This week; new prime minister, state of the market and more
What a week! Friday saw us ring in a new leader for the country. Scott Morrison is now Prime Minister and Business Insider have published a podcast where the then Treasurer talks property. Some interesting points from the article:
In terms of the impact of prospective interest rate rises, Morrison said: “What would be the risks of the banks [raising rates]? One of the really positive features of the Australian housing finance market is the fact that we have an insulation…”.
He said this was because homeowners are “about, on average, two and a half years ahead of payments on mortgages and that’s how people have largely been significantly saving. As the rates fell, they kept paying at the same rate, built up their balances, and so they’re a few years ahead, on average.”
Meanwhile, here is a good 'state of the market' piece which we 100% agree with. Too much is being made by the media about the 'market crash'. The truth is actually, far less 'newsworthy'.
This excerpt of the article by Michael Yardney speaks VOLUMES about what is going on at the moment and I could not put it better myself so here it is.
The economy is chugging along nicely and our property markets are experiencing a soft landing.
Corelogic reports that combined capital city dwelling values fell -2.4% over the last year, while combined regional dwelling values increased 1.6%.
Sure, Sydney property values dropped 5.4% over the last 12 months, but that’s not a crash. And yes, Melbourne property values fell 0.5%, but that’s hardly worth a headline.
Of course, the media’s negative sentiment could end up becoming a self-fulfilling prophecy, scaring off potential home buyers and reducing demand making the market downturn worse than it needs to be.
From the AFR, a piece on declining rental yields in the current market, and its effects on investors. It's a topic we touch upon here briefly. It's important to note that the article does end on a positive note:
Grant Brits, the former investment banker and Olympic swimmer who founded the Superestate superannuation fund which invests in residential property, said in the long run residential property will deliver good returns.
People are starting to realise that the crash narrative being played out in the media is simply not the case. From Australian Broker today – whilst apartment sales have been moderate, the expectation is that this will be short lived.