Welcome to 2010 and what will likely be the most exciting year in Australian real estate since the property boom earlier this decade. I am eagerly anticipating this year’s first Super Auction Saturday in early February to get a hint of where our market is headed in 2010. I have a feeling we’re in for a great ride!

Average property values have now recovered beyond their 2007 peaks, after which we experienced a relatively softer marketplace during the GFC throughout 2008/09. Things started firing up again in mid-2009 with record low interest rates and an improving Australian economy bringing major confidence back to the property market – and the share market as well.

We’re now heading into a year where property prices above $1 million should rise due to massive demand from upgrading families. Investors should be back, adding a major boost to the market under $1 million as first homebuyer numbers dwindle. The Federal Government’s original First Home Owners Grant of $7,000 remains in place, along with various stamp duty concessions provided by state governments, so first home buyers who missed out on the First Home Owners Boost last year should continue to feel confident about buying in 2010.

One of the reasons I feel very confident that we’re in for a buoyant market this year is due to vendors’ and buyers’ expectations on price being pretty close to on-par. Clearance rates in major markets such as Sydney have been consistently above 70 per cent for several months now, indicating buyers and vendors have a similar idea regarding good value in today’s market.

RP Data recently released a report analysing our capital cities’ average days on market and level of price reductions by vendors. It showed that by late 2009, vendors only had to reduce their initial listing price by five per cent for houses and 4.5 per cent for apartments to get a sale. This is below the long-term average and indicates vendors’ and buyers’ expectations on price are pretty close.

Of the capitals, Canberra was the best performer with initial asking prices reduced by only 2.5 per cent during October 2009 and house prices rising 2.6 per cent during the same time period. Adelaide demonstrated great long-term improvement with prices reduced by only 5.2 per cent in October 2009 compared to 9.5 per cent in October 2005.

Across the country, the average time it takes to sell a house has dropped from around 50 days at this time last year to an excellent 31 days in late 2009 – the average length of a standard property campaign. This is another indicator of vendors and buyers coming together on price.

In terms of days on market (DOM), Perth was the stand-out performer, with average days on market for houses dropping from 51 days in October 2008 to 27 days in October 2009. Canberra’s DOM dropped from 43 to 24 and Brisbane’s fell from 46 to 31. Impressive!

I concur with RP Data’s summation that these numbers represent “extremely healthy market conditions”. I expect to see a lot of activity in the property market in the first quarter – at McGrath, we already have hundreds of auctions booked from mid-February onwards.

If you’re thinking of buying or selling this year, spend some time at auctions next month to get a vibe for the action ahead in your particular marketplace in 2010.

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