Tuesday, November 20, 2007
I have some very strong views on the current training requirements for real estate agents in New South Wales and would like to think that 2008 will be the year that truly brings about a revolution for this industry. The only problem is that Federal laws do not govern the real estate industry and every State or Territory has its own set of guidelines. Most of them are fairly similar, however they are different enough to make the process of operating legally across the entire country almost impossible for any one agent or agency.
There are three main initiatives which would constitute an “Education Revolution” in 2008 for me. Firstly, a national set of guidelines under which all real estate agents operate would be an enormous step forward. The Property, Stock and Business Agents Act 2002 (NSW) governs real agents only in NSW – a Federal Act covering Australia would be wonderful but of course this would require co-operation between the Federal, State and Territory Governments.
Secondly, a national approach to the “Certificate” requirements for all real agents is essential. A completely revised entry program for all new agents must require more than a 3 day course, which currently fails to provide the basic skills required to succeed in the industry. We need to totally ban correspondence entry courses which require only a mailed assessment task. I know of many real estate agents who have simply printed off the answers from a friend and not completed a single minute of study when completing their Certificate of Registration.
Thirdly, a national approach and total overhaul of the current Licensing requirements is a must. Currently in NSW there are multiple providers of Licensing programs which vary in length of time from less than one week to up to 2 years. Assessment is inconsistent and there is a culture of “pay and pass”. A was told recently of a student studying the licensing program at TAFE who was passed to avoid the administration nightmare of failing him/her (Identity Protected). The teacher was unable to fail the student who had not turned up to class or had left the class early almost every night. To make matters worse the student did not complete assessment tasks on time and still received a pass. This system is resulting in sub-standard agents with poor knowledge and the big losers are the general public and the industry as a whole.
The real estate industry is struggling to lift its image and yet bodies like the Real Estate Institute of New South Wales fail to push for reform in such basic areas. To truly enjoy an “Education Revolution” the real estate industry requires a complete overhaul, necessitating a “clean slate approach” to rebuilding the educational requirements of the industry to attract people who would otherwise choose other consultant roles. The status quo will result in the continuation of real estate as a dumping ground for those who have failed elsewhere and have nowhere else to go.
The annual turnover of agents is around 80% (first year agents). This attrition rate is completely unacceptable and exemplifies the failure of real estate training as it now stands. By lifting the calibre of real estate newcomers we will lift the image of the industry.
The big questions are how high will interest rates go and who can we blame for the increase? There is no simple answer to the question, however I believe interest rates will increase to 9-9.5% and it would be unlikely to reach double digits. The Reserve Bank’s independence means that increases in rates will be made without political bias and will be in the best interests of the country as a whole.
The Australian economy has enjoyed 16 years of consecutive growth which means the first 5 of those were under a Labor Government, followed by 11 under the Coalition. Regardless of which party is in power after Saturday interest rates will increase in 2008 and Australians should be tightening their belts and avoiding excess.
The top end of the market is booming and will continue to boom in 2008. The top end of the market has come through 2007 unaffected, with units and low-end property prices steadying, although many buyers are carefully considering their decisions and taking their time to make offers.
This leads us to yet another question – Will 2008 be a good time to sell? In 2007 most vendors have made the decision to move based on lifestyle factors and financial pressures rather than the realization of capital gain. 2008 looks like continuing that trend.
There are buyers at every level of the market, however, prices are steady and should continue to be the same over the next 12 months. Top end property and those in the Sydney’s West will be the exception in 2008. We will continue to see records set in Sydney’s beachside and harbourside suburbs and suburbs in Sydney’s “mortgage belt” like Glenmore Park, Blacktown and Liverpool will struggle under the weight of further interest rate increases. This should provide some excellent buying opportunities for those with the capacity to purchase with foreclosures likely to reach levels not seen since the early 1990’s. Rental prices will continue to increase in 2008. Increased yields will please investors who have struggled for so long and chosen shares over property. This could mean further movement into bricks and mortar which is a positive thing for those selling in 2008.
All in all the year looks like being a tough one for those already feeling the pinch and the rich will continue to get richer. The need for an immediate solution to housing affordability will become even more apparent and investment in infrastructure to connect the regional cities to our capitals will require a solution that involves full co-operation between the State and Federal Governments. Maybe a Labor Federal Government will be able to better co-operate with the State Labor Governments? Michael Marquette
For an increasing number of Australians rising interest rates and inflation on the back of rising fuel and grocery belts, are tightening many belts. Those with mortgages are being consumed by mortgage stress, and with low vacancy rates fuelling big spikes in rents, tenants are not being left behind either.
A report by the National Centre for Social and Economic Modelling and the Housing Industry Association (HIA) predicts that the number of households spending more than a third of income on rent is set to rise over the next three years. There are expected to be another 230,000 households facing rental stress over the next three years, and that takes the total in Australia to three quarters of a million.
Chris Lamont of the HIA states that almost one in two tenants throughout both metropolitan Australia and regional Australia, are really struggling just to put a roof over their head.
Whilst traditionally rental stress has been more an issue in the major capital cities, we have to now take into consideration that a lot of regional centres, as a consequence of the mining boom rents have also been rising at very fast rates. In some areas, wages have kept up with those increases, in most, they haven't.
Regardless of which party occupies the powerful side of parliament following the federal election, the rental crisis is really going to rear its ugly head at the beginning of 2008.
The majority of tenants are looking for new properties at the beginning of the year, and given that the market is already very inflated and strained in addition to a vacancy rate at its lowest on record at 1.7%, the stress is only going to get worse.
Some form of targeted assistance, perhaps in the form of a rental rebate scheme would certainly assist many and deflate the issue, as would further assistance to first home buyers.
Unfortunately, it’s definitely time to batten down the hatches and tighten those purse strings as such relief will unlikely be forthcoming quickly enough. Simon Turner
Affording property could suddenly be made much easier with Home Equity Share matching home buyers with investors.
To be precise HES brings together buyers who can afford monthly payments but not a 20% down payment, and investors who want to get into real estate but don't want to become landlords or make monthly payments.
Potential home buyers post a profile listing their preferences, including the area they want to buy in, and the price range they're looking for. They're automatically matched with compatible investors, come to an agreement and sign a preliminary commitment. This allows the buyer to become pre-approved for a loan, and to start looking for a property. Once the buyer and investor agree on a property, the investor provides the down payment, the buyer arranges a mortgage for his home and moves in. At the end of a specified agreement term—usually three to seven years—the buyer can purchase the investor's interest in the property, or they can sell the house share its appreciation in value.
For more information visit: www.homeequityshare.com Simon Turner
The Federal Government has announced its long-awaited plan to sell off Commonwealth land to address the growing housing affordability crisis. It has promised to speed up the sale of enough blocks for 10,000 houses across the country by 2010.
For the cynical amongst you, it may be interesting to know that the first property that will be available in Sydney is part of an estate in the John Howard’s wobbly seat of Bennelong. For those less cynical but nonetheless concerned about housing affordability, such houses are already on the market for $790,000.
A further 700 dwellings on the banks of the Parramatta River in Ermington will be disposed of by the Government in 2008 as part of the plan that would provide enough land for 6000 dwellings in western Sydney.
Prime Minister John Howard announced plans similar to those of Opposition Leader, Kevin Rudd, to spend $500 million on infrastructure for community facilities such as playing fields and libraries around new housing on the city fringes and in urban areas.
The most likely area to be sold first is the former Naval Stores Depot in Ermington, which lies in Bennelong, where the developer Stockland has four-bedroom "manor homes" on the market.
Additional sites include the Ingleburn Army Camp in South West Sydney and the Schofields aerodrome in North West Sydney. The Ingleburn site would provide enough land for 4680 dwellings and would require $75 million worth of remediation to be covered by the Commonwealth.
The final two sites in Sydney are West Wattle Grove in south-western Sydney and Bringelly Radio Receiving Station. Simon Turner
A 34-year-old woman who accumulated $47,420 by tricking more than 200 victims in a crime spree was last week given a suspended jail sentence.
Magistrate Pat O'Shane said the woman had taken bonds from people, purporting to be leasing properties she did not own. Among her victims were financial institutions.
The magistrate stated that the woman had been "naive" as she had dealt with people in her own home, used her own name and deposited all the monies into a single personal bank account. Nevertheless, she had exhibited "a high degree of planning and criminal conduct".
Ms O'Shane accepted Prince had had a troubled history and had suffered from a bipolar mental disorder for which she had had inadequate medication, and at times she had not kept up with the medication.