As the Rudd government prepares to release the 2009 budget, a big question is what could replace the first-home buyers incentives that are due to be terminated on June 30?
There's no doubt the combination of lower interest rates and first-home owners grants has put the buzz back into real estate.
But there have been mixed message from the government in recent weeks about whether the grants will be extended, sparking intense speculation over what the budget will contain.
There is little consensus about a future direction to keep the industry buoyant.
Aussie Home Loans John Symond says he believes the first-home buyers grant should continue for new housing only, to create jobs and extra housing and, in turn, free up existing housing and take the pressure off rents.
Leanne Pilkington, general manager of residential real estate group Laing+Simmons, thinks the government should consider other options, such as a first-investment-home loan, as that will stimulate a different part of the market.
And billionaire property developer Lang Walker would like to see the grants extended and state governments make more
land releases.
I think the big message is to be confident with real estate as it does go through cycles, he says. Weve just come through the longest bull cycle. Its had a little bit of a dip, mostly at the top end, but
fundamentally it is very sound.
Confidence is a Walker trait and is not in short supply among other movers and shakers of the real estate industry either.
The five experts Your Space spoke with have a personal stake in the property market, as well as business interests, and all remain bullish about the future. So what
do they advise?
ANDREW WINTER
Property consultant, former real estate agent and host of Selling Houses Australia on The Lifestyle Channel.
Lives: Gold Coast hinterland.
Property portfolio: A newly renovated family home on acreage and a four-bedroom investment house in Pacific Pines on the Gold Coast.
Investment you have most pride in: In mid-1995 I ignored advice and bought a ridiculously cheap two-bedroom flat in the emerging Docklands area of London. I paid 70,000 for it and sold it for 120,000 10 months later.
What you would never buy: My pet hate is residential backing on to major roads. The back of peoples homes is the private bit where the kids play, where you sit and relax or go for peace and quiet.
Buy now or wait: It depends on the individual.
The upper end of the market is where the real deals are.
If they get rid of the big extended grants for first-home buyers at the end of June, it will be a great time to be a first-home buyer.
The sellers who were keen to sell will be stuck with houses that can't sell.
His advice? Bargain with the seller to reduce the price by as much as the grant and more or go elsewhere.
Tips: Look at finance very closely because interest rates could go down more.
If you're buying a home, find one you really like and can put up with for five or six years to save on real estate fees and stamp duty.
Predictions: It ought to be a bit flat. Everyone should carry on business as usual.
Don't expect any profits, try to get the best deal you can but dont worry too much. If you are buying, think of it as a long-term investment.
LEANNE PILKINGTON
General manager, Laing+Simmons
Lives: Glenhaven, in Sydneys Hills District
Property portfolio: Investment apartments in the city.
Investment you have most pride in: My first investment, which I bought with my sister and my boyfriend, who is now my husband. We bought a little house in the western suburbs, renovated it then sold it after six or seven years.
It was a labour of love but we made a good profit on it.
What you would never buy: I would never buy in a market that I didnt know.
I made the mistake once of buying a place with really high strata levies and I would never do that either it just eats away at your profit.
Buy now or wait: If I were looking at buying in the sub-$500,000 market I might wait if I wasnt getting the first-home buyers grant.
If I were buying in the $700,000 or $800,000-plus range I would absolutely buy now. And there are a lot of good buys in the $1 million-plus market where people have had margin calls and had to get rid of their properties.
Tips: Do your research. Be sure you can afford higher interest levels because these rates are not here to stay.
Predictions: The market is going to stay fairly flat. No one really knows whats going to happen and a lot depends on jobs.
CHRIS GRAY
Consultant, author and property expert on Sky Business News.
Lives: Coogee
Property portfolio: Between $10 million and $11 million spread across 16 apartments and a house, mostly in the $500,000 to $800,000 range.
Investment you have most pride in: I bought a block of five units in late 2007 for $1.9 million. I put $600,000 into it and four months later the bank revalued it at $3.5 million.
What you would never buy: I would probably never buy off an investment company because quite often they try to create a one-stop shop where they do everything for you.
I'm more a fan of buying something tailored for me, often second-hand, that I can make improvements to.
Buy now or wait: In the last two years I've bought about $5 million for myself. I am currently buying properties off the plan which will be built in a couple of years.
Tips: Concentrate on the long-term gain.
Always get a valuation to ensure you are not overpaying.
Consider using a professional as around 60 to 70 per cent of properties we buy as a business don't even go on the market.
Understand that interest rates will rise in the future. Make sure you have a cash buffer.
Predictions: Properties around $500,000 to $800,000, 5km to 15km from the city centre will rise first.
LANG WALKER
Executive chairman, Walker Corporation, a leading developer of masterplanned-housing communities.
Lives: Hunters Hill
Property portfolio: An apartment on the Gold Coast plus the equivalent of 40,000 housing blocks around Australia.
Investment you have most pride in: The ones I instigated that I feel particularly happy about are the Finger Wharf at Woolloomooloo, King St Wharf and Rhodes Waterside. Others include restoration projects such as the university apartments at Broadway and the Broadway Shopping Centre.
What you would never buy: I don't think theres anything I wouldnt buy if its the right price.
As for lifestyle investments I've had a vineyard, Ive had a hobby farm; Ive got out of all of those.
I'd rather stick to the water and go boating.
Buy now or wait: Im always a counter-cyclical buyer; I think its a great time to buy. Its probably a good time to buy in the upper end, too, as prices have come back 20 to 30 per cent.
Tips: Choose your suburb carefully. Transport nodes are very important. Existing houses are a good area to be looking at. Keep your job.
Predictions: The recovery is going to be led from low-end housing. Its going to be an interesting six months.
JOHN SYMOND
Founder and chairman of Aussie Home Loans
Lives: Point Piper
Property portfolio: A few residential properties and an industrial warehouse. None of these properties is anything out of the ordinary. Theyre not high-priced stuff, just suburban properties.
Investment you have most pride in: Aussie Home Loans goes without saying. However, I am extremely proud of the home I built on the harbour. It took four years in the planning and four years in construction and the materials used are all good Australian products.
What you would never buy: Hobby properties, as in horse studs or vineyards. In good times a hobby property can take a year to sell; in bad times they are unsellable.
Thats dangerous because if you need to sell you are in trouble. You have to keep your heart away from your brain if youre looking at that sort of investment.
The other area I would never do again is a holiday house where you use it one part of the year and rent it the other. Both turn out to be a waste of time as far as investment goes.
Buy now or wait: The higher the amount, the harder it is to sell and the greater the opportunity for buyers. Some prices have come off 20 or 30 per cent but they arent going to go up in a hurry so there is no real urgency to buy.
Tips: Do your homework and dont dive in because the property market will remain flat for quite some time.
Dont assume that low interest rates will remain. Budget for interest rates at least 2 to 3 per cent higher, long term.
I've never been a proponent of fixing rates but if you can get a three- to five-year rate around five-point-something, Id be locking a big chunk away.
Predictions: I hope the global fallout has hit rock bottom, but my guess is well have another couple of years of pretty tough times.
