01 Sep 11
The Noosa market remained steady over August despite a shaky
stock market. In the press there seems to be a lot of negativity
regarding the Australian property market from so called experts
from the States here flogging their book and making unrealistic
comparisons to the market in the US - a market where, unlike
Australia, if you can't pay your mortgage you can give your keys
back, and is suffering from all the problems that come with a
huge sub-prime market and poor, risky lendingpractice.
But of course, according to the doom and gloom brigade, whatever happens over there will happen here! Well I doubt that - Australia is different! Our banks are conservative - in fact they are as AAA rated as they come.
Across the nation our property markets are undersupplied in terms of population growth predictions. Areas where there is discretionary spending on holiday investment homes have been harder hit, in some cases up to 40% down on previous peak. The rest of the general market is much better, growing at a steady rate of between 10 to 15%. Ironically the same coastal markets experienced the biggest gains during peak times - as high as 30% per annum in some years.
It's these markets that now offer the greatest opportunities for high capital growth over the long term.
It is a good thing for real estate markets to take a breather as excessive growth over the long term isn't sustainable. Ownership over the long term riding through these peaks and troughs has previously resulted in an 8 to 10% average growth in most of these areas. We believe that now is the time to catch the market before the next growth period.
Looking forward, without any macro issues or major world events the Australian property market is set for growth. Interest rates are low - possibly getting lower - and employment remains high.
Coastal regions are set to benefit the most from this due to the significant value they currently offer against metropolitan markets that have not experienced similar falls in value. These areas have been over sold and it's now a good time to get in for the long term as it is unlikely these areas are going to become better buying. Look for blue chip locations - close to water, beachfront or beachside, lifestyle rich locations or close to city centres.
On a final note, any commentator talking about the end of the baby boomers positive impact on the Australian markets is wrong. Baby boomers only began to appear in the market before the GFC, at which point they went to ground aftersuffering losses to their super and asset values. That is changing. Many have continued working and are coming back. I dare say a lot of the huge cash deposits current held by our big banks are funds stored ready to act at the right time. Have no doubt, when these boomers move they will be aggressive and determined to secure the lifestyle they expected to be living years ago. Terms like Sea Change and Tree Change will reappear in the demographic analyst's vocabulary - it's just a matter of confidence!
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