What’s New In September:
The auction clearance rate in Sydney has now fallen below 70%. The clearance rate is a good thermometer on the temperature of the market. It has been around 80% for most of this year. Good properties, well presented and in good locations are still moving, but B or C listings on busy roads or less desirable areas are being left on the shelf. The Byron area still feels strong with busy open houses and auction attendances. Byron region usually lags behind Sydney and Melbourne by 12-18 months.
Speaking of auctions. I have been successful with 6 out of 6 starts when bidding for clients at auctions this year. If anyone you know is planning to be a bidder at an auction, you could do well to have me in your corner. I charge $700 plus GST which includes an inspection and property report.
Are we safe as houses?
Lots of chatter about in the media on whether the market is overcooked. ABC’s Four corners the other week predicted a perfect storm with Australian property boom and bust. Yes the market is overheated but still along way from a crash. There has to be oversupply and/or serious unemployment for responsible people to start predicting a crash. For the decades I have been involved in the industry, the predictions of a property bubble are just background noise to me now.
Four Corners did highlight the re emergence of a problem that was occurring pre-GFC. A handful of predatory brokers are working the greedy and the gullible to max their equity and buy into off-the-plan housing scams. The program interviewed a young couple, on average incomes, who professed their aspiration to own 20 investment properties and sip piña coladas to celebrate. Watch out for the train wreck approaching. But who exactly is the guilty party – broker or deluded buyers? I’m sorry, but if you are holding a high debt-to-equity ratio in this market with historically low-interest rates then you do not understand economics 101. There may not be a bubble burst about to happen but property does not always go up,
Speaking of spruikers. The latest character to graciously assist people with a “wealth creation scheme” is Rick Otton. Clever Mr Otton promotes the idea that you can buy a house for $1. The scam involves a complicated process including “rent-to-buy”, sandwich lease options”, “deposit building using sweat equity” and other trickery which don’t work or even make sense. The only real money being made is when Mr Otton sells a book or a $3000 seminar. Mr Otton is currently before the courts for “misleading and deceptive conduct”.
There may be a few postcodes in Australia where house prices are about to fall off a cliff, but not between 2478 and 2474. Currently, the demand in this region is so acute, affordability is the real issue. A new report from the NR Housing Forum states that Byron Shire requires an incredible 64% of median household income to pay rent or mortgage on a median house price. This is almost double the definition of affordable housing, which is supposed to be between 30-35%, which is the NSW regional average at 32%. This means that anyone on a median income, buying a median priced house in postcode 2481 will be required to divert 67% of their income to rent or mortgage. Second and third highest in the state is Tweed at 48% and Ballina at 46%.
This is backed up by a new report by the Australian Housing and Research Institute revealing the true extent of housing needs in Australia. There are currently 1.3 million households in a state of housing need: that means unable to access market housing or in a position of rental stress. This figure is predicted to rise to 17 million by 2025. 1.3 million people is 14% of Australian households. NSW and QLD are equal 1st place with families experiencing housing needs.
One of the more accessible ways to resolve housing stress is to make the rental deal fairer to tenants. Last year the Dept of Fair Trading released a discussion paper and called for interested parties to respond. The main gripe for tenants is the ongoing support for a no-grounds termination lease whereby a landlord can evict a tenant for no apparent reason. The system in Europe allows for tenants to be the ones in control of the lease and gives the landlord notice, not the other way around as it is here. Fairness for renters will be assisted if the government encourages the “Build to rent” market. Current land tax settings make it difficult to assist investors to build units to then take cash flow from the rental market. That can be fixed.
We are so “Lifestylepreneurial”
Renowned social demographer Bernard Salt came to town and left us some of his statistical wisdom. He revealed that Northern Rivers region has been named the top entrepreneurial hotspot of the country. NBN Co commissioned a “Lifestylepreneure” report (sounds like something out of an episode of Utopia). Kingscliff and Mullumbimby are hot spots for micro businesses (1-4 employees) with 19% new start ups in the last year. Bangalow is a close second with 14% more micro start ups. The national average is 5%. Mr Salt says we have it all here – lifestyle and creativity – which means we are “lifestylepreneurial”.
Sustainable House Day and Home Expo
This is always a popular event on the calendar. The Sustainable House Day is like a sample food festival for foodies, except this is a design and architecture day for housies! There are several homes being shown on September 17th, just look it up on their website and book yourself in.
Also held in conjunction is the very popular and often packed out Living for the Future Home Expo held at the Seagulls Club in Tweed Heads, Saturday, September 16th 10am – 4pm. This year’s Design Competition theme is “Build It Local”. Be there if you like the look of a good, well-cut joist and beam. Family-friendly and free!