Don't Delay Getting Into The Property Market...10th March 2010
Hi, Andrew Bell here again.
Well we have started off March with some significant moves in the market place haven’t we. Interest rates rose to the 4% level as we expected and we of course have forecasted that interest rates will get back to 5% which means another four quarterinterest rate rises and that is just getting to a level that we call neutral interest rates.
What about the Governor of the Reserve Bank. He is very upbeat about our economy and is certainly suggesting that the fears that maybe were lingering at the beginning of this year have certainly been put to rest at this stage.
Today I just wanted to go back and recap on something we touched on in this year’s Property Report. For those who were
present at this year’s Annual Gold Coast Property Report you may recall how I particularly highlighted the most significant
fundamentals that would dominate the property market moving forward. It is the massive population growth that we have to
have in order to maintain a healthy growing economy and this massive issue of housing shortage.
Not only are construction levels down at present but what I particularly highlighted was that even if there were ready, willing and able developers we have a huge issue which people haven’t fully come to terms with.
I felt like a bit of a lone voice at the time but I was interested to see in the most recent issue of Business Review Weekly a feature on Australian futurist and economist Brian Haratsis in which he fundamentally shares everything that I had talked about a month ago.
He says that the bad news for renters and property market entrants is that he expects house prices to soar and Australia’s
affordability crisis to worsen. Although he goes further than I did stating that if Governments do not act to release more land it may cripple the nation’s economy.
He talks about the fact that the low construction levels mean that the supply and demand equation is so out of kilter that a
boom in prices is almost guaranteed.
Whilst we know one of the solutions to this problem is Governments releasing more land for development of new housing estates and much has been spoken about this over a number of years now. However what I tried to highlight last month and Brian has highlighted this month is this massive issue of the need to develop infrastructure for wherever these land releases may occur.
It is all well and good to release a lot of land for the construction of new housing but if Governments can’t afford to build the roads, provide water supply, build schools, hospitals, police stations, ambulance & fire stations, and all of the other infrastructure support that needs to go into new communities than there is no point releasing that land because those housing markets won’t be serviced.
There is no question that Australia has massive amounts of available land for future redevelopment. That is not the issue. The issue is where the money is and where is the will to get the infrastructure in place.
It is no surprise to me why Governments are so reluctant to release more land for development and that is because ultimately the pressure comes back on them and their already stretched budgets to provide the infrastructure and ongoing community support.
As I said in January, buy up as much property as you can right now and if you can buy up some properties for your kids because this problem we have will take decades to turn around.
Owning real estate has not only provided Australian’s with so much financial security but it has also been the means by which most Australian’s have created their financial wealth. It used to be that the great majority of Australian’s could own their own home but that is changing rapidly. 28% of Australian’s rented 4 years ago, now 31% and the forecast by 2015 is a massive 40% of Australian’s will be forced to rent because they cannot afford to own a home. Talk about the haves and the have nots.
Share this information with as many of your loved ones as you can as any delay in securing the purchase of their homes will very quickly prove to be the most expensive mistake of their life.
If you would like any more information please don’t hesitate to contact us. We would only be too happy to help you with as
much information as possible.
All the best for now and we hope you enjoy the month of March.
Andrew P. Bell
Chief Executive Officer
The Ray White Surfers Paradise Group