First National CEO comments on improving market outlook

May 2, 2013 Leave a comment

Reblogged from First National Real Estate - Australian Property Blog | Melbourne, Sydney, Brisbane, Darwin, Perth, Adelaide, Hobart:

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This month, First National members gather for our network’s annual National Convention.

As always, we’re working hard to stay at the forefront of property services so a raft of new technologies and consumer focused strategies are scheduled for introduction to our members. These are aimed squarely at improving customer experiences and maintaining the quality of results we deliver to the many clients who choose First National Real Estate each year.

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Sold on Social Media

June 2, 2012 Leave a comment

First National Real Estate Lakeshores today announced that it has completed its first sale to a buyer originating from Facebook. The estate agency operates a Facebook page with over 200 active followers and regularly posts updates about new listings, sales, competitions, interest rate movements and community events.

The Facebook sale occurred when a buyer who was looking in a different area engaged in an online conversation with First National Lakeshores Principal, Mark Millington, about the upcoming weekend and the inspections she had planned.

Mr Millington indicated that although he was aware her preference was for a property further south of the Mannering Park/Summerland Point area, he had wanted to share a property in Wyee Point that ‘was one of his favourites at the moment’.

‘It was exactly the kind of house we were looking for but because my partner commutes to Sydney on a daily basis, we didn’t want to buy quite so far north on the Central Coast’ says Christina Haak.

‘But the house looked gorgeous and when Mark pointed out that there was a freeway on-ramp at Morisett and that the current home’s owners also commuted to Sydney, we decided it was worth taking a look’.

After multiple messages back and forth, the couple first met Mr Millington face to face at the Wyee Point property when they inspected it. Following negotiations, they purchased the property.

‘The social media phenomenon has become an important component of real estate marketing in recent years but many real estate agencies have failed to grasp its true value’ says First National Lakeshores Principal, Mark Millington.

‘To ignore the opportunities it presents is to cut off people selling their homes from a vast pool of potential buyers. That’s crazy. There’s a whole community of people using Facebook and other forms of social media to get in contact with each other and share information. Agents need to make sure they are accessible via social media and must be prepared to engage with consumers on their terms.

‘That means when the customer is ready and that’s often not until they’ve made several enquiries via the Internet or via text messages on their mobile phone.

Over 10 million Australians now have a Facebook page and the website has become the most visited on the Internet. Often considered a communication medium used only by young people, Facebook has lately seen its usage by senior citizens and over 55 year olds increase by over 500 per cent.

Mr Millington is additionally a Director of the First National Real Estate cooperative and is responsible for the technology portfolio of the 450-office network across Australia and New Zealand.

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FIRST NATIONAL BUCKS INDUSTRY STANCE

April 22, 2011 Leave a comment

First National Real Estate Lakeshores Principal Mark Millington, has snubbed industry representatives who have said in recent media reports that the property industry would support moves to replace stamp duties with a broadening land tax or any other tax.

“It has long been recognised that stamp duty as a tax is inefficient and a complete rort,” Mark Millington said.

“So, while First National Real Estate agrees it needs to go, it does not support the notion that it be replaced with some other tax.

“As far as we are concerned, when the GST was introduced, it was meant to phase out a number of various state and territory government taxes, duties and levies such as banking taxes and stamp duty.

“Now, more than a decade on, we are still being burdened with stamp duty.  What’s worse, the property industry appears to be portrayed in some news articles as willing to settle for replacing the duty, instead of having it abolished altogether.”

Beyond the benefits to the property market of lowering the cost of buying, abolishing stamp duty would also serve to help the economy, by making room for the resources boom.

“Stamp duty inhibits mobility for many, which mean mining areas which are desperate for workers are finding it difficult to encourage workers to sell their homes and move to another area,” Mark Millington said.

“The government needs to look at policies that will encourage mobility rather than inhibit it.”

Mark Millington said the upcoming 2011 Federal Tax Summit presents the ideal opportunity to get blanket approval from state and federal governments to abolish this duty and there should be no further talk of ‘replacement’, but to deliver what was promised in the first place.

“Affordability is rearing its ugly head again, and governments need to stop being greedy and looking to the property industry to make up the shortfalls in inefficient spending and ‘black holes’,” Mark Millington said.

“As well as helping first home buyers enter the market, we need to keep stocks available in the upgrader and investor markets.  These people are looking at other investments because of the expenses involved in upgrading and investing in property.

“Governments even go so far as to put a stamp duty on the GST that is paid on commercial and industrial properties that are sold, which just seems ludicrous to me.”

Mark Millington is at a loss to understand why governments are resisting the move to abolish stamp duty, when so many are in agreement that it needs to go.

“A recent article said the OECD supported the rationalisation of state and government taxes particularly stamp duty on house sales, the ex-Treasurer Peter Costello said it should have been eliminated when the GST was introduced and even the Henry Review recognises the need for it to go,” Mark Millington said.

“The GST was meant to provide sufficient funding for state needs, and if they are not able to raise enough revenue through the GST they need to look at reform, rather than rorting hard-working Australians and replacing one tax for another.  We should get rid of stamp duty altogether.”

Issued by: First National Real Estate.  For further information contact Mark Millington, Principal, First National Real Estate Lakeshores, on 02 4359 1555.

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CLIFFHANGER

August 25, 2010 Leave a comment

Election Cliffhanger

Election Cliffhanger

Uncertainty surrounding the outcome of the weekend’s federal election looks like having a depressing effect on share, money and real estate markets. The Australian dollar was already falling on early morning trade as Your Industry was being written.

With the coalition releasing its housing policy just one day before the election, and there being so little housing policy debate throughout the campaign, it could be some time before a degree of normalcy returns.

That, of course, depends entirely upon a smooth resolution of the current situation.

Both Labor and the Coalition are busy courting independent MPs and the Greens in order to form a Government. With The Greens likely to hold the balance of power, it may not be long before Bob Brown’s stated intention to demand a higher mining super profits tax becomes reality. Weeks before the election, sales were reported as having fallen by as much as 18 per cent in some mining towns, even after Labor’s hurried, reparative negotiations with mining companies, so property investment in Western Australia and Queensland may suffer further.

While reports of slower sales and hesitant buyers have dominated media recently, this is typical of the winter months and is likely a reflection of the wearing off of historic low interest rates as well as historic Government incentives and stimulus. You can’t have 20 per cent capital values growth in one year and no penalty in the following, on the back of a GFC and a housing market force fed on steroids. The market has to adjust and with the additional retarding effect of a federal election, any other outcome would see the bubble brigade gaining legitimacy.

While niggling uncertainty about world financial health continues, rightly or wrongly, the perception is that low unemployment, the minerals boom and China’s economic growth offset Australia’s risks. The RBA’s decision to keep rates on hold earlier this month has also helped, enabling the market to quickly adjust to real world rates being closer to 7.5 per cent.

Headlines about lower auction clearance rates don’t necessarily accurately reflect the true state of the market. The Australian Bureau of Statistics indicated that there was a 2.3 per cent rise in May loan approvals and in July first homebuyer mortgages were up from 9.5 per cent to 11.1 per cent –indicators that don’t look too shabby at all.

The combined national rise left loans up 1.9 per cent, the first such increase in eight months – a good harbinger for spring.

Valuer Herron Todd White’s August review might have had some journalists thinking agents should be running a bath and looking for a toaster. Fundamentally, it indicated fewer properties were for sale, more were being sold by private treaty and things were taking longer to sell. Once again, a quiet market is common in winter and the quieter the market and the fewer the listings, the more likely a spring surge of listings and activity becomes.

HTW indicated a slight August fall in values in the prestige Melbourne markets and the under $600,000 segment in Brisbane was thought to be driving the overall market. Perth’s median has again fallen below $500,000 but prestige sales have been so limited that it is impossible to draw a conclusion as to what’s happening there. Darwin prestige units have stabilised but houses over $1m are thinly traded. Hobart sales are slow, but no more so than normal for this time of year. Adelaide showed some minor growth in the June quarter.

In all cases it seems quality property is moving but secondary property is taking longer to find buyers – again, unsurprising in winter. Overall, there are positive indications that once the winter chill and political impasse are history, there could well be a groundswell of vendors ready to sell on the spring market. First homebuyers are likely to make a return however investors may, depending on the political landscape, be less inclined to invest in the traditionally high return mining markets.

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Market Ripe to Bear Fruit

August 4, 2010 1 Comment

Market Ripe to Bear Fruit

Market Ripe to Bear Fruit

Commenting on yesterday’s announcement by the RBA that it will hold interest rates at 4.5 per cent, Mark Millington, Principal, First National Real Estate Lakeshores says there are plenty of opportunities around for home buyers and sellers, given current market conditions, as long as the fundamentals are focused on.

“At times like these, homes that are properly presented, appropriately priced and well marketed will always do well, regardless of what happens with interest rates,” Mark Millington said.

“It’s a matter of making sure you get the basic factors right and plum properties should bear fruit.”

When there is relatively high business confidence, strong levels of immigration and low unemployment, the market becomes suitable for buyers. However, those seeking to sell can also make sure they take advantage of these prime conditions.

“In a slower market, there is less pressure on sellers and buyers and during the cooler months, there is less volume of stock around from which buyers can choose, so houses are more likely to sell,” Mark Millington said.

Mark Millington said currently there are growing investment returns in the property market, which should prove lucrative for the astute investor.

“Investors, in particular, can benefit greatly from the current market conditions and pick up some terrific properties that offer strong returns,” Mark Millington said.

Issued by: First National Real Estate
For further information contact Mark Millington, Principal, First National Real Estate Lakeshores on 0418 970 591.

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Property Remains a Sure Bet

July 23, 2010 1 Comment

Mid year property outlook 2010

Mid year property outlook 2010

As property punters across New South Wales hedge their bets both ways, First National Real Estate Lakeshores’ Principal, Mr Mark Millington is bringing some much needed clarity, predicting property prices’ growth will slow but that the market will remain buoyant despite ongoing uncertainty and increased consumer nervousness.

According to Mr Millington, property prices across all sectors of house, land and apartment/strata in the Lake Macquarie and Central Coast region rose by up to 1 – 5 per cent in the last six months, driven mostly by an increase buyer pool and lower level of available homes for sale, plus lower interest rate and government stimulus. 

The rental market has seen vacancy rates decrease marginally by no more than 1 per cent as housing affordability and immigration create more tenants than available homes – a factor which has seen rents increase by as much as 5 per cent in some cases.

For the remainder of 2010, property prices, across all sectors (house, land and apartment/strata) are expected to continue to increase by up to 5 per cent as there is a shortage of new listings and a growing buyer pool to draw from.  However, this is dependent on the RBA not increasing rates too high. 

“The last two rate rises have already impacted on buyer confidence and also housing affordability and it is hoped they have now done their job and will hold rates where they are for some months, significantly improving buyer confidence,” Mr Millington said.

Vacancy rates are expected to ease even more, decreasing by a marginal 0-1 per cent, while rents are expect to further increase by up to 5 per cent due to the ongoing shortage of available rental accommodation.

Sales should continue to increase as Generation Xers continue to seek, and take advantage of, opportunities to trade up.

The new tax by the NSW government for home owners selling property over $500,000 will have a negative impact on the market, similar to the results of the NSW vendor exit tax for investors.

Housing affordability has come to the forefront in NSW, particularly in Sydney, while other parts of NSW, such as the regional and coastal areas, enjoy lower median prices and are attracting investors and first home buyers. It is expected affordability will remain a major factor in property decision-making throughout 2010.

Property hot spots are considered regional and coastal areas that have the greatest potential for growth as capital cities become more expensive.

A highlight for the second half of 2010 will be an expected 5-10 per cent increase in investor activity in the property market, on the back of an already 1-5 per cent increase in the last six months.

The expected increased activity is due mainly to finance markets becoming more volatile and consumer confidence being affected, investors will return to property for security, with a housing shortage that appears unable to change quickly, ensuring real estate holding values or increasing in value.

Interest rates are expected to continue to increase further by the end of 2010, by between 1-1.5 per cent, further impacting on the Lake Macquarie and Central Coast property market and adding to housing affordability concerns.

The environment is continuing to be a factor for consideration by homebuyers, with the most popular ‘green’ features being water tanks and solar hot water.

According to Mr Millington, the Government needs to take greater control of the supply versus demand issue for the Australian property market.

“They need to consider a holistic approach to the issue and look at a number of factors, such as releasing more land; overhauling the planning process and introducing a national planning authority; and introducing incentives for more medium density developments,” Mr Millington said.

There is a strong trend developing for Gen Xers and Baby Boomers opting to stay in their homes, rather than sell, making it harder for Gen Yers to get into the property market.

To view the full report for the Australian property market mid year update click here.

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HOME OWNERSHIP STILL WITHIN GRASP

June 21, 2010 Leave a comment

First Home Buyers

Home Ownership Still Within Grasp

Home owners and buyers are once again feeling the pinch to keep their dreams of home ownership alive as housing affordability returns to the property market agenda.  But, First National Lakeshores Principal, Mark Millington says it’s a matter of rethinking options and developing creative strategies.

Impending future rate rises, along with tightening lending conditions and increasing mortgage stress concerns have started to take their toll on home buyers’ ability to own their own home.  According to Mark Millington home buyers need to take action on an individual level to tear down the wall of housing affordability in any way they can.

Recent research has found a decline in the number of home loans with a high loan-to-value ratio (LVR) of 95 per cent or above.  LVR refers to the amount of money borrowed for a property, compared to what the property is worth.

Mark Millington says while lending criteria has toughened in recent months, there are still lenders willing to negotiate a better deal around a number of factors such as fees or rates or the actual LVR itself.

“Lending institutions need to be willing to negotiate and be a little more flexible,” Mark Millington said.  “And there are plenty of lenders out there who are willing to do just that, if home buyers are willing to shop around a little and do a bit of homework themselves.  It’s up to the individual to take matters into their own hands and ask.

“But they need to have the facts that support their case as well.”

Some key tips for overcoming housing affordability concerns include:

  • Time your purchase for when there is a lull in the market, such as winter, when the market generally slows and lower demand can potentially tip the balance in favour of buyers.
  • Calculate what you can afford to spend, factoring in any interest rate increases, probably 2 per cent higher than current levels.  Match this to your list of preferred suburbs and concentrate on properties that are genuinely within your range.
  • Be flexible and adjust expectations as required.  You may dream of buying a home in a particular area, but consider a smaller home, or even a unit or apartment, with a view to upgrading later.  Alternatively, consider an area a suburb or two removed from your where you would like to live.
  • Start a disciplined saving strategy immediately.  Set realistic savings goals and set up an achievable budget for household expenditure.

Mark Millington also had some sage advice for home owners currently experiencing mortgage stress.

“Home owners can consider extending the life of the mortgage,” Mark Millington said.

“In recent years, all the focus has been on how quickly a family can pay back the mortgage and then move another rung up the ladder.

“Obviously, that is the most desirable situation, but times are changing and it may be more useful to focus instead on how to get into the market in a way that is financially manageable.

“But whatever they do, they should seek the services of a qualified, reputable and trustworthy financial advisor.”

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Residential Market Slows

June 2, 2010 Leave a comment

For the last year, strong demand has led to high auction clearance rates and marked growth in residential real estateProperty Outlook 2010 values nationally. However, it’s now official – clearance rates have slumped after the compounding effect of six interest rate increases since October, tightening lending criteria and a worsening European financial crisis.

Eight weeks ago, Melbourne was riding the crest of the demand wave with a clearance rate of 85.3 per cent. That’s now fallen to 69.4 percent. Similarly, Sydney was enjoying a clearance rate of 73.7 per cent but that’s now just 63 per cent. However, while these are the nation’s two largest auction markets, they’re only a small proportion of all dwelling transactions nationally. Still, the traditionally weaker auction markets of Perth, Adelaide and Brisbane have eased as well.

In contrast though, the total number of auctions taking place has remained very strong and measures released yesterday by RP Data indicate that although prices growth has slowed, home values are up nationally by an average of 0.2 per cent in the month of April and 2.4 per cent for the quarter. Of concern though is the change in direction for both Brisbane and Perth values, with the former dropping 0.5 per cent and the latter 0.6 per cent in the April quarter. Could this be the beginning of a downward trend?

The Government’s planned imposition of a Super Profits tax on mining companies is affecting confidence as it attempts to position the tax as a battle between big business mining and average Australians. With several future mining projects either now on hold or cancelled, it may still be too early to be sure whether this is having direct effect but both Western Australia and Queensland have shown anecdotal evidence of cooling consumer sentiment and, as the above figures confirm, a slide in prices.

Last week, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) contributed conflicting commentary on Australia’s housing position. The IMF suggested that its analysis of housing slumps since 1970 shows home prices will fall much further and for much longer. In a report in The Australian, its economist Prakash Loungani said previous slumps had lasted on average for 18 quarters, with prices dropping 22 per cent. The current housing slump has lasted only 14 quarters and prices have dropped just 15 per cent.

Prices have dropped 15 per cent? Not according to Australian data. Taking the opposing view, The OECD was more upbeat, even though it predicted at least four more rate rises, and most likely five in the year ahead. It suggests the RBA will finish the year with a cash rate of 5.1 per cent by December and push on to 5.7 per cent by next June.

This is completely at odds with Australian financial markets, which are anticipating a tightening of only 0.25 per cent over the next year. Yet, despite the OECD’s gloomy interest rate outlook, it still expects demand for Australian real estate to remain strong, ‘bolstered by immigration’ and above average economic growth – exceeding 3 per cent. New South Wales is paying the price for the State Government’s introduction of a new property tax which is making new construction less attractive for developers. Brisbane also appears to have fallen out of favour, with big residential developers pinning hopes of future profits on Melbourne, Perth and Adelaide.

Stockland have recast their product to the affordable end of the market and will be relying on the ‘boom market in Melbourne’. Its recent investor update says that 50 per cent of all jobs created in the past 12 months were created in Victoria and that the state has been more successful than any other in tapping the population surge driven by migrants from China and India. Billionaire developer Lang Walker is firmly focused on Adelaide as well as Melbourne, and most other developers are following in his footsteps.

The RBA Board met to yesterday determine what action to take with interest rates for June. The weakening market indicators and falling Australian dollar led to a hold in the official cash rate.

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Does Australia Face a Property Bubble?

March 22, 2010 5 Comments

Heading for a property bubble

Does Australia face a property bubble

 

For sometime, elements of the media have suggested Australian housing values are over-inflated and face the risk of a speculative housing bubble bursting. This theme arises in some European and US based reports, where an incomplete understanding of the Australian property market’s unique dynamics is evident. Australian media is not devoid of such reports, although they are far less prevalent. 

Of course, there are reasons for concern. Many of the market’s indicators do underline the fact that things are getting hotter. Housing prices have been rising strongly this year, on the back of modest gains even last year. Auction clearance rates started strongly in 2010 and pre-auction sales are well up. The number of properties being sold has risen. Rents continue to rise, although slightly slower than expected, and vacancy rates are at their lowest point in the past twenty years. 

Balancing the rapidly heating market though is a sharp drop in home loan approvals. To an extent, this is an expected result of the removal of the First Home Owners Grant Boost. With many having rushed to beat the phase out in December, there’s a natural adjustment occurring. However, this is also partly attributable to tightened credit conditions. 

The set of fundamentals driving the Australian property market differ, though, from most international markets right now. Firstly, Australians are chiefly coastal dwellers. This is in total contrast to the European and United States property markets. We have a limited number of population centers and these attract the vast majority of our population, as a result of employment and lifestyle conditions. 

Our political structure of Federal and State governance leads to another unique factor. The Federal Government has determined a policy whereby levels of immigration are set at their highest since WWII, generating significant demand for housing. This collides with an environment of under supply and a demonstrated State Government incapability to plan for appropriate land release and building approval processes. 

Australia’s banks are more heavily regulated than those of other countries and the concept of ‘non-recourse’ lending that, in part, led to the sub-prime mortgage crisis in the United States, is simply not a feature of our marketplace. The economy has performed strongly and continues to do so as employment posts some of the strongest gains on record in recent times. 

Banks, however, remain reluctant to resume lending for apartment developments and this is another factor constraining supply. As predicted in First National Real Estate’s Property Outlook 2010, investors have noticed the opportunity for capital gain in such an environment and this is where the Reserve Bank of Australia (RBA) observes some risk of speculation creating a bubble. 

Research shows that basic variable interest rate movements of the past ten years have averaged 6.6 per cent. The last few RBA board meetings have all discussed the need for interest rates to return to ‘normal levels’ if the economy still shows signs of expansion. According to finance brokers Smartline, Australia is now only 0.60 per cent from the medium term average, as the chart above shows. RBA boss Glenn Stevens’ estimate is that it will take one or two 0.25 per cent increases in official interest rates to return to ‘normal’. 

New home sales made an encouraging start to 2010, with sales of newly constructed homes jumping 10.1 per cent in January. Sales of new apartments also rose, but only by 4.1 per cent, following a 14.5 per cent rise in December 2009. However, while sales were up in January, building approvals fell 7 per cent so supply remains the never-ending challenge critical to avoiding a bubble. 

One simple factor is clear. If State and Federal Governments cannot coordinate, at all levels, to solve land supply constraints, high levels of taxation on new housing, and, structural barriers, the strangulation of dwelling supply will leave the RBA with one option only to minimise the chance of a bubble bursting – suppressing demand by lifting rates further still.

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