Buy, buy, buy say estate agent bosses

Buy, buy, buy say estate agent bosses

The gap between buyers and sellers is narrowing favouring even the entry level buyer.

Several property specialists have indicated that 2012 is the year to take the plunge and invest in that property you have had your eye on, even as a first time buyer.

Auction Alliance CEO, Rael Levitt, says the residential property market has reached equilibrium making the next 12 to 18 months an ideal time to invest. Explaining the concept of equilibrium, Levitt says “when supply and demand are equal, ie, when the supply function and demand function intersect, the market is at equilibrium.” Levitt says since house prices have dropped and little newly built stock is entering the market, the demand is trickling upwards with the marketplace showing good value.

Craig Hutchison of Engel & Völkers concurs. He says the gap between buyers and sellers is closing with home owners recognising on some fronts that unrealistic asking prices will not lure purchasers. Hutchison says there has been a tendency by sellers to hold on to their properties hoping to realise unrealistic returns which were the hallmark prior to the global 2008 subprime crisis.

Levitt says after three years of dwindling sales and slumping prices, 2012 appears to be the year to invest in property. “Although the market may weaken slightly this year, the market is now bumping along the bottom which means from a long term investment perspective this is the time to buy.”

The MD of Chas Everitt International Property Group, Berry Everitt has added his voice to those saying the current market is a buyers’ one, but says that sizeable deposits have proved to be a significant obstacle.

He suggests pooling resources to overcome this barrier at a time when interest rates and house prices are low and affordability is up. Everitt suggests the formation of an investment group to put up a deposit and share other costs while letting the property to cover the bond. Obviously the process will have to be carefully managed from a legal point of view.

Household and property sector strategist at First National Bank, John Loos, says while it is difficult to say when it is a good time to buy or not, “it’s becoming a better time to buy”. He points out though that people thinking of buying property must keep in mind possible interest rate hikes. Loos says cost hikes in municipal rates and utilities like electricity must also be considered. “…one needs to buy well within your means to allow for those very significant cost increases in future”, Loos said.

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Levitt maintains that 2012 will most likely see further house price lethargy but that this opens the window of opportunity. “This may appear to be a contrarian view which flies in the face of the persistent gloom that has nagged the residential market since 2008, when the subprime crisis flared globally. It has become increasingly apparent to us that the pieces for a housing rebound will eventually fall into place.”

He points out that while a slow recovery could be derailed, the market finally seems to be regaining some measure of normalcy after a few years of weak prices and the volatile impact of foreclosures. The normalcy being the equilibrium between the demand and supply of housing. Levitt concedes that while it is early days to predict a rebound in 2012, transaction volumes appear to be improving.

“With the exception of really hard-hit markets, such as leisure property, the vast majority is ready to turn around. This isn’t going to be one of those spiked robust recoveries but if entry level buyers want to get into the market, this is a good time.

“I think that the hysteria of the boom is now well and truly over. We are back to the natural forces of the market and that means that just like our parents and grandparents (who) saw slow and steady growth in house prices, we will see the same. If you have a long-term pragmatic view of residential property investing, you will realise that the only trajectory is now upwards and the timing for investment over the next 12-18 months could not be better,” Levitt concluded.



Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!