Greetings once again

April BPS Newsletter comes to you from the far South Coast of NSW. Bermagui is a town much like Byron Bay was a few decades ago. It has some beautiful beaches, relaxed atmosphere and a sense of community. Some people I know have found the Byron pace a bit taxing and have made the move down here. So this will be a cut down newsletter for this month. But I am still online and taking calls.

Real Estate Reform

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It's still a long time coming but there are rumblings about reforming the real estate industry. Most people are uneasy and distrustful of real estate agents not because of the individuals involved - the majority of agents are decent people - its that the process of buying a home is embedded with conflicts of interest.

One main conflict is agents are being paid by the vender and then pretending to be working for the buyer. Agents are asked to be a servant of two opposing masters. Then, conversely, the buyer and seller need to each pay fees to a conveyancing solicitor - a job that can be more simply done by one. Since most people engage the real estate industry only every seven years or so, they don't get to see these issues. A buyer's agent can help balance the process and has a clear duty of care to get the best property for the client (the buyer) at the best price.

Another conflict exists because successful agencies survive on turnover. This unwittingly forces most agents into the "spruiking" mode. If prices are increasing, they say, "buy now or be left behind"; if stagnant, "buy now because the market is soon to rise"; or if prices are falling, "buy now because prices are good and the market has bottomed out". But with selling any product this is what is expected. It is just a mistake to expect quality, unbiased information in this situation.

The conflict of interest in the wider industry is due to the large amount of revenue media companies derive from property advertising. Journalists and commentators are not free to criticise the Real Estate Industry because of the pages they fill with glossy 'property porn'.

An interesting article on this topic can be found here.

Real estate reform is going to happen behind the scenes anyway. The internet has changed property marketing and purchasing forever and it is still in a state of flux. The online tools available make up-to-the minute valuing of a property very accessible. You just need to know how to do it and pay for the data. The fact that old traditional agencies do not provide this information to either their vender client or their "new best friend - the buyer" is what is wrong. To openly provide information would diminish their role and power base.

Market forecast

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So what does the future hold? No one has a crystal ball and life and events always intervene on the best predictions. However ...

My reading of the market in the Norther Rivers area is it is going to take all of this year for the backlog of listed properties to clear. I do believe that prices have, if not bottomed, at least stabilised for a while. This year will be a good time to pick up well priced properties as the last of the distressed sales are cleared. (Sorry if I sound like a spruiker). The majority of present investor buyers are bargain hunters looking for low hanging fruit.

But present buyers should not be looking for capital gain for some time. I believe the market will be sedate for a few years at least - probably five. It may even be possible that we will never see massive rises in property prices again like we saw 10 years ago. At present there are too many forces opposed to house price speculation and non affordability issues for new home buyers.

Owner occupiers thinking of moving or downsizing should try to wait out this present market and list later in the year at the earliest. Otherwise selling now and buying in the same market and holding for the long term is not going to cause too much upset. Again, as I mentioned in the above section, finding accurate information on what your property will sell for is available online. As a venders advocate, Byron Property Search can provide this information cheaply prior to you listing your property.

Monthly Miscellaneous

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Interest rate stays stable

Interest rates were left on hold for the month of April. Many pundits however are predicting a drop in May unless the economy charges ahead. Now that the major banks have unlocked themselves from the RBA, how this will translate to mortgage holders is still up in the air.

Mullumumbimby Mercantile

The campaign to buy the Dennett's IGA store in Mullum seems to be gathering momentum and could happen. If you want to support this venture go to http://www.ourmullumbimby.org . Food Co-ops are very successful in the USA and many thriving communities have them where they serve as a meeting place, user friendly employer and keep the money inside the town. Information nights are happening so keep an eye out for the next one.

Housing Task Force

Another date for your diary is May 3rd at the Civic Hall. Kevin Doodney fronts the Future Housing Task Force. He will be providing information on how to achieve home ownership in an economical way as well as pressuring councils and housing industry bodies to adapt realistic compliance regulations. It's all about adopting small, smart, economical and ecological housing for the future. All things that I enthusiastically support. Go here for more information.

Home affordability

The combination of reduced house prices and interest rate cuts has helped Australia's Home affordability index. The House price-to-income ratio is now at four. It was last at this level in 2003. The Australian median house price has dropped from $420,000 to $400,000 while individual household disposable income has risen by 5.3%.

Save your bank fees

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My finance partner Jay Perron has come up with a way to save you your bank fees. Since 95% of our loan writing work comes from referrals by previous happy customers we would like to repay you for that. We will pay the loan package fee for any existing customer who sends us a new client. We will also waive the first year loan package fee for the new client as well. (Package fees vary between funders but are usually between $100 - $300 PA).

The simple conditions are:

You must have an active loan we have settled for you,

Your friend/referral settles a loan with us (refinance or purchase),

Minimum settled loan that is referred must be a minimum $300k.

Must be referred via email and referred client is not already dealing with us.

That's all folks

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If my Buyers Agent work ever goes sour for me, I am currently practicing for an alternative career. When my partner Susanna tours her music concerts ( http://www.susannacarman.com ), my daughter Lucy and I sometimes do very difficult circus tricks to open the show. It is only a matter of time before we are discovered by Cirque Du Soleil and swept away to Las Vegas. So you should get in quick if you want a consultation with me.

See you next month,

Michael Murray

0428 555501

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