Issue 26 | December 6th 2018 | Australians are the richest people in the world
A fascinating period of time, isn’t it? Many are finding it confusing and I certainly get the reason why. There is so much negativity in the paper whether it is about what is happening in Government, what is being uncovered through the Royal Commission, all the reporting in the newspaper about the real estate market, and so on and so on.
There is no question that the real estate market is in a traditional correction phase after so many years of strong growth, yet you would almost believe that there is no market. Just one example of our activity here on the Coast was our Sanctuary Cove office in October posting $21 million in sales. That is an all-time record for the Sanctuary Cove office and it is just one example that there is an enormous amount of real estate activity going on at the moment as long as properties are correctly priced to the market. There has been a lot of focus on Sydney and Melbourne and their price corrections, but it should be remembered that in the entire history of the Australian real estate market there have only been three occasions where there were significant price corrections at an unusually high level. Each of those price corrections – where one occurred at the time of the Great Depression in the 1930s, the second during a massive credit squeeze in the early 1960s, and the third following the Global Financial Crisis – were all precipitated by an economic crisis. All three of those occasions followed the same sequence of events; namely a share market crash, then falling wages, followed by rising unemployment, and curtailed housing finance. In fact, of the three significant price falls, only 1 had a fall that was close to being a crisis situation and that was in the Great Depression, which interestingly was followed by the biggest rise in house prices in our history over the following few years when house prices trebled over a 10 year period from 1945 to 1955.
So, does anyone feel that we are actually close to any of those indicators of some traumatic effect for the real estate market?
Well, the OECD, an independent international body, has just tipped Australia’s economic growth to remain robust and ahead of most advanced economies through 2019. Rather than wage falls, our economy has experienced wage growth of .6% in the September quarter; taking the annual rate to 2.3% which is the fastest in 3 years. It might be surprising to hear that the measure of Australia’s consumer confidence has improved for the second month during the month of November, where the survey shows that respondents are more upbeat on their finances in the long-term economic outlook. The survey showed that Australians believe the economic conditions for the next 12 months were improving and there was a surge of 9.7% in confidence of our economy over the next 5 years.
Within the broader survey there was also an Index regarding the real estate market which showed that there was an 11.8% jump in the number of Australians who believe now is a good time to buy and in fact, over the course of the entire 12 months, that index is up 17% on the year earlier.
I guess all of that might add to any confusion that people are experiencing at present, and perhaps it should remind us that so often all we get to read or hear about is the negative stuff that people love to talk about or focus on and so often ignoring the entire picture which is always made up of positive and negative.
There is good activity still occurring in the real estate market, although properties that are incorrectly priced are not selling. Days on market are blowing out rapidly and are starting to go well beyond 100 days for those properties that are not marketed correctly and not priced correctly. It just means people are taking longer to adjust their prices to the market, whilst our auction properties are generally turning over in less than 40 days and so often getting great results. We saw that last Saturday with another fabulous auction with 9 registered bidders and the property selling under the hammer well above expectations.
It reminds us that it is time for anyone thinking of selling to take advantage of our big ‘The Event’ January promotion. Our city swells with so many visitors and holidaymakers who make up an increased number of buyers for the Gold Coast property market. January always records the highest number of property inspections for any month of the year, and so if you are thinking of selling do not miss that opportunity and certainly get ahead of the looming Federal Election and changes that may occur as a result of that election. For more information about The Event the hotline phone number 1800 198 009. Do not hesitate to give us a quick call and we will provide all that information to you.
*That is it for this week. I hope you enjoy some beautiful festive celebrations with work colleagues, friends and family over the next couple of weeks in the lead up to Christmas Day. Let’s try to send out a bit more love than has been floating around of late and make it a great finish to 2018. See you in a fortnight’s time.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group