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This past month I have been hearing some nonsense from people and Those that I would have thought knew better about the STATE OF THE AUSTRALIAN PROPERTY MARKET.
One of the agents with us emailed me to say that he had been to a property course for a weekend and they had ALL the research from Australia and basically are saying that it is very slow. How can that be when we had one new 64 unit development come on line and it all sold out in one weekend in Australia BEFORE WE HAD A CHANCE TO SHOW IT when we were in South Africa a month ago?? I wouldn’t call that slow would you?
I wonder if the people he had been with actually know what they are talking about or are they generalizing again as is often the case. Failure to isolate areas. Another client told me that he knows that the Australian Property market is in free fall and prices were going down.
I wonder why one of our vendors just put his prices up if that is the case??
One person who had actually bought, gone unconditional and then at settlement decided not to proceed and accept losing his 10% deposit as his South African financial planner told him that property markets are going to crash all over the world.
How can anyone actually believe that what is happening in once country will also be happening every where else?
A person who works in lending in Britain told me that there it is now too difficult to get mortgages for people to buy offshore (someone should tell the Australian lenders that). This may be the case for people borrowing for European countries now but that does not then automatically relate it to Australian lenders.
Based on these few cases and more, I thought it wise to pen a few words to caution our investors and “would be” investors to be careful who they listen to and to understand that Australia is not necessarily the same as America, South Africa or the United Kingdom when it comes to the property markets
To start with there is NO SUCH THING AS AN “AUSTRALIAN PROPERTY MARKET”
Each area has to be taken in isolation as what is happening in the market in Sydney is NOT happening in Melbourne and what is happening there is NOT happening in Brisbane and what is happening there is NOT happening on Gold Coast and so on.
Property markets go in cycles, always have done and always will do, so one needs to be able to know how to identify which part of the cycle the property is AT EACH SEPARATE AREA.
Cycles can only be in one place at any time, UPTREND, PEAK, DOWNTURN, CORRECTION. This is WHY one needs to understand that in a country such as Australia it is not all in the same place at the same time. It is vital to understand timing issues when investing in property.
The new buzz words are “sub prime problems”. Most people outside the mortgage industry didn’t even know the term, sub prime until recently, yet today they are all “experts” on it
Certainly there is a new mood in the mortgage industry, worldwide, as a result of the sub prime situation in America. South Africa has just had the credit control introduced and that has meant that people can no longer get into as much debt as before. Now one bank will be able to talk to another bank to find out what the clients borrowings are whereas they couldn’t before. Australia has had a credit rating procedure in place for thirty years or more. This means that people can not just go into debt without the lenders ascertaining that they have the capacity to repay.
The CRA ( Credit Rating Australia) goes a long way towards NOT allowing people to get in too deep which is what happened in America during the heady property days.
Yes there has been some effect with mortgages with the Australian Lending Institution but nothing like happening in other countries and Australia’s CRA will always protect consumers more so than countries that do not put such practice into place.
The second hand market has slowed ( but has not come to a standstill as we hear about in other countries)due to the interest rate increases but the Investment market is not as affected. It is Important to understand that the Australian Government gives it’s citizens substantial taxation benefits to encourage them to take steps to become financially independent in retirement. Property is one way to achieve this and therefore on new properties it dosen’t matter so much if the interest rates increase as 100% of the out of pocket expenses such as interest is deductible from people’s income.
The thing I find is that people giving “advice” such as I mentioned earlier, do not understand some of these issues and therefore how can they give factual information out?
So the Australian banking industry has not been totally immune to global problems. They are still in good shape with the Commonwealth Bank announcing a record profit for the year ended June 08.
Be careful who you listen to and weigh up just a few factors that are not alive and well elsewhere as they are in Australia:
- The economic growth still coming through despite the current domestic slowdown
- The continuing resources boom
- Increasing population/with demand greater than supply for property
- High immigration
- Low unemployment
- A strong banking system.
Please feel free to contact me on email: Jenese Malone
See detailed article on house shortages in Australia here...
Do yourself a favor BE CAREFUL WHO YOU LISTEN TO!!!!
