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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A lot has changed in Brisbane’s premium housing market over the past decade. Once favoured suburbs have come and gone whilst others have maintained their iconic status. In 2004, there were slightly more than 360 house sales over $1 million in the Brisbane LGA. In 2014 this had almost quadrupled to over 1,250 sales. Property values have escalated despite the GFC and during 2004 the top ten suburbs yielded 53% of all house sales over the magic million dollar mark. Comparatively, 2014 has seen the top ten account for less than 40% of the total sales. This clearly demonstrates that more of our top end product is spreading further through Brisbane’s suburbs.
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The Gold Coast’s apartment market endured a very highly publicised downfall during the Global Financial Crisis which saw a number of high profile projects such as Soul, The Oracle and The Hilton suffer as a result. The consequence of those unfortunate circumstances has been a market inundated with mortgagee and insolvency sales, particularly in the higher price points, ever since. However, 2014 has proven to offer a glimmer of hope and a silver lining on the cloud of consumer confidence which has plagued the Gold Coast’s premium apartment market. So far, the sales in the Oracle are estimated to have reached approximately 95% completion whilst The Hilton has now officially sold out. Furthermore, premium grade insolvency stock on the Gold Coast has now almost passed through the system, clearing the decks for a new chapter for the area’s premium and super premium residential offerings.
As a number of new projects emerge, some questions must linger in regards to the depth of the Gold Coast’s premium apartment market in the wake of such pro-longed and unfavourable sales periods for large scale, high quality projects in recent history.
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Population growth for Queensland has long been one of its key economic drivers. It has provided considerable strength to the construction industry, driven strong retail output as well as given the civil sector some its largest projects in order to cope with the swelling population. However the population trends have changed considerably over the past decade.
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The sale of New Motor Vehicles is often a good measure of where the economy is at and what businesses and individuals are thinking in terms of reasonable sized investments. Recent data suggests that things are going sideways in broad terms, however the stand out has been the ACT, the only State to record an increase over the previous month in both Trend (0.9%) and Seasonally Adjusted (1 .6%) data. When consideration is given to the same period last year, the big loser was Tasmania having fallen by 1 1 .6% on trend and 1 2.1% on seasonally adjusted data.
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