Welcome to our October Newsletter

Have you noticed how much negative news there has been in the press recently? Sometimes there seem to be more negatives than positives.

An increasing shortage of well-located properties in our capital cities, teamed with an increasing demand, means that there is only one way for rents and eventually property values to go - and that is UP!

As we know, not all property values increase equally. There will always be some that will out perform others. The changing demographics and the way in which we live or want to live, means that there is a higher demand by tenants for certain types of properties and locations.

Some property investors will take advantage of the next property cycle. History shows however, that most will miss out.

Nasser Mashni

CEO

Australian Finance and Property Solutions

The current Property Market

Latest figures from the Real Estate Institute of Australia, (see the table below) show that property markets have held up well over the last year. Looking at the growth over the last quarter, you can see the effect of the world credit crisis, local problems and low consumer confidence are having on our property markets.

	Houses				Other dwellings (units, apartments, etc)
City	Median price June 08 qtr	% change March 08 to June 08 qtr	Median price June 07	% change June 07 to June 08	Median price June 08 qtr	% Change March 08 to June 08 qtr	Median price June 07	% change June 07 to June 08
Sydney	$542,000	-2.1%	$532,600	1.8%	$364,000	-0.7%	$366,500	-0.7%
Melbourne	$451,000	4.9%	$415,000	8.7%	$370,100	0.0%	$363,000	1.9%
Brisbane	$420,300	0.1%	$366,300	14.7%	$356,000	0.6%	$310,000	14.8%
Perth	$443,000	-3.7%	$455,000	-2.6%	$374,000	0.0%	$365,000	2.5%
Adelaide	$366,000	0.3%	$312,800	17.0%	$276,000	0.4%	$239,000	15.5%
Darwin	$423,300	0.8%	$395,000	7.2%	$329,000	2.0%	$279,300	17.8%
Canberra	$450,000	-3.2%	$426,500	5.5%	$353,000	-3.3%	$335,000	5.4%
Hobart	$325,000	-3.0%	$310,000	4.8%	$260,000	4.0%	$243,000	7.0%

Source:REIA

Property prices in Melbourne have held up, with some areas still performing well. Auction clearance rates are the lowest they have been for a long time and both buyers and sellers are uncertain and anxious.

The bad news keeps coming from overseas - the world financial markets are in turmoil.

Yet the fundamentals for our property markets still stack up very well…..

Our economy is sound. Whilst there is a slowing down, the Reserve Bank of Australia has deliberately put measures in place to curb inflation and slow our spending. We have had a couple of interest rate reductions with more likely next year. Our population is increasing faster than ever before with 1500 people arriving in Melbourne every week. We are not building enough houses, which means we have an undersupply of dwellings. Vacancy rates are still at a record low with rents rising. What does this mean for property investment? In short, property yields are increasing. The market is indicating that the cost of constructing new dwellings will increase thus the value of established properties goes up.

Losing sight of the positive factors can be easy with all of the current news, however we need to focus on the facts.

So what do you do as a property investor?

Remember the golden rule. “Property investing is a long term proposition.” It is essential that you frame your thought process this way. It is possible to buy a property at any time in the property cycle as long you ensure the fundamentals are there. I believe now is a great time to buy property. As Warren Buffet says “Be scared when others are greedy and greedy when others are scared”

Experienced investors know that the best time to buy is today - so long as you are thinking long term.

Have you booked in for your financial health check? – Call us on 03 9815 3922.

Do you know about our referral program? – contact Karen on 9815 3922 for more details.

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