Residential sales heat up to create an Easter bonanza
by: Jo Studdert From: The Australian March 31, 2012 12:00AM
Julie and her son Emile Kerim at home at the family property in Ryde that they have lived in for 26 years. Picture: Jane Dempster Source: The Australian
IT'S official: the property market is coming back to life from a near-death experience.
And the strongest leading indicator is the width of real estate agents' smiles.
Some parts of the whole are still in intensive care, notably South Australia and Tasmania.
Melbourne is in an observation ward and is doing as well as can be expected which is not much. The Northern Territory, of course, has its own life form that bemuses the experts, but Queensland and NSW - city and country - plus Western Australia, or at least Perth, are showing unseemly signs of recovery.
These vital signs are important because they suggest what's in store for the rest of year, as the Easter season has become the year's biggest selling session, according to RP Data figures for the past five years, replacing autumn as the time most people choose to buy and sell, says Cameron Cusher, RP Data's senior research analyst . Top 50 Tech Rec Coverage
Today is Super Saturday in Sydney, with a record 752 properties listed for auction, the highest number in two years.
So what is happening right now indicates the mood, the will and the confidence of people to go to market. Otherwise, they would wait.
"In autumn, people can't use their pretty spring gardens to make a sale. What's on offer in autumn is property itself," Real Estate Institute of Australia president Pamela Bennett says.
And it is, indeed, being offered.
"There are good signs generally, with increased volumes of sales," says Tony Brasier, managing director and chairman of PRDnationwide real estate, a company that covers the entire eastern seaboard and inland locations up to a few hundred kilometres from the coast.
"We had a very good February," Brasier says. "There is more activity in the market and agents expect even more after Easter. We think it will be better than it's been for two years."
In the west, Ray White's WA chief executive Mark Whiteman expects the best autumn sales period in years. "We've seen sales kick back in, right across the board," Whiteman says.
"Our inquiry rate has picked up incredibly, as has the number of people at open homes, the number of registered bidders and the number of bidders.
"Even the prestige end is clearing. Interest in executive apartments has been excellent, both from owners, generally employed in the mines, and from investors wanting to rent to mining executives. Our vacancy rates are extreme. Basically there's nothing to rent anywhere in Perth."
Whiteman admits the main spur is that the market had hit the bottom, making homes affordable again.
He asked 80 assembled senior agents for word on their districts.
"Overwhelmingly, there is a higher level of inquiry and more properties for sale," he says.
"First-home buyers are definitely back, as are investors, particularly in the sub-$500,000 market. Prices are down and rents and yields up."
Whiteman's agents also note that more multi-million dollar properties are coming on to the market.
Brisbane is also recovering, and bringing the Gold Coast with it, Australian Property Monitors senior economist Andrew Wilson says.
In Brisbane's New Farm, Ray White principal Haesley Cush says prices have reached affordable levels and "good things are happening. We have twice the number of registered bidders for any auction than we would have had last year."
Sydney, which wasn't as battered as elsewhere, is also up and about, and taking a walk in the hospital grounds.
"Last year it was hard to get clearance rates above 50 per cent," Wilson says. "They are now above 55 per cent, on March 17, reached 58 per cent and on March 24, 60 per cent. There is more buyer activity.
"For March 31, we have the highest number of properties scheduled for auction for several years."
He says, the activity has not been enough to push prices up.
But there are unexpected pockets of excitement in Sydney, such as the very southern suburb of Menai where LJ Hooker's registered valuer, Wayne Hurst, is being kept so busy he is going to double his sales team. "Our clearance rates are over 80 per cent. There is a lot of confidence here."
Wilson says the two leading indicators of market conditions are auction clearance rates and the number of approved home loans.
The latest Australian Bureau of Statistics figures show home loans in NSW rose 16.5 per cent in January from a year earlier, by 15.5 per cent in Queensland and by 22.7 per cent in WA. In Victoria, they rose by only 1 per cent and in South Australia were virtually unchanged from last year.
"In Tasmania, there are no indications that the market will do anything but stay flat," Wilson says.
SA is still in an induced coma and it is touch and go. "I expected last week's paper to show a big increase in the number of properties for sale. It didn't," LJ Hooker's SA regional manager Rod Adcock says. "There are signs of revived buyer interest but it hasn't translated into sales. Historically our auction clearance rate is mid-80 per cent. Now it's mid-40 per cent."
In some states, prices are as low as they will ever be, the REIA's Bennett says.
"The best that can be said for Melbourne's market," Wakelin Property Advisory director Monique Sasson Wakelin says, "is that it is at the beginning of a new cycle of stabilisation and recovery. There is a lot of observation and information-gathering going on but people are tentative."
A flurry of Melbourne sales in January and February was probably just the ambulance-chasers cleaning up before any price rises. Since then the market has relapsed.
Fellow Melburnians, Andrew Perkins, national manager research, and Jamie Kay, executive director, apartments, at Oliver Hume Real Estate Group, are seeing more second and third-home buyers in the market, and owner-occupiers seeking quality apartments rather than ones built for investors.
"Owners bring more discerning tastes, so well-positioned quality projects are in high demand all across the city and its fringes," Kay says, especially in the $400,000-$600,000 range, just below the entry point for houses.
And Elliot Gill, South Yarra partner at Bennison Mackinnon Real Estate, is finding an unexpected interest in period homes. Victorian to Edwardian houses are definitely selling better than modern houses and townhouses, and it's not explicable by price.
"I think people just feel safer buying that kind of property," he says. "I think it's the land component."
Damien Smith, chief executive of Rate City, a financial comparison website, offers one piece of advice to buyers.
"Lenders are desperate to lend, and borrowers underestimate the discounts they might get against the advertised interest rates," Smith says. "They do have room to move on the most rates they're offering."
It seems clear that the patient is not going to get any worse and has even recovered from some afflictions, but APM's Dr Wilson says it's too early to tell. "What we are seeing is a gradual improvement."
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NERVOUS BUT MOVING ON, AFTER 26 YEARS IN ONE HOME JULIE and Terry Kerim are downsizing and have put their family home in Sydney's Ryde on the market.
The federation house has been their home for 26 years and, until recently, was the only house their children, Emile, 25 (musician Milo), and Olivia, 21, had lived in.
Now the children are grown and Olivia has moved to a flat, the Kerims feel it is time to move to a smaller place.
Terry Kerim has business interests and the couple needs to be able to travel for them and not be concerned about leaving the house unattended.
But they are reluctant to begin looking for a new home until this one is sold so that they know how much they will be able to afford.
"We bought this home in 1985, sight unseen, because it had such a big yard - 885.2sqm," Julie Kerim says.
"The first time we saw the property, we already owned it, but we knew it was just right because, although neither of our children were yet born, both Terry and I wanted a big family house and especially one with a big yard for our future children and their friends to play in.
"Well, it was perfect. For years we have had lots of kids swimming, playing backyard cricket and football and sliding down the grassy slope on hosed tarpaulins."
The 1912 house retains most of its original architectural features: a fireplace, patterned ceilings, decorated cornices and eaves.
But the family has renovated the bathroom and kitchen and added a modern extension, opening up the living, kitchen and dining areas out to a big entertainment deck.
"We wanted to keep the original look and the streetscape, but needed more space," Julie Kerim says.
"I am lucky to have an architect brother, Richard Goodwin, so he designed an extension to the back of the house for us.
"It's in the same brick as the front and is painted in traditional federation colours.
"From the street, the house is federation, then there's a big modern surprise out the back. I like seeing the look of surprise when people first see it.
"We don't know if this is the right time to buy or sell, all we know is it's the right time for us, and for Terry's work. Now is the time to do it after all these years."
But their timing might be excellent, says Kathleen Synnott, Ryde area specialist at McGrath Real Estate.
"A lot of buyers are out there looking, especially in the Ryde area and I am seeing something I've never seen before: people coming into the area for work," Julie Kerim says.
"In the past they would commute, but not now. People would rather move suburbs to be close to their work than be caught in the traffic every day."
In the past decade, Ryde has become a business development area, especially for hi-tech and IT companies.
"It's all happening in Ryde," Synnott says. She also has noticed that buyers are spurning the idea of renovations, seeking places that have been completely renewed.
"They are time-poor and determined not to waste a moment in commuting or house alterations," she says.
All this bodes well for the Kerims and their auction on April 21 just after Easter. They hope to get more than $950,000 for their home.
