Over the last few years the mood surrounding investment has been gloomy, and any signs of recovery have been marred with pessimism and self doubt. Now there is a line of sentiment that is noticeably positive in Australia; we are the lucky country, and many are starting to remember that.
For many of us, our super is the second largest investment we will ever make after our home. The apathy that many have towards this nest egg is a widespread problem, exacerbated by the recent poor performance of many super balances.
As a property research house we constantly receive lots of questions from clients and business partners about where the “hotspots” are for property. On a daily basis we are questioned about the different markets around Australia and one of the most common questions is about the Melbourne market. As a service to our dedicated readers today we will go over our reasons that make Melbourne not the ideal market to be currently investing in. As usual, this is not to say that there are not great buys to be found in Melbourne, it is just the macro factors have pushed Melbourne below Blue Wealth’s approval line on our ratings model.
Struggling developers in Adelaide are going ‘all in’ to sell their house and land packages. Despite historically low interest rates, attractive government grants and developer incentives, Adelaide developers are still scrapping to get sales. Looking back at previous market cycles in the property industry, if such incentives were available property prices would be doubling every three years and everyone would be buying into the property market.
Much like many aspects of business in Australia, the government has a heavy hand in the property market. Current grants aimed at new builds from the federal and state governments to help first home buyers into the market are failing. Besides the grants’ design to help first home buyers, they are supposed to be a double edged sword for the government – if more first home buyers are purchasing they are supporting construction, a major employment sector, and therefore helping the overall economy.
One of the great messages from our seminars is simple: don’t think about what YOU want when purchasing an investment property, think about what the world will look like when it comes to sell in the future. While we can’t accurately predict exact future circumstances, we are witnessing a significant shift in Australians’ attitudes towards housing that will present a markedly different housing dynamic in the future. Blue Wealth is currently recommending, not exclusively of course, established inner city areas close to amenities and lifestyle drivers.
It’s been almost five years since the Lehman Brothers collapse kicked off the GFC and sent the world’s financial markets into chaos. To date there has been over $12 trillion worth of stimulus and 515 rate cuts by the world’s central banks in response to increased unemployment and negative growth. However, things seem to be taking a turn for the better: American real estate is recording positive growth; Germany is having a change of heart towards austerity; and the structural demographic shifts around the rise in the Asian middle class means consumption and demand is driving economic growth.
Looking at the 2011 census from a property perspective provides a fascinating insight into how we’re living. As of the 2011 census there were 21,507,717 Australians, with 5,684,062 families and an average of 1.9 children per family. Looking at this in more detail, the census has information on the relationships we share with those we live with. The most popular relationship is that of husband and wife (with 7.6 million Australians). Next was ‘child under the age of 15’ i.e. dependents (3.6 million), then lone persons (1.9 million – almost one in ten), followed by de facto relationships (1.4 million) then non-dependent children (1.1 million).