Market Update - October 2008
There are many factors that affect the strength of the residential real estate market. One of the biggest is that of consumer confidence. If we feel happy and secure in our personal financial security and importantly, that of the marketplace at large, we are more likely to make large financial decisions.
Interestingly, financial insecurity in one sector of the marketplace can have a positive affect on another sector. While it is only early days, the volatility and uncertainty of the share market at present could be the kickstart the real estate market has been waiting for.
In the late 1980s the share market was very strong. When eventually took a dive, a lot of investors turned to bricks and mortar and this could be credited with kickstarting the real estate boom of the early 1990s.
For some investors, particularly those who have been burnt by the stock market or have limited investment expertise, real estate is seen as a tangible investment option that is easier to understand and can be self managed. The current stock market instability, coupled with the benefits of low vacancy rates and high rents, are seeing more investors return to property investment and we expect this number to continue to grow steadily in the coming months.
Another factor that obviously has a marked affect on the residential real estate market is interest rates. After four interest rate rises over eight months, consumer confidence gradually waned and eventually buyers went into hiding. Conversely, when rates dropped in September (and with talk that a further drop on the cards) activity in the marketplace picked up immediately.
The onset of Spring coupled by warm, sunny weekends brought both buyers and sellers out of their sleepy winter hibernation this month. There has been a marked increase in the number of properties on the market and many more potential buyers are attending our open homes. Spring never fails to increase activity in the residential real estate market. Gardens come into bloom and, as our lifestyle dictates, we love the idea of living in a home with a fabulous outdoor entertaining area.
As the squeeze on the rental market continues unabated, it is unsurprising that an ever growing number of tenants are making the leap into home ownership. Rising rents and extreme competition for the few rental properties that become available is turning more tenants into purchasers. Even long term, settled tenants are angered by continual rent rises and are buying. Some tenants may find it is more financially beneficial to put their money into a mortgage rather than rent. Tenants who are first home buyers can benefit significantly from the first home buyers grant and zero stamp duty incentives.
Thankfully, our region is not significantly affected by external market fluctuations like other areas of the Sydney metropolitan area. Many home owners have lived here long term and thus have small mortgages or own their property outright. House and unit prices have remained relatively stable over the past 2-3 years and properties have continued to sell within reasonable time frames.
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Hong Kong Laundry Or Global Warming Solution
With the contentious issue of global warming something it seems we can longer ignore, many of us are looking for ways we can change our behaviour around the home to reduce our carbon footprint. One of the easiest, and cost effective, ways we can help save our planet is by cutting back on our use of the clothes dryer and take advantage of the glorious (free) Australian sunshine. According to the Queensland Government Climate Smart Living website (www.climatesmart.qld.gov.au) a clothes dryer used three times per week costs around $100 per year to run and creates 500 kilograms of greenhouse gas. Dryers in Sydney units alone produce an estimated 80,000 tonnes of carbon dioxide a year, the equivalent of 18,600 cars*.
While cutting back on clothes dryer use may be a simple lifestyle change for people living in a house or townhouse, unit residents risk hefty fines (and even imprisonment) if they hang washing their balcony or anywhere else that may be visible to the public.
By-law 10 of the Strata Titles Act currently states that:
"An owner or occupier of a lot must not, except with the prior written approval of the owners corporation, hang any washing, towel, bedding, clothing or other article on any part of the parcel in such a way as to be visible from outside the building other than on any lines provided by the owners corporation for the purpose and there only for a reasonable period."
A breach of this by-law can lead to a $5500 fine or up to 12 months in prison.
Originally the by-law was created for aesthetic reasons. Hanging washing on balconies or other areas that can be seen by the public may be considered by some as visual pollution risking turning our cities into what is often referred to as a ‘Hong Kong laundry’. While unit blocks should have an outdoor clothesline area available for residents to hang their washing, theft can be a problem.
The Department of Fair Trading is presently examining the drying of laundry items by-law to determine whether it is still appropriate in its current form for contemporary conditions. While the owners corporation of each strata development can choose to adopt the current by-law, cancel the by-law or given individual owners and residents written approval to hang their washing where it would be visible, this option may not be known to some residents or simply ‘too hard’ for other.
While it’s paramount we don’t lose the aesthetic appeal of unit blocks, there are surely many alternatives and solutions to suit our changing needs. If you would like to have your say on this issue, the Department of Fair Trading is encouraging public comment. Visit the Department of Fair Trading website for more information (www.fairtrading.nsw.gov.au) or call them direct on 9338 8955.
Source: www.smh.com.au.