Mornington Peninsula Real Estate News May 2021
NEW LISTINGS LIFT SUBSTANTIALLY
If you’ve been holding off selling your home, for fear of becoming homeless, the market is finally sending the signal you’ve been looking for according to CoreLogic’s latest national home value data.
You’d be hard-pressed to find anybody in Australia who isn’t aware that it’s a ‘vendor’s market’, and has been since June last year. Until now, one of the reasons is that so many homeowners are not prepared to sell, frightened they’ll not be able to find another home in a reasonable timeframe. That’s because advertised stock levels have been running at 25% below the five-year average, until late April at least.
However, now the pendulum has swung somewhat, with new listings to market now well above average, relative to the past two years. This is positive news for those that would like to move, but have been discouraged by the degree of buyer competition they read about.
While advertised stock levels are still low, more property is flowing onto the market, and relationships with local agents have never been more important. A substantial number of those new listings are not being advertised, either because vendors are preferring discrete sales, or because agents are able to strike agreements between seller and buyer rapidly.
Housing values lift 1.8% in April
CoreLogic’s national home value index recorded a 1.8% rise in April, with the monthly pace of gains easing from a 32-year high in March of 2.8%. Although the pace of growth has slowed, housing values are still rising rapidly, up 6.8% over the past three months alone – now 10.2% higher than last year’s September COVID low.
Small fish are sweet
The four smallest capital cities recorded double-digit annual growth (Adelaide 10.3%, Hobart 13.8%, Darwin 15.3% and Canberra 14.2%), reflecting a smaller COVID-related disruption and an earlier start to the growth phase last year. Melbourne is recording the lowest level of annual growth (2.2%) due to a larger downturn, attributable to the extended lockdown period last year.
Preference for houses over apartments
The trend of houses outperforming units continued last month, yet again, as Australians demonstrated a preference for more space, a backyard, or a regional relocation – tree change/sea change.
This shift away from higher-density housing during a global pandemic is understandable, however, a rise in flexible working arrangements also seems to be supporting greater demand for houses around the outer-fringes of capital cities. Relatively weak investor activity, compounded by a supply overhang in some CBD high-rise precincts, is also dampening price growth in unit markets.
Upper quartile still leading growth
Continuing the opposite of last year’s trend, the upper quartile of the housing market rose 8.8% in the last quarter, compared with a 4.1% lift in values across the lower quartile.
TOP 5 FRAGRANCES TO Attract BUYERS
Viewing a property is a multi-sensory exercise and nothing will deter a buyer more than a bad smell. Fragrances need to not only create a welcoming, clean and friendly atmosphere, they also need to have a top note of aspiration.
Coffee and a crackling fire: The days of scented candles and baking cookies are over. Freshly brewed coffee and the hint of smoke from a cosy crackling fire is evocative of a future life being lived.
Fresh flowers: Placing a bunch of colourful and lightly fragranced fresh flowers on an entry table provides immediate sensory pleasure as buyers enter. Roses are great – especially if they’re from your garden, as are some varieties of lilies, or a posy with lavender or rosemary in it.
Essential oils: Oil burners and diffusers are a useful way of dispersing fragrance through the home. Stick to plant-based scents that bring a sense of nature into the home. Citrus-based smells like lemon myrtle and mandarin are widely popular. Scents like ylang-ylang and geranium may overpower.
Freshly cleaned: Dousing everything in bleach will leave a cold, clinical smell, so schedule the deep clean in advance of the open house. Give everything the ‘once over’ the day before with cleaning products that contain lavender, eucalyptus, or lemon. Bicarbonate of soda absorbs odours.
HOW TO FAST TRACK PAYING OFF YOUR MORTGAGE
Knowing you are chained to a mortgage for 3 decades or more can be daunting. There are ways you can mix up your strategy, however, with the reward of reducing the balance of your mortgage, as well as the time y0u’ll take paying it off.
Adjust your psychology – Nobody likes the idea of short-term sacrifice for long-term gain but thinking about pockets of sacrifice throughout the lifetime of your mortgage can make it more digestible. Over 30 years there will be as many lean times as there will be times of prosperity.
Career aspirations should be considered in line with your mortgage too – double-income households that are both benefiting from pay rises as they progress professionally will be in a great position to really carve a chunk out of a mortgage by living off one salary and directing the other to the loan repayments for example. Tightening the budget for 2 to 5 years and reducing the mortgage as much as you can during that time, then relaxing into a more manageable balance, is much easier than living a restricted lifestyle for most of your life.
Tighten the purse strings – Whatever strategy you choose in terms of repayments through the lifetime of your loan, tightening your budget will always make a difference. If you don’t currently track your spending, make the change now. There are plenty of apps that will do the job, or you can use the humble spreadsheet, or even handwrite it in a notebook. Every month there will be something that can be skipped, reduced, or removed altogether. Delaying things from one month to another to spread the expenses across the year will help boost your month-to-month repayments, without impacting on your lifestyle too much.
Maximise an offset account – If you don’t already have an offset account for your mortgage, you should get one! The balance of your offset account is used to calculate the interest payable on your mortgage – if you have $10,000 in your offset account and a $600,000 mortgage, then interest will be calculated against $590,000 instead. The higher the balance of your offset account, the less interest you will pay. Getting a salary paid into your offset account is a great way of increasing its balance, as is transferring savings or your buffer account balance.
Increase your mortgage repayments – Paying more off your mortgage from month to month is of course the best way to fast track paying off your mortgage, but it’s also the most challenging.
If you tighten your budget and pay a big chunk of it down early on, then reduce your interest via your offset account, you’ll definitely make some progress. Finding ways to increase the money you’re actually paying across will also make a big difference.
This isn’t always easy, but as mentioned previously, identifying blocks of time across the lifetime of your mortgage where you can boost your payments, such as when your salary increases or once block expenses like school fees are finished will all make incremental but rewarding differences.
WEAKEST RENTAL CONDITIONS SKEWED TO CITIES
The nation’s weakest rental conditions remain skewed towards higher-density markets, especially the cities of Melbourne and Sydney. In Melbourne, the downwards shift in unit rents has been more severe, with rents down -7.6% over the past 12 months.
However, rental rates in Melbourne’s apartment sector look to be stabilising, with CoreLogic’s measure of rents holding steady over three of the past four months. The monthly trend in Sydney apartment rents has recently turned positive, with unit rents consistently rising over the past four months to be 2.8% higher over the year to date.
Finding vacancies more challenging outside capitals
Rental conditions have been stronger outside of Melbourne and Sydney, where demand is less dependent on overseas migration and interstate migration trends have provided an additional lift. Darwin and Perth have shown the most significant lift in rents. Rental supply has also been less substantial outside of Sydney and Melbourne due to historically lower levels of investment activity and less construction aimed at the investor segment of the market.
ARE TENANCY INSPECTIONS THE TIME FOR AN UPGRADE?
Some investment property owners think it’s enough to respond to the maintenance needs of their tenants, and not make any further investment in the property that may increase its value.
Every property needs ongoing care, maintenance, and upgrades, and the better condition a property is kept in, the longer it will retain its value.
Your regular tenancy inspection makes sure everything is in order, but it’s also a great opportunity to investigate in more detail the condition of your property, with the goal of making improvements – investing in your investment if you like.
Beyond the basic checks that are routinely done, it’s useful for your property manager to get specific when asking the tenant if everything’s working ok.
Asking things such as how the gas heater has been running, whether the air conditioning seems to be working ok, if there are any issues with light switches or fixtures, leaking taps, strange noises when the toilet is flushed and so on are worthwhile.
Often a small prompt can be a reminder about something that has only recently happened or worse – it’s been happening so long they now think of it as normal!
In addition to direct feedback, it can also be valuable to request photographs from your property manager of specific things – the carpet in a high traffic area for example (does it need replacing?), the progress of some gardening work or planting that was done some months before (is everything still alive?), or a more focussed look at the wear and tear on walls and surfaces (do they need repainting?).
TOP 5 SECRETS OF TENANT RETENTION
It’s every landlord’s greatest wish to have good quality tenants in their property. While some don’t always see that dream fulfilled, others are reaping the rewards of great tenants and doing all they can to make sure they stay. So how do you keep a good tenant for the long haul?
Be responsive – whether responding to a maintenance call, approving a request or answering a question, follow-through will work its charm every time.
Arranging maintenance as quickly after it was reported as possible will definitely get you in their good books.
It tells the tenant you heard them, empathise with them and respect their needs – action always pays dividends.
A wish list – It’s rare that tenants get the chance to have a say, so being asked ‘how would you make this property better?’, or “what’s your wish list for your home?’ is a real game-changer.
You may not action everything (or anything) on their wish list, but choosing requests that are easy to implement, not too costly, and will add value to the property is really a no brainer.
Surprise upgrades – keeping tenants satisfied and happy can be as easy as a new shower head! If you’ve had some upgrades in mind for a while, surprise them with the news and brighten their day. New bathroom fixtures, replacement of some out-of-date tiles, or maybe some new additions to the garden all add value but also improve the tenants’ experience of living there (and thus wanting to stay on).
The little things – If you’re blessed to have responsible, committed tenants then sending a little gratitude their way in the form of a card in the mailbox here and there, a movie voucher, or a small but strategically chosen gift is almost essential. It lets them know you value them and builds in loyalty to you they may not have had before. At the very least, you could send a few sentences in a Christmas card telling them what great tenants they are and expressing your gratitude.
Be human – if a tenant feels like a place is a home, they will take care of it as if it’s their own. If you take care of them, in recognition of this, everybody wins. Taking a human approach means being understanding when life gets in the way.
Their rent might be late here and there, or they might appreciate some notice if the rent is going to go up. Or worse – they might get sick, separate from their partner, or lose their job.
Doing whatever you and your property manager can to be supportive and improve the tenant’s experience of the property is the key to a (hopefully) prolonged tenancy.
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