Issue 7 | March 29th, 2018 | Who Would Have Guessed?
Andrew Bell with you from a city that is really starting to buzz with most of the international athletes for the Commonwealth Games already here, road closures taking place, full security ramping up, and a final dress rehearsal for the official opening of the Commonwealth Games next Wednesday evening, the 4th of April.
Who would have guessed?
This week I want to touch on a couple of topics that I might describe as ‘Who would have guessed?’. With the growth in our economy over the past year reducing unemployment and building up company profits there has been an amazing, if not breathtaking, $10 billion turnaround in our budgetary position. This is mainly through tax collections that is giving the Government enormous opportunities to bring forward the projected surplus that we have all been waiting for and/or that tax relief that everyone would love to see. If they can generate next to $10 billion in two months imagine what they can do over a year. Whilst so much time has been focused on petty politics and in-fighting, quietly, behind the scenes, we have been building a really good platform for our economy.
Optimism in the real estate market
This may well link to my next ‘Who would have guessed?’ where the latest Westpac Melbourne Institute of Consumer Sentiment shows it has now recorded the fourth month above the 100 point level, which marks that there are more optimists than pessimists in relation to the real estate market. Despite discussions about Sydney and Melbourne peaking, this survey, measuring when it is a good time to buy dwelling, has reignited after a long downturn in 2017, with an upswing in 2018. Pessimists certainly dominated the market in 2017, yet the survey shows that the assessment of family finances recovered some of the loss ground of last month as the sub-indexes tracking views on ‘finances versus a year ago’ rising 2.4% and a sub-index tracking ‘expectations for finance over the next 12 months’ up 2.1%. There is little doubt that the improving news on the economy and much talk about wages growth about to click in would account for that more optimistic sentiment.
Will interest rates fall or rise?
The next ‘Who would have guessed?’ is the unbelievable growing number of people suggesting that official interest rates may in fact fall at some time in the future. This is from reading history that suggests when the difference between long term and short term rates is below .5% then official interest rates will often fall. There is also this growing awareness that about a third of banks funding now comes from overseas, and with official rates rising from countries we borrow from, and with banks factoring in possible losses from faltering borrowers, that they have actually increased lending rates independently of the Reserve Bank. There is a belief that the Reserve Bank will be concerned that these higher rates, independent of their settings, may put a break on the economy so it is not inconceivable that there could be an official interest rate drop, although the most likely scenario is for the existing setting to continue longer than we might have other wised believed.
Three interesting factors that have come into play over the last week which just provides another level of somewhat confusion for many people about what is going to happen in the real estate market moving forward.
Get set for the Games
Moving from real estate for a moment. I must be open about the fact that I have an added level of excitement about the Commonwealth Games; having been a Committee Chairperson for the bid to secure the Games for the Gold Coast and then, over the past five years, on a GOLDOC Committee that is part of the Organising of the Games. Knowing what securing the Games has already done for our City, and the potential for what can come post Games, our office has bucked the trend of most agents who are all but closing down over the next few weeks. Our belief is, with over 700,000 additional visitors to the Gold Coast, there will be buyers of Gold Coast property amongst them. As such, we have our biggest promotion of Gold Coast property that we have had in the past 10 years. In the interest of each and every one of our clients, our whole 270 team will be cranking up not cranking down. Keep a good eye out in the Gold Coast Bulletin for an amazing selection of Gold Coast real estate as the biggest audience of local, national and international visitors descend on the Gold Coast and experience the Gold Coast in its finest hour.
Have a safe and enjoyable Easter and let the Games begin.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group