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Andrew Bell’s Market Update: Commentators Perspective Causing Market Confusion

MARKET WRAP: Issue 8: April 14th 2016

It is natural for all of us to want to live with a high degree of certainty but I have come to terms with the fact that we live in times that are more uncertain than ever and so it is highly unlikely that we are going to ever get a sense of great certainty moving forward and this year in particular with the upcoming Federal election you can be sure there will be a greater sense of uncertainty.

USA vs Australia Economy

But in reality the world is plodding along in somewhat of a positive direction. Saw an interview this week of the chairman of the US Federal Reserve. She said she is very comfortable with where the US economy is at present with good jobs growth and a strengthening economy. Important to have the world’s No. 1 economy as a positive engine room for the world. Back home our own economic growth has continued to surprise on the upside. There is a tendency to talk negatively about our economy but in reality our GDP relative to the rest of the world is very good, our interest rates are stable and in a simulated mode, employment trends are very healthy and unemployment is trending down. These are good – not great – but better than good, especially for those of us interested in real estate.

Are all markets the same?

From a real estate perspective. Aren’t commentators amazing? When the real estate market is not booming they concentrate their discussions on how poor returns are on real estate or how there is no rising wealth in the country because property values are not rising and so on. Once the market starts rising they then talk about rising unaffordability or how rising property prices are pricing so many people out of the market and causing a wealth gap between the rich and the poor. If prices rise for a couple of years then there is the inevitable talk about a bubble and what they claim will be the inevitable bursting of the market as we hear today.

Certainly what has emerged in recent years is the un-synchronizing of markets. You will see markets in completely different phases with completely different drivers. That happens even within the same city.

For property owners or property investors they have a lot to understand in that buying process. Not all markets are the same. I heard a great analogy the other day and that is whilst they say a rising tide lifts all ships, clearly in real estate certain markets and certain property types and even certain suburbs have been enjoying very strong price growth, whilst others minimal. Whilst the overall property market has been very positive, further analogy was that it was like putting your left hand in a bucket of cold water and your right hand in a bucket of hot water and saying overall you feel comfortable. The reality is some markets and some parts of cities are hot and others are not.

How will the Federal Election affect consumer confidence?

Certainly the real estate market can be as difficult to read, as is the world economy, as is the Australian economy, as is the stock market etc. Indeed with so many commentators with vastly different views it is no wonder there is confusion out there. This year in particular in Australia will be more confusing because of the Federal election and the massive commentary that will be running up to that election.

The purpose of our eNewsletter has always been to provide you with the latest information and feedback from grass roots levels. For example I have been talking about the strengthening prestige end of the Gold Coast market well in the last week there has been a $11,000,000 sale. Lots more to discuss about the prestige market which is so critical to the Gold Coast and I will give more commentary on that shortly but for now one thing you can be assured is that the Gold Coast property market is now alive across every sector but there is hot and cold so stay tuned as I give you more information on that moving forward.

That’s all for this fortnight, all the best.

Kind regards,
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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