Guest Expert Opinion: Year in Review by Brian White
The Australian property market ended 2012 with more optimism than had been anticipated half way through the year. Several factors have encouraged a positive anticipation that this might occur.
The extraordinary return to confidence in the New Zealand property market - surely the most remarkable turnaround that a property market has witnessed for many decades - led to the increasing belief that the question over the Australian market would be not so much “if” the market was going to improve but “when”.
The highly successful completion of the Spring selling season in 2012 enabled the industry to record a much stronger December than has occurred in the past. The carry over of stock is less than it has been for some time.
The impact of the GFC was particularly felt in property markets that could be fairly described as discretionary, for example holiday homes/apartments and lifestyle driven developments. Properties closer to the inner circle suburbs of our cities fared best. (By the way, this has been the exact same trend in the United States where the top six cities in population numbers experienced a far lesser drop in value.)
The reasons for this are generally explained by the better job opportunities in the major cities, the Government’s concentration of resources and big corporations have their offices.
The strength of the mining sector has been a Godsend to the property markets in many of Australia’s regional centres. Dramatically escalating rentals were a boom for property investors.
At year’s end there was some waning indeed. Frenetic confidence in many of these markets but, it must be remembered, the property owners in those centres had a remarkably buoyant few years.
One must remember that approximately 30 per cent of all residential transactions are the property investors who will tenant their purchases, it is easy to understand the impact of tenancy occupancy demand upon the broader real estate market itself. Conditionally, property investors wish to live near their investment assets (ease of surveillance, confidence in the neighbourhood etc). The feature of 2012 has been the preparedness of investors to go to new areas (or them) chasing anticipated high rental growth.
In summary the Ray White Group has greater confidence in the Australian property market coming into 2013 than the year before. The anticipation of further interest rate cuts is the best New Year’s present to those in this industry.
Brian White, Ray White