property buyers getting the upper hand

Oh yeah houses taking longer to sell, listings have nearly doubled compared to the same time as last year and affordability is at record lows and this kook says now is a good time to buy in the same article.

I cant wait for all this to go pear shaped and watch the finger pointing!


Property buyers getting the upper hand
BY STAFF WRITERS May 29, 2008 12:00am

Houses are taking longer to sell

Vendors are having to be flexible on price

HOUSING affordability is at record lows, but the tide looks to be turning in the favour of buyers, with houses taking longer to sell and vendors having to be willing to lower their asking price.

RP Data research director Tim Lawless said the changes in the property environment mean the time is ripe for property investors to get back into the market.

“While it’s great news for cashed up buyers, vendors on the other hand need to become re-accustomed to the change in market conditions,” he said.

Rental yields picking up

Mr Lawless said another positive sign for investors was that rental yields were showing the first signs of improvement in over 18 months.

Rental yields express the return property investors make on their investment, in percentage terms. It's calculated by dividing the annual rental income by the purchase price of the property. So for example, if a landlord is getting $400 a week for a property which was bought for $450,000, the yield would be 4.6 per cent.

Yields fell last year as house prices rose quicker than rental rates. But as house price growth slows and the tight rental market leads to higher rents, yields are starting to pick up.

The only capital cities to not show an improvement in rental yields between March 2007 and March this year were Adelaide, Brisbane and Melbourne where house prices are still growing strongly.

According to RP Data there are 180 suburbs around the country returning gross rental yields of 6 per cent or higher. About a third of those suburbs are in capital cities, while the rest were in regional towns, with resource-rich and coastal areas performing particularly well.

The best rental yields were in outer suburbs, with good transport links where house prices are low in relations to the rents being charged.

Sales trends

Over the last month an average of just over 130,000 residential properties have been on the market each week. This is up from a weekly average of just 73,570 in the same period last year.