Helen Keller
By the time this month’s Community News hits the streets, we will have a new Priminister elect. The future of our economy will rest on the government’s shoulders fairly and squarely and it will be interesting to see whether or not the winner of the election can get us ‘back in the black’ by 2013 as promised. Hmmmmm….
The national property market could best be described as volatile over the past month or so with housing finance commitments for owner-occupied housing falling 3.9 per cent in June, (almost twice the market forecast of 2 per cent). (Source: The Courier Mail) AMP Capital Investors chief economist Shane Oliver said the fall pointed to an ongoing deterioration of the housing sector."It's basically telling us the housing recovery that we've seen over the last 18 months has come to an end," he said."Going forward we can't rely on housing construction to continue pushing the economy ahead, we're going to be more reliant on the consumer and particularly business investment."
A weakness in housing finance will also continue the weakness we're starting to see in house prices, which was only evident towards the end of June."It's another reason for the Reserve Bank to leave rates on hold," Dr Oliver said. CommSec economist Craig James said the figures, which were now at nine year lows, were "a bit of a concern". "They show continued weakness in the housing market," Mr James said. "In the last couple of months, investors had served to prop up the overall market but that wasn't the case this time around. "It must be starting to come as a concern for the authorities." He said Australia was now seeing "the loss of momentum" in the housing market, with housing finance commitments at nine year lows. "Certainly, the rate hikes that have been applied late last year and early last year are continuing to bite." Weakness in retail spending, the housing market as well as manufacturing services and construction, were now revealing an economy that has "lost its way to some extent," he said.
Australia was still paying for the government stimulus which kicked in late last year, Craig James said. "It brought forward a lot of activity, but unfortunately in 2010 the market just dried up." Mr James said the poor construction finance figures would signal concerns about a lack of demand for projects in the second half of the year.
Many prospective buyers and investors have been sitting on the sidelines over the past 18 months, trying to predict the best time to buy. Often, it is difficult to pick the ‘bottom of the market’ or the exact right time to purchase and the best advice is probably to research the area you are looking to buy in and have a medium to long term strategy of holding the asset.
We have been doing some research on sales volumes and residential property price averages in Rainbow Beach over the past ten years and the trend over that period was quite interesting. There was obvious price growth and an increase in sales volumes during the periods 2002/2003 and again in 2007/2008; however there has been a significant reduction in both sales volumes and median prices since the beginning of 2008.
See the graph below:
These trends coincided with national residential and commercial property growth as well as ‘dips in the market’; most recently being the global financial crisis. Demand for ‘holiday homes’ and properties in coastal regions has decreased since the beginning of 2008 and values have therefore declined in line with that.
There is a clear anomaly in this graph which appears in 2008. The median sale price jumps dramatically due to an abnormally large number of high value units sold (ie. $1 million +) which drove the median price up. This median price line inevitably dropped back to ‘normal’ levels in 2009 as there were no further releases of units such as Rainbow Sea Resort or Plantation Resort. This also confirms our observation that buyer enquiry range remains in the $300,000 to $600,000 bracket.
Based on statistics, in our opinion, now is a great time to buy. Solid capital growth over the past decade is likely to continue and although there has been a correction in the market over the past two years, the long term capital growth prospects for Rainbow Beach are excellent. Surrounded by National Parks and on Fraser Island’s doorstep, yet only 2.5 hours from Brisbane – this is a destination that more and more people are discovering.
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