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Investor Report February 2014

By Ian Campbell

Market Update

There is no doubt that the Sydney property scene is in the midst of a healthy market, and those areas of the metropolitan area that are most sought after are experiencing boom-like conditions.

Indeed, the media has been quick to label this stage of the cycle as a property boom.

However, the term ‘boom’ itself conjures up many types of interpretations and forecasts and often the reality of what is actually happening gets buried under all the hype.

When you talk with hundreds of buyers about their view on the market, it is very evident that buyer confidence is relatively fragile. And more and more buyers are tending to stand on the sidelines and not get caught up in what they see as an overheated market.

The key factors that buyers are concerned about is the impact of higher interest rates when they do begin to rise, growing unemployment, and the lack of positive news about the Australian economy, which is unfortunately the theme being expressed by many business, academic and political leaders.

Noteable recent sales include;

14H/15-19 Onslow Avenue, Elizabeth Bay

  • Sold at Auction – $1,360,000 ($50,000+ above reserve)
  • 2 bedrooms, 2 bathrooms, 1 carspace
  • Requiring renovation
  • Panoramic harbour & district views

5/62 Marine Parade, Maroubra

  • Sold at Auction – $950,000 ($100,000+ above reserve)
  • 2 bedrooms, 1 bathroom, 1 garage
  • requiring renovation
  • Ocean views

Autumn Market Outlook

We expect to see continued high auction clearance rates as buyer demand remains robust. Strong buyer activity is unlikely to diminish whilst interest rates remain at current levels.

Investor buyers will maintain a strong presence in the local market as rental demand remains buoyant.

It is anticipated that more listings will come on to the market in Autumn as favourable selling conditions continue.

Do Your Sums!

Is it time to review your loans and interest rates?

Over the past 12 months banks funding costs have eased and many of the banks have been able to offer lower interest rates for new customers.

Much of the discounting is based on two things – the loan amount and LVR (loan to valuation ratio). The more sizeable loans – for example above $500,000 – may attract a more competitive interest rate. Also, where a high percentage of equity exits in the property, banks will often provide a lower rate due to the reduced risk.

In any review of an existing loan, it is worth noting that the banks do not retrospectively discount their entire loan book because the funding of existing loans was previously “bought” at a higher rate.

Nevertheless, in such a competitive environment, it still makes sense to review your situation annually with a broker or bank. The broker can give you a wider snapshot of lenders and rates that best fit your overall position. The bank is likely to only show you their own rates and not their competitors.

The Loan Market representative responsible for servicing our landlords and clients is Gary Phillips. Gary can be reached on 0413 100 302.

Up to Date

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