When sales are slow it’s easy to blame the market. Interest rates, discounters, government regulations. Once they’ve been sorted out the market will be ok.

The HIA wants to blame the market. So does Gerry Harvey and his big retailer friends. Faced with sluggish sales they place their industries woes squarely at the feet of the Reserve Bank and the Internet. They believe that, if rates don’t remain on hold, new home sales will continue to stagnate. Or if they could just get a fair go then profits would be restored.

Maybe their right but it’s hardly a recipe for creating sales.

Rather than looking pleadingly at the RBA the HIA would be better served by turning their attention on their own costs and pricing structures. In doing so they might discover an untapped demand for different products at different (read, lower) prices.

And rather than complaining about slow government approval processes they could make more better use of those approvals that are working efficiently.

As a business we’re not immune to HIA style thinking. It’s easy to get sucked into believing it’s a flat market and to be paralysed by the negativity of those who are convinced that sales will increase only when the market improves.

But that’s not what we’re about. It’s not how we roll. We know there are things we can do to expand our business even while others complain. We know there are ways to serve our customers better and more effectively. And that’s exactly what we’re going to do. Today – right now – for there’s no time like the present.

Any increase would have made a bad market worse.

But it’s only a matter of time before the economy will gather momentum bringing with it inflation and upward pressure on rates. There’s little doubt rates will increase over the months ahead.

How can home owners take advantage of these low interest rates?

One way is to start paying off your mortgage as if rates were a full 1 percent higher. That’s about $200 extra per month on the average mortgage. When rates increase you’ll already be comfortable paying the extra.

Another is to pay down high interest credit card debts and consider reducing credit card limits. A combination of high consumer debt and high mortgage interest rates can place families under significan pressure.

Consider making an extra payment at least once per year if possible. Sources of extra payments can be tax cheques and pay rises.

For prospective buyers budget for higher repayments than are currently on offer. Budgeting for interest rates at least 1 percent higher is a good start. Don’t base your budgets on honeymoon rates. They come to an end and so does the honeymoon.

Jay Wood

Home owners across Western Australia breathed a collective sigh of relief when the RBA announced their decision to keep the cash rate at 4.5 percent yesterday.

It’s a much needed boost for the local market.

With over 14 500 property listings for sale in Perth any upward movement in rates is felt immediately in the number of buyer inquiries and therefore on prices. According to many agents the market is finely balanced with sellers being forced to reduce prices to attract offers.

Jay Wood, from pfr.com.au in Victoria Park says that the market is trying hard to move forward. He’s noticed an increase in buyer inquiry and home open activity levels but believes that buyers are making low offers thanks to the number of options available.

“It’s a numbers game”, says Jay. “Whereas previously it would take 20 buyer inquiries to generate a sale it now takes 30.”

Jay believes interest rates will remain on hold for the rest of the year, but they’re not the only factor in play. He suggests that the resurgence of mining industry activity and the low level of new residential construction starts will take time to filter through to increased real estate prices, he suggests.

In other words it’s a waiting game.

His advice to sellers is simple; think carefully about your first offer.

“In this market there’s only one buyer for a property and many sellers are now wishing they had accepted their first offer. The first offer is often the best”, he says.

“The market is all about sentiment. At the moment it’s dragging a bit”, he concluded.

My question is when will it start to move? What will change it? What are your thoughts?

Jay Wood is a real estate agent in Victoria Park and has an interest in Residential Settlements.

The big news over the past month has undoubtedly been the reduction in the interest rates on a number of fixed home loan products, particularly those over two and three year terms.

Some of the fixed rate home loans now available may be very appealing to borrowers, especially anyone who is looking for some certainty over their mortgage repayment levels. A fixed rate may also give borrowers the opportunity to limit the impact of any further changes to interest rates by the Reserve Bank or the banks and lenders themselves.

If you are considering a fixed rate, you will need to be aware that most fixed rate products have fewer features than their variable rate counterparts and may be expensive to break.

Having said that, a recent survey conducted by Loan Market nationally shows that a good percentage of mortgage holders have the capacity in their budget to cope with further interest rate rises. While that doesn’t look likely to happen in the near term, based on the current economic data, it’s an excellent position to be in.

People considering a fixed rate home loan should firstly seek advice from a competent finance specialist.

But how times have changed. Less than 18 months later the market has once again surged.

It’s back in the black with plenty predicting more good news to come.

Compared to the rest of Australia – and despite a massive resources boom – WA is an under-performer. That’s if you can call an annual growth of 14.3% under-performing. Some expect the combination of higher interest rates and lower first home buyer grants to slow the market.

But others are more upbeat pointing to strong population growth and improving employment prospects as potential market drivers.

What are are your thoughts? Which way is the Western Australian property market heading in 2010?

Real Estate Institute of WA president Alan Bourke said the RBA might have to increase rates by up to 0.5 of a percentage point in the next six months if the economy continued to grow strongly.

“This… would seem likely, so home owners should understand that this pause in rate rises may not last, and those people with mortgages should take steps to budget for any further increases and keep an eye on their spending,” he said.

And whilst President of the national body of agents, REIA believes that the RBA decision is good news a number of other commentators are pointing to the risks of a imminent housing bubble.

What effect do you think the RBA’s decision will have on the market? When do you expect rates to rise again?

Have they done the right thing? What are your thoughts?

Posted via web from Residential Settlements

Posted via web from Residential Settlements