We as agents can value as accurately as we can using comparable sales or investment yields or adding up land value and construction costs. Where there is a quote range and a property goes on the market in the quote range and the buyers push the price upwards then that is the market working. All agents will use their local knowledge and comparable sales. The final sale price can vary from estimates according to other competition in the market place, buyers attitudes to the market and interest rate environment. In October we valued homes and listed stock for private sale and auctions for November and December and when interest rates went up on cup day the market calmed down over night and our figures show the buyer interest waned due to the interest rate rise. So valuing is not an exact science. If you have a specific example I am happy to analyze it for you. 99% of the time we have a quote range the reserve price will be in the quote range. Brad

In the article I was referring to a formula of 50% land and 50% build and 60/40 or 40/60 are the outside percentages to go to before over or under capitalizing. A block of land worth 1 million with a $450,000 home is greatly under capitalizing the land similarly a 1 million dollar home on a $450,000 block is over capitalizing. I would be happy to go through your numbers if you wish. Cooper street is a good street and from a guess you will be opposite the school. A decent block there with a $800,000 home will peak at $1.5-1.6ish so you are at the limits for the street. Having said that there are many different things to affect value like width of land, view, adjoining properties and developments overlooking. A simple explanation but hope it helps. Brad

The market has toughened up in recent weeks. People are worried about the possibility of an interest rate rise and continuing media speculation about property values. Buyers have definitely taken a step back and are almost hoping values come off the boil. Renovated homes,land and villa units are all still selling well with good buyer activity. Flats have softened a little and off the plan sales have slowed. It is not unusual coming into winter for stock levels to drop and therefore there is not the buyer interest in reduced stock levels so demand keeping upward pressure on prices weakens. Every year it is a similar trend Brad

First home buyers should look to buy as soon as they can. To rely on the first home buyers grant entirely, probably means you haven’t saved a large enough deposit to enter into the property market without the support of government assistance. The first home buyers grant at the moment is around $7,000 for Metropolitan first home buyers and that is a decent gift to get people started. At the lower entry point of price ranges, for example a two bedroom villa unit for $400,000 in Pascoe Vale, a deposit of $60,000 or 15% would be a sensible deposit. At that level, $7,000 would be a contribution towards stamp duty and legal fees. The huge bonus of 2009 of $32,000 may well be a once off event and that saw the surge in prices of one bedroom flats and a re-jig of many town planning permits to accommodate more one bedroom flats, because they fitted the criteria for floor space and price range for first home buyers who received that $32,000 bonus. Once that disappeared, the market thinned and even today, the number of buyers looking in the $300,000 to $450,000 price bracket other than investors is very thin on the ground. This is mainly due to the normal amount of buyers being brought forward into the 2008 to 2009 market places with the incentive of the first home buying grant. So, first home buyers should look at buying when they have enough deposit and a reliable income and not rely on the first home buying grant as an incentive.

The current market place is in a transition from a very buoyant market place favouring vendors, to a slower market place where buyers have more control over the prices. There is still strong stock numbers, but fewer buyers and those buyers are playing a very cagey game. Genuine vendors are finding it hard to get their asking price which they had nominated six to eight weeks prior. How the market has changed so quickly? The market always slows a little during the colder midyear months, however this year with the talk of uncertainly in the economy, with a prospect of an interest rate rise in a few months time, high prices of petrol, etc, buyers have taken the opportunity to try and grab back a bit of the inflation which they contributed to in 2010 with house prices. So in a nutshell, buyers can purchase more favourably now than they could have prior to Easter and selling is a bit more difficult than it was before Easter, but prices are still higher than people would have achieved this time last year. People do focus on the most recent high price instead of a longer view trend that their properties are worth significantly more now than they were 12 or 18 months ago. Regarding Sunbury, we do sell in Sunbury and have recently sold a property in Forrest Court and are selling the significant industrial estate on Vineyard Road and tend to have one or two listing on the go in Sunbury at all times.

Megan The low clearance rate you referred to this year, is still sitting around high 50% to 60%. Some areas have clearance rates much higher than this, but you are referring to the Melbourne average no doubt. The clearance rate can be a product of the quality of stock on the market at any one time and normally in winter, the better homes do not go for sale and people wait for the spring time, when buds are in full bloom and football is finished. The market has traditionally improved every year, providing a strong platform to achieve solid prices. I do not see any reason that this year will be different. The talk from Westpac over the weekend of an interest rate drop over the next 12 months, fewer auctions and the shortage of really high quality homes, means that when the market does pick up, it will be a stronger market place than we have seen over this recent Melbourne winter. So many private sales have been a product of people being frightened to pass their property in and so they try with a price and often chase the market down to where the buyers are. An auction, even in winter still markets your home better than a private sale and with lots of publicity with a board, local paper advertising and open for inspection times, many auctions may not sell on the day but the buyers are found during the auction program and they tend to sell pretty quickly after the auction. A 60% clearance rate still means you have a 60% chance of selling your home, rather than a 40% chance of passing it in. Some areas do not suit the auction system and those passed in auctions within those areas also weigh down the passed in rate Melbourne wide.

Jaymee. We do not have an office in Sunbury or Gisborne. We do sell in Sunbury and currently have a large parcel of land subdivided into industrial allotments in Vineyard Rd. This is selling well and we have also sold a few homes in recent months in Sunbury as well. Contact the Caroline Springs or Keilor offices for properties for sale in the area. Thank you for the compliment regarding the standard of our staff. We always try hard to achieve the highest possible prices for our vendors.

Alice, As you have stated, you have $1m to spend. That is a lot of money that will buy you a sensational home. Generally speaking, inner suburbs have the strongest auction markets and the better homes go to auction, so if you are looking in Brunswick, Coburg, Pascoe Vale, Essendon, Moonee Ponds, Flemington, etc, you may well find that the style of home around $1m will be promoted under the auction system. In the outer suburbs such as Keilor and Caroline Springs, a home worth $800,000 to $1m would generally be promoted under the private sale system with a set price. So, your question about buying for the best price is really more to do with buying the best home to suit your needs. If you go to an auction and it is a popular home, there is a possibility that you may have to adjust your purchase price to reflect the strong competition that an auction might provide, while your search for a home under the private sale system will provide you with homes with a set price guide within your range. Brad

The Essendon Football Club proposal up at Tullamarine will be an exciting development and will definitely assist values in the area. Several reasons make me think the values will remain strong in that area. First, the massive investment of $30 million into the local area all with a streetscape onto Melrose Drive will improve the amenity, especially from a recreation point of view, of that somewhat desolate part of the landscape at the top end of Melrose Drive. Secondly, it will provide a destination for people to go and use the facilities, which they currently don’t have so close by. Thirdly, there will be hundreds of people who work within the confines of the Essendon development and therefore there are opportunities for rental and purchasing to strengthen the local market place and finally, it will provide a destination and identity for people who will become more aware of Tullamarine as a suburb because of Essendon’s new home.

Investment returns vary from the type of investment you choose. You can invest into cash and receive what the banks offer, but that is taxable. You can invest into a property and your investment return is based on two factors, firstly the rent you receive on an annual basis and the potential for negative gearing and use of a depreciation schedule to benefit your tax position again and secondly, the capital growth which over a period of time far outweigh the negative gearing aspects of your investment. People run investments with negative gearing in the belief that the capital gains will provide them with a profit over time. Short term tax benefits must surely be outweighed with a profit, as nobody in their right mind would run something deliberately at a loss for a long period of time. When you are looking at buying an investment, if you buy for example, a two bedroom flat in Essendon for between $400,000 and $450,000, the rent you will receive will be approximately $350.00 per week. That is a much less gross dollar return on your investment, than a cash yield from the bank. What you hope though, is that after using the interest loss and depreciation schedule that will assist your tax position and the capital growth over a period of time, by buying in a strong residential location will provide you with a good profit. That profit will be capital gains taxed, but along the way you may also have paid off your mortgage or reduced the capital and improved your equity by the reduction of your mortgage, and secondly by the growth of the market. So to advise you of what is a good investment is a bit like how long is a piece of string. It depends on your risk profile and also what level of tax you are currently paying on your income, as well as the length of time you intend to hold the investment. If you only want to have an investment over a period of 2 or 3 years, then I would say go and buy a fixed term interest account at your bank. If you are in for the long haul of 10 years or greater, buy a property and take a lesser percentage return on your purchase capital, but in time the property will prove a winner.

Yolanda, Our Senior Property Manager for the Moonee Pond's area is Michael Pateman who can be contacted on 9374 2199.

Devi, The approval process can vary as all applications are ultimately approved by the landlord, however this usually takes one to two days. Our Rental Department manager is Michael Pateman, who can be contacted at our Essendon office on 9374 2199.

We encourage clients to consolidate their properties into one portfolio, particularly when they already have trust and confidence in their property manager. The diverse location of properties is less of an issue now than it used to be, as access to the internet and software available to the industry now gives us up-to-date comparable rental information. This means that rent reviews and keeping track of local market property value movement can be done remotely and accurately. In relation to this potential lack of local knowledge, it is much easier for someone to gain an understanding of this than to learn how to be an effective property manager! If you already have someone who is responsive, mature, assertive and a good communicator, they should have no problem in understanding local markets. We currently manage properties all over Melbourne through our network of eight offices, without compromising our level of service. Bundling your portfolio also gives you the convenience of consistent reporting and statement information and dealing with the same person for all rental issues. We manage quality properties and diligently screen tenancy applicants, so the need for personal visits due to a tenant or maintenance matter, apart from bi-annual routine inspections, is kept to a minimum.