The Business Spectator has published an article on a challenge to the market leader in web based real estate advertising Realestate.com.au.

It’s no secret that REA is the number 1 portal in Australia, and in Queensland it’s clear from enquiry levels in our office that they dominate the market. In fact we subscribe to the number 2 portal Domain, and it’s clear from enquiry levels that they hold little sway with home shoppers in the Townsville Area.

It’s certainly not surprising that they are to be challenged – if you want to buy a home in the ACT , the leading portal appears to be alllhomes.com.au, and independent. It’s all about how we are conditioned and we see as the point of reference in the particular market.

No the less, challenge they may , nut it will still take time and enormous financial input to change “belief systems”, and I suspect REA will dominate the market for some time to come..

Australia’s largest real estate companies are preparing to fight online marketing giant REA Group Ltd over the rising costs of Internet advertising and real estate data access rights, according to the Australian Financial Review.

Companies which include LJ Hooker, Ray White, Raine & Horne and Century 21 are considering banding together to create rival advertising spaces and information sources, the AFRsaid.

“It’s called Project Rebellion,” Real Estate Institute of Australia president David Airey told the AFR.

“For too long agents have simply allowed their information too be used by commercial operators at no charge and been put in the stupid position of having to buy it back.”

REA operates the country’s most popular real estate website, realestate.com.au.

The Cowboys are closing in on the lead of the NRL ladder after a storming 30 to 6 win over the Auckland Warriors at home tonight. The Cowboys have proven they are worthy of a finals berth this year with ultra consistency throughout the year.

The Cowboy’s performances do well for Townsville and help cement it as Australia’s regional powerhouse, and we are certainly priviledged to have the high calibre NRL team absed in our great city.

It was only this week that someone mentioned to me that they had not seen Angelo Licciardello on the news lately – he been very quiet. In fact the last I remember hearing of him was the trumpeting of the inner city development and the urge for State Government to relocate key government departments in teh city centre to stimulate the area.

Angelo worked for the Townsville City Council before leaving for Delfin Lend Lease and being based at Douglas (Riverside Gardens). Once that projected wound up he moved back to a Senior Role with the Council.

With rumours oif the Rocky Springs Development imminent, the move seems timely.

The Rocky Springs Project, a proposed satellite city, will be located 15 km south east of the city centre, will occupy 1594 hectares and cater for 15,000 to 18,000 dwellings housing up to 38,000 people.

The Townsville Bulletin today published this (story and link follow) :

http://www.townsvillebulletin.com.au/article/2011/06/18/240671_news.html

Planning Boss Gone

TOWNSVILLE City Council’s director of planning and development, Angelo Licciardello, has resigned after almost three years in the top town planning job.

The council’s CEO Ray Burton is understood to have informed staff of the resignation yesterday.

A council spokesman could not be contacted last night to comment on the resignation which comes as the council is still working on a new town plan to replace the town plans of the former Townsville and Thuringowa councils, which were amalgamated in 2008.

It is understood Mr Licciardello will serve out a three-month notice period before moving on to a new role with a local development company.

Mr Licciardello was appointed to the position – a role understood to command a salary of up to $290,000 – in October 2008.

In June of that year, he had been appointed chairman of the council’s CBD Taskforce, however, in the previous Labor-controlled Townsville council he also served as director of planning from 1995 to 2001 before taking a role in the private sector.

In his most recent stint, Mr Licciardello was director of planning and development at a difficult time with the council championing contentious new infrastructure charges on development.

Developers labelled the charges ridiculous and unviable.

After State Government reforms, announced in May this year, the charges are to be reduced State-wide from July in an effort to stimulate construction activity.

Mr Licciardello was known to be forthright in his advocacy for following the city’s planning scheme – a trait which sometimes did not sit well with councillors.

He also won few friends in the development sector after telling a meeting of the urban development institute in 2009 that the previous council approach to accommodate development would be replaced by adherence to processes and procedures.

However he also appears to have attracted little support from the council’s executive structure.

Of the 18 executive managers across the council structure as at January this year, just two were in planning and development compared with six in corporate services, five in community and environment and four in infrastructure services.

Only the commercial businesses department has fewer executive managers, having one executive manager.
If Angelo’s move to Delfin Lend LEase is confirmed  – and thus Rocky Spring’s start

Graham

Well it’s finally happened – the Flinders Mall has re-opened and it’s a great sign for the city.

And of course if you have lived in Townsville you will remember a lot of Flinder’s Street prior to the Mall being constructed. I can remember driving down Flinder’s Street as a child (I am know 50) and particularly at Christmas seeing the lights in the shop window’s.  I will not reflect on that know – but here’s a piece from the Townsville Bulletin today  with the link :

http://www.townsvillebulletin.com.au/article/2011/06/18/240641_news.html

Drive-through milestone

The official reopening won’t be for another month but today will be a landmark for shoppers and store owners who had been crying out for a rejuvenated CBD.

The day will be marked with a parade of historic cars.

Flinders St traders, who have been in the main street for the duration of the journey – the heydays when it was a thriving mall and the downturn when it was a virtual ghost town, forcing owners to shut up shop – are the ones rejoicing the most.

Lorna Mead of Bert Brown and Co said her family’s business has been trading in the CBD for 112 years.

“I personally have been involved since the late-1950s,” she said. “I remember as a child my father was here and it was a very busy traffic street. It was the place to be and that continued up until the mall development came in, which made it bigger and better. In the late-70s through to the 90s, it was really the place to be.

“I think many people will be relieved to have access to the shops made easier.”

Townsville Hatters’ Lyn Towers has been set up on Flinders St for more than 20 years.

“We’ve had a lot of ups and downs but everything is very positive at the moment,” she said.

“It was good at the start and then David Jones pulled out of the mall and there was a slump but now the mall is looking lovely.

“I think it will help people to see what shops are here. It’s not the same old shops like in the shopping centres, which people don’t realise.

“I’m sure it’ll bring people back in.”

Lawrie Kemp has been in the city centre since he was a kid working at his family’s business Doug Kemp’s Camera House.

He said the mall redevelopment was the biggest improvement to come to the CBD.

“I think it will have a very positive impact on trading,” he said.

“The street development will generate the Palmer St-type atmosphere and it will become a much livelier place.”

Mayor Les Tyrell said the parade at 10am would mark the awakening of Flinders St.

“The ability to drive cars once again through here and to come in and park and shop will be great,” he said.

“I encourage everyone to come in and see what we’ve got to offer.

“This was the biggest part of the project and there’s an opportunity for people to see what the street has opened up to.”

Interest in properties is on the rebound in recent weeks with many agents reporting an increase in homes under contract and enquiry levels.

Is it s sign we are nearing the bottom of prices in the Townsville property market ?

The answer – an unequivocal yes if we referring to houses – not units.

So how can we draw this conclusion – one undeniable fact is Townsville does not have an over supply of land – yes we may think land is sitting longer and prices have come back – but the reality is that the developers cannot absorb sale prices of $130000 to $150000 on any size block of land indefinitely – so they will simply stop releasing new allotments.

A valuer recently mentioned that the head-works costs in cutting a new allotment is now in the vicinity of $110000. Add to that the burden of acquiring the land parcel in the first place and holding costs and you have a loss leading situation – and the developers with sufficient cash flow to weather out these cycles will simply sit on their hands and wait for demand to increase.

This is a economic fundamental – supply vs demand.

Building costs in Townsville have remained constant for the past 5 years – the cost of building a 4 bedroom home of say 200 sq meters works out to roughly $1200 per sq metre.

Take a line through this and will give you a very good example. We were asked to look at marketing a home in The Avenue’s of Kern Brother’s Drive Kirwan several months ago. We knew the home was approximately 240 m2 square under roof – in today’s terms brand new about $288000 to replace. It had an in ground pool – replaceable at say $30000 and sat on a traditional block of land worth say $180000 in rateable or resale terms (The local government valuations are not to far out in some instances). There was a garden shed (larger than normal. So the house new at say Kalynda Chase (5 minutes up the road and land selling as low as $166500 for 600m2 block in January) based on above assumptions $500000.

There was a neighbouring sale of much larger home across the street which backed up these assumptions.

I mentioned my thoughts on replacement costs – the owner, who had the home represented immaculately ands was very house proud mentioned two against had tools him it could be marketed at $579000. The owner questioned our commitment to marketing the home at this level – and whilst we said we could try but being realistic and with respect for his marketing budget we believe it would need to be brought within a more acceptable range within 2 weeks or it could become “exhausted”.

The property as listed with another agency $579000 negotiable – then $549000 negotiable – then low to mid $500000′s and this week (some three months later) -offers over $500000 ?. (Ultimately the agent will be driven by the owners requests – and we know the owner was very proud of the home and want’s the maximum dollar for their home. So you cannot always blame the agent for listening the owner).

Now the general comment is always it’s a buyers market – I disagree with stereotyping people property or markets – all are unpredictable. However if you can put the same home on the ground brand new for $500000 why would you pay $579000 ? When buyers are so well educated – and some will prefer new over old the likelihood is they will pay under replacement cost – but well presented properties will sell at a premium to that figure and they may get a sale at the replacement cost based on the motivation of the vendor.

Perhaps it’s my banking background and talking for 30 years to valuers how are slammed in a rising market as conservative and slammed in dropping market “That’s the valuers view – it means nothing – it’s what someones prepared to pay”.

But I will bet that on the law of averages that pricing will generally reflect the above formula less the allowance for old vs new – and it’s not the cost of building the home that has come down. it’s the land value’s – and If my theories are correct – we are close to the bottom of prices in the Townsville Real Estate Market.

In my next article I will discuss the unit market – and why you should be buying now !

Graham

I was having lunch today when I ran into another agent from a well established firm in Kirwan. He made what was such a profound but yet obvious comment – we did not have the usual sales “rush” in January, which the Townsville Property market is so used to.

Reflecting on this, it is not hard to see why, with two cyclones crossing the coast within 2hours drive North and South of  Townsville as well floods in South East Queensland.

When I worked for the Commonwealth Bank, I usually did not take holidays over the Christmas Break for one reason – every one was in  holiday mode and there was home loan business there for the picking. We seen this on the ground this year with extensions for finance over Christmas – some for 2 weeks !. I told the buyers to change banks – this is ridiculous – you are buying a home and no one can see you for your loan (or more likely the lender has targets and conditioned the client not to see nay body else at the bank – it is how their bonus structure works!).

None the less I am divorced from the finance side of things now but it become clear after Christmas that the market was stagnating, very quickly – the old agents cry “It’s the market  – It’s the market“.

Well the market is people – people buy and sell and did so in January and we have three offers on the table at the moment being negotiated – so surprise ! There is life in those old legs.

What this is reminiscent of is two distinct years I recall as a Mobile Lender for the Commonwealth Bank. I wrote big numbers – 1000 loans a year (1200 in one of those years)  the last 3 years with the Bank (and no – sorry Ralph Norris – as you know Sir Ralph they were not for Storm  Financial clients – the Storm loans were written by small cell in Townsville and lenders in branches in Mackay and Bowen  (to set the record straight !).The two worst January’s I remember – were when the Liberal Government first gained power in Canberra and slashed public servant jobs – which seemed to evoke to a cut in spending and transfers of public servants across the country- thus we had no New Year transfers in – (I am not economist but I am sure that’s how it happened – Canberra house prices collapsed – I remember Tim Sheens had moved to Townsville to coach the Cowboy’s at the time and owned a house in Canberra).

The next worst – was when had a really bad wet season and people did not transfer in from down south – it appeared they held off and I distinctly recall the fact stock sat around Annandale until late February and March and then all of sudden cleared.

Now I am not suggesting that the market fundamentals are the same as say 2007 – when as the leading Commonwealth Bank Mobile Lender in Australia I wrote $30m in fundings in May (after which the fall back started in prices – and not because of the Global Financial Crisis – but that another story).

But I am tipping that come late February / March, that we will see higher tide of buyers than we have seen in some time, and this will be due also to stable interest rates and well publicised competition amongst Banks.

This is good thing and will inspire confidence.

So Happy New Year ( a little late but in keeping with the Chinese New Year in the year of Rabbit) – break open the champagne about the March 1 and celebrate – we should see the stock levels starting to move again !

And I also predict that the market may still come back a little before we are through – but when you can buy three bedroom homes in Kirwan for $280000 and Vincent and Heatley for $250000 and $260000 (going going gone ! OR no sell no pay you say – but at what price !), I am sure we will be looking back in three years time saying – gee we should have purchased then !

All the best for 2011 – sorry I’m late.

Graham

Strong showings at open houses on he weekend re-inforced the fact investors are back in the game. The Kirwan open houses were well partonised, and the follow up calls since show that buyers are ready move on stock that has have good fundimentals.

With prices back up to 10% since January, those with an eye for value see the 4 bedroom homes in kirwan, many less than 4 years old which readily rent at $380 to $400 per week, and offer great taxation benefits through depreciation and capital allowances, at the most affordable they have been in the last 3 years.

Simply the maths make these very good value when compared to the new homes, partilcularly when most 4 bedroom homes are fully airconditoned, have ensuite, double garage, low maintenance, and present as near new, but sell under replacement cost.

With a new home costing around $1213 per square meter on the ground to contsruct, and your average 4 bedroom home in Kirwan (say the Avenue’s or Willowbank developments) being 186m2, it hard to build the these under $400000 house and land. Given the location and what Kirwan has to offer families, including being close to some of Townsville’s premium schools, Riverway and shopping centres and 5 minutes over the Ring Road to Riverways, James Cook University Townsville Hospital and Lavarack Barracks, Kirwan is my top pick for value investing at the moment.

Graham

The announcement by Strategic Airlines of direct flights to Densapar has to be applauded. The Townsville international Airport, as we briefly knew it years back, will hopefully spring back to life with the annoucement and given the strong Aussie dollar, should see locals embrace the service. For too long we have had to travel to cairns Brisbane or Sydney, in many cases having to fly 2 to 3 hours in the wrong direction to visit Asia. The success of Asian Airlines out of the Gold Coast surely reinforces the fact we love our travel.

Given Townsville’s population, and undisputed crown as capital of the North, it’s hard not to see the service being a success.

For the full story see the following article courtesy of the Townsville Bulletin :

http://www.townsvillebulletin.com.au/article/2010/09/17/170881_business.html

Graham

With good numbers through the open houses last weekend, it’s evident the buyers are out and looking.

As a result this week we have had offers accepted on 124 Anne Street Aitkenvale, 7 98 The Strand North Ward and 9 Fraire Street Hermit Park.

What’s so significant about this is that bottom end of the market appears as healthy as ever. Enquiry levels over the phone are strong, and whilst some market sectors are definately performing better than others, activity is far stronger than ealry in the year and all bodes well to a return to normal market conditons.

Enquiry level for houses has again shown signs of stabilsing with several proeprties receiving multiple offers during the week.

This is great news for the Townsville property market, with the enquiry spread acroos all suburbs and price ranges. From top end homes in Idalia (Fairfield Waters) to the affordable end of the market in Kelso, otehr agents report a good week for sales.

Prices seem to have stabilsed for the moment.

Investor enquiry has been down, despite the continued turmoil in the share market over the last week. Our experience has been enquiry solely from owner occupiers in the last 5 days.

It appears also a number of laregr projects have been given the greenlight, boding well for Townsville.