Andrew Bell’s Market Wrap: How Will The Market Look By The End Of 2019?

Issue 12 |  June 6th | How Will The Market Look By The End Of 2019?

Hi, Andrew Bell coming to you today from the hinterland region of the Gold Coast at 520 The Panorama, Tallai. Thank you for all the positive feedback about our location shots. I am glad so many people are enjoying looking at the wide variety of spectacular properties here on the Gold Coast.

It is no surprise that I have also had a lot of questions about how we see the Gold Coast real estate market rolling out as we move forward post-Election and I will share that with you shortly. For now, let’s staring looking through this amazing property on 14.73 acres, and, as you can see, with the elevation to provide stunning skyline and hinterland views. It is high on the ridge of the Gold Coast hinterland and as such provides complete privacy and the most luxurious setting. The home has been designed to encapsulate the stunning surrounds from every room of the home and of course, it has all the features you would expect for a premier property.

Those features include a Master suite with walk-in robe, ensuite and a great outdoor spa bath. The living room has a romantic fireplace and glass doors that lead out to the entertaining area which has a servery and overlooks the pool. Timber flooring is a prerequisite for a home such as this and of course, it does have ducted air-conditioning and a kitchen with stainless steel appliances, gas stove cooktop, stone benchtops and a servery. We invite you to come and have a look for yourself. Details on screen now of our Marketing Agent Josh Thomas for you to contact to make a time to inspect. At any time of the year, it is worth the drive, but at this time of the year it is truly stunning.

Agent details: Josh Thomas
j.thomas@rwsp.net or 0421 324 372

I will now share some of my thoughts about the market ahead. The real estate market is always cyclical. It always has been and most probably always will be. There are many factors that come into play that form part of that cycle. Cycles do not occur simply because of a time frame. We talk about cycles ranging anywhere from 7 – 10 years but events don’t happen purely because it is year 3 or 4 or 6, but because of certain factors that come into play because the cycle triggers different events.

The Australian property market peaked at various times in various locations throughout the country during 2017. History has told us, through past cycles, that the correction phase that follows a peak in the market is generally around 2 years. Part of the cycle is that a correction must happen. When prices rise during the boom years there is always some give back. Ultimately, as the market corrects and the economy along with it, there are reactions from the marketplace. A consequence of the slowing phase of a cycle is that unemployment starts to rise and that happened just recently.

Our unemployment has been falling for many years and got down to 4.9% several months ago, but it has now started to increase where last month we saw unemployment at 5.2%. The consequence of that is that the Reserve Bank is going to lower interest rates and that, of course, feeds into the real estate market. We also saw last year APRA and the Banks tightening lending policy. They were concerned that throughout the boom years there were risky lending practices. Now that fear has passed, APRA, only this month, has called for an easing of the finance regulations where loans could not be provided to borrowers unless they met the 7% interest serviceability test. In the closing days of our recent Federal Election, significant attention was given to first homebuyers who have now been provided with the best offer they have had in a mighty long time. This will feed through to more buyers for the real estate market. With the passing of our recent election, the fear that existed about the potential wiping of negative gearing on resale properties and increased capital gains tax has now evaporated completely and there is a very positive attitude towards real estate.

All these factors I mentioned above means real estate is moving into more positive settings. Irrespective of the election, many of these factors were in play. The price correction had already occurred, the easing of finance was always going to happen, and reduced interest rates were necessary to stimulate the economy and ease unemployment. However, no question, there is incredible relief now the election is behind us

We now live in a world of low inflation so do not expect significant price increases. In the 1980s, inflation and wages growth was much higher, as were interest rates. More than double what they are these days. As a consequence, properties doubled in value every 6.3 years. Now fast forward to the last decade where we have been in a much lower inflationary environment and much lower wages growth, and of course, interest rates are at historical lows. It is no surprise that growth over the last decade has been around 6% per annum, which means properties double in value every 12 years. There is no reason to expect that to change.

My forecast is that the cycle, in any event, was going to see us move from price correction to a level market by the end of 2019. With the election outcome, it is likely to see that happen sooner. I expect to see brisk activity following our interest rate drop and that we will be into a much healthier stable marketplace if we are not already in that space now. However, do not expect that we have boom times coming as the cycle will tell us that we will now be entering a stabilization period.

That is all for this week. I look forward to being with you in a fortnights time. In the meantime, let’s look after one another and stay safe

Kind regards,

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

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