over the coming year.  If historic performance is anything to go by, the post-boom period between 2004 and the end of 2006 saw Australian capital city home values increase by just 4% over the entire two year period.  At that time unemployment was similar to what it is now and the economy was on the cusp of a resources boom that fuelled economic prosperity. 

Factors such as higher interest rates and housing affordability will continue to dampen market conditions.  In balance, the Australian economy which is characterised by robust economic growth and a labour market approaching capacity which will fuel wages growth,  which will continue to underpin demand for housing both from a rental and purchase perspective.

Source RP DATA-Rismark

This blog post is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Management Experts

Adelaide’s tram customers are now experiencing unprecedented access to services and a more efficient and comfortable journey with all six brand new Citadis ‘Euro’ trams operational.

Improvements were most evident in the morning peak where the number of services arriving in the city from Glenelg has increased by around 30 per cent.

In a few weeks since the start of services on the extension to the Entertainment Centre the tramline has started to realise its potential as a key part of a mass transit system.

The commissioning of six new trams has allowed TransAdelaide Metro far greater flexibility with timetabling and provided the opportunity to run more services on the Glenelg line where they are needed most, in and around the am and pm peaks.

Customers now have more options to catch a tram to and from work, rather than take the car, and know that they will arrive at their destination faster and with minimal delays.

This includes both the capacity increases on the Glenelg line as well as the new opportunity for commuters to access the park and ride facility and free tram travel at the Entertainment Centre.

Among the improvements to tram services from March 22:

• 29% increase in tram arrivals in the city from Glenelg between 8am and 9am weekdays
• 14% increase in tram departures from city to Glenelg between 4:45pm and 5:45pm weekdays
• Total number of weekday services through the city centre increased by 5%
• First am service running 15 minutes earlier
• Last late night service running from the City at 12:40am – 37 minutes later than previous
• Additional late night service running from the City at 12:20am

Customers can now also travel further for free, with the City Shuttle service extended from South Terrace through to the new West Terrace tram stop.

In addition, for the next six months the free service also extends to the Adelaide Entertainment Centre where customers can park for $2 all day.

Adding services around those traditionally very busy times in the morning and afternoons to spread the load means there is more flexibility for customers.

TransAdelaide are pleased to be able to offer their customers more options and for more people to be able to realise the benefits of using our ever improving public transport system.

For further information on Adelaide’s tram services visit www.adelaidemetro.com.au

This article was brought to you by Raine & Horne Glenelg your Glenelg Real Estate Agents and Glenelg Property Management Specialists