‘Significant’ downturn in our real estate market

The ARMIDALE housing market is experiencing a significant sales downturn that could possibly last through the rest of the year.
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Despite strong economic growth in Australia last year, 544 properties were sold in this region, down significantly compared with 2007 and 2003 figures.

In the first quarter of last year, there were 149 local housing and property sales.

This year there were 100, down by nearly a third.

Despite small boom periods in 2006, 2007 and 2009, the number of houses sold in the region has been steadily declining since 2003.

“There certainly has been a drop in the number of transactions,” Professionals real estate agent Luke Fahy said. “A lot of it is due to an increase in stock levels.

“Over 600 properties (in our postcode) … that’s a lot of property on the market.”

Armidale Town & Country real estate agent John Oehlers said it was “basic economics”, with a low demand in the region and a high supply.

However, median house prices though have not fallen dramatically.

Instead, they have hovered at $350,000, according to Rex Harper from Century 21.

However, Paul Campbell from First National Real Estate said the average house and property price had fallen by $39,000.

Most real estate agents The Express spoke to believed that low confidence levels were mostly to blame for falling sales.

Low market confidence, coupled with the end of the First Home Owner Boost Scheme last December, has scared a lot of potential first home buyers out of the market, according to local agents.

However these factors, along with the Reserve Bank cutting interest rates last week, has made Armidale a viable area for out-of-town investors.

While other agents said the local market was oversupplied, Uphill and Schaefer real estate agent Julie Schaefer noted that an influx of investors meant there were fewer properties in the first-time property buyer bracket.

“When the market is good for investors they usually buy the things the first home buyers want so they can’t afford to get what they’re after, so they really need to get in now before the investors get in,” Ms Schaefer (pictured) said.

Another issue agents face is the number of competitors. A large number of local real estate agents, combined with the sales drop, could present a survivability issue, local agents say.

“Agents will go broke … or merge,” Mr Harper predicted. “There’s what, 11 agents here? There’s no way 11 agents can survive.

“I mean the pie hasn’t gotten bigger, it’s just gotten thinner.”

Several local real estate agents believe that the number of real estate agents could present a survivability problem if the market doesn’t turn around.

However, it isn’t just agents that are feeling the pinch, builders are being affected as well.

Nev Waters founded Waters Homes with his son, Glenn, 17 years ago and they have been operating in the New England area ever since.

Mr Waters said inquiries at his business were “no more than half” of what they were this time last year. This coincides with the major drop in first-quarter home sales.

Mr Waters said government incentives were desperately needed to assist the building industry.

“If something is not done it’s going to be a catastrophe in the building industry,” he said.

Mr Waters was cautiously optimistic more work would come their way. However, he estimated that his business has only two months worth of work left. He says for builders the problem isn’t isolated.

“Blokes aren’t handing in their [building] licenses but they’re just not renewing them,” Mr Waters said.

In fact, Armidale’s weak overall housing sector is hardly isolated.

Last month, housing prices in Sydney, Melbourne, Brisbane, Adelaide and Perth fell 1.4 per cent.

This follows falls of about 5 per cent last year.

Armidale may then be simply a sign of the times. Overall, Armidale’s housing markets may not be in dire straits but it is in a lot of trouble. Many of the real estate agents were concerned but also optimistic.

The large number of sales in 2003 coincided with a national property and investments boom in the early 2000s. However, that bubble burst 10 years ago and Armidale is still feeling the effects.

Despite solid economic growth across the country and low unemployment Australian consumers everywhere have lost confidence in the market.

The reason is hard to pinpoint but the evidence seems to indicate that real estate, construction and retail will take the hit.

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