Andrew Bell’s Market Wrap: Australians have never been wealthier

Issue 15 | Thursday 28 July 2022 | Australians have never been wealthier

Hi, it’s Andrew Bell here, I touched on recently some conflicting information that certainly makes it hard for people to truly decipher what’s going on, for example, the recent information showing record levels of household savings yet at the same time, we are hearing about increased distressed households with mortgage arrears. There is even an article in the AFR this week stating the number of new listings coming to market that were distressed property sellers, forced to sell who are now representing 10% of the market. Being in the industry I knew that there was no official measure of whether a listing was a distressed listing or not, we list dozens of properties every day of the week and we don’t notify anyone as to whether it’s a distressed seller, so I am curious as to where this information is sourced.

It turns out they look at the wording in real estate ads to see whether it indicates the property is a distressed listing e.g., “Mortgagee sale” is clear, but it goes on to identify wording such as, “make an offer”, “urgent sale required”, “motivated seller” etc. I would love to know who decided that such wording represented distressed sellers. We will often get sellers listing their place with us who have another property they want to buy and will want to put some urgency in the ad to signal to buyers that they would like to sell quickly. They are not distressed at all; they are keen to get on with their next real estate purchase. We often have people moving interstate for new jobs and they also would like to sell sooner rather than later, no distress just a preferred option. This new “research”, if you could call it that, is completely flawed. 

Another bit of information that puts people in conflict is the latest information showing that Australians have never been wealthier at present. Total household wealth surge 35.5% since the beginning of the Covid pandemic 2 years and has hit a record $14.9 trillion by the end of March, and that’s according to the Australian Bureau of Statistics.

Even at a time when we are talking about the rising cost of living, household wealth grew by another 1.2% from January to March of this year.

Australians added $40 billion to savings in the March quarter, and this contrasts with the rest of the world with savings declining. Household wealth is also measured by household values and Superannuation balances.

However, going forward there is an expectation that this wealth will be “eroded” somewhat.  Shares have declined in value and so that will reduce the wealth of anyone that has money in Superannuation or direct investment in the share market. Property prices are softening in many parts of Australia and so that will reduce the wealth effect. With 35% increase over the past 2 years, Australians overall are significantly wealthier than they were 2 years ago, which is why we are seeing people continuing to consume all types of products, including real estate. It’s if that consumer confidence gets eroded that we will see people stopping to consume which will reduce our economic growth that trigger a chain reaction, it hasn’t happened yet. It is one of the things we will have to carefully watch.

Well, I think that everyone knows that Spring has always been one of the best times of the year for real estate. People come out of a degree of Winter hibernation and hasn’t this winter been super cold, then there is this consciousness that people would like to be in their new properties prior to Christmas and for those with kids to be ready for the new school year in the new location. We have one of our major promotions for Spring called the Spring Carnival Selection, which is high profile campaign that gives the participants in this program a much higher degree of marketing profile for their property that only we can provide is the largest real estate company in Australasia. This campaign is only available through the Ray White Surfers Paradise Group which operates from northern New South Wales to Brisbane. Contact your preferred Ray White Surfers Paradise agent or reach out to us on the details on screen via either our email or our 1800 hotline. Don’t miss out and get ahead of the effects of rising interest rates on the real estate market.

I look forward to being with you in another fortnight’s time for more insights into the real estate market. Let’s all be careful to try and avoid this winter series of viruses.

Stay safe and let’s appreciate how lucky we are to be living in our part of the world.

Andrew Bell

Warm Regards,

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

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