As the media grabs hold of any article that looks like showing a property bubble, the reality is that bubbles come in all shapes and sizes. Some will pop in the most spectacular ways whilst others will drift away causing very little disturbance. In some markets, it is actually possible to have a property bubble seeing only incremental growth in prices. Some may argue that many of our capital cities are in this type of bubble right now. The kind of bubble where volumes of apartment sales are being driven by both interstate and international buyers to such an extent that the oversupply of product has meant that prices have largely gone sideways...
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Having just completed an intense three days whereby I delivered four presentations on various markets around South East Queensland, I thought I would share with you some of the more interesting insights regarding the Gold Coast Apartment Market, Migration, Small Businesses and Interest Rates.
However, before I do, it would be remiss of me not to thank the four parties that had me along to talk, Queensland Department of State Development, Villaworld Ltd, QM Properties and Lotte Engineering and Construction – a top 10 business group in Asia. We are very proud of the quality of our clients and enjoy being part of and contributing to, their many successes.
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Today the Reserve Bank announced a reduction in the official cash rate of 0.25% from 2.25% to 2.0%. Whilst every reduction is genuinely appreciated, we are at the point where it is not making a significant difference for consumer spending...
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At The National Property Research Co. we are incredibly fortunate with the diversity of work we conduct and the clients we act for. However at this stage of the property cycle, the level and depth of manure being pushed is out of all proportion to the risk and reward. In sixteen years of researching the property market we have seen a lot. Much of it outstanding with truly visionary thinking and execution. This rant is simply pulling a thorn from the side and feeling better for it. The property industry is a wonderful industry and one that has been good to many of us. In football terms, “it is bringing the game into disrepute” that irks me. The absolute disregard for the end user by some parties and the misinformation is enough to make an old researcher shake his head in utter disbelief.
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The concept of dipping into our superannuation to fund the cost of housing is not a new concept. It is however one that fails to recognise the root causes of why a young individual should have to reach into their super. The ability to use your super to fund a house or apartment is the equivalent to putting a band aid over an artery and expecting the bleeding to stop. Surely we are not so short sighted as to impact the future wealth of this nation and capacity to afford self funded retirement to appease an affordability issue.
The first question we have to ask is, why is this generation any different to any that has come before it? Generation Y have been characterised by many traits, one of which is the desire to have something now. In many respects they could be referred to as the “Impatient Generation”. So why does this generation find it more challenging than others to buy a house?
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Today the RBA has reduced the cash rate by a further 0.25% down to 2.25%. This is on top of already easing household pressures through fuel costs and food. Whilst there is often talk about interest rates providing inflationary pressure for residential property, the reality is that the correlation is quite weak. Of more concern for the policy makers and financiers should be what happens when the interest rates start to increase. With 50% of all home loans being to the investment sector, gearing ratio's will need to be monitored, particularly in areas where an oversupply is expected with rental incomes anticipated to decline in the short to medium term.
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