Weekly Wrap 2– Week ending June 26
This week winter arrived not with a whimper, but with a bang. Rain, wind and even snow (!) sent us all scurrying for our warm socks, beanies and coats. Yet the weather did not deter property buyers with the auction clearance rate steady at 70% (down ever so slightly from 71% last week).
Next weekend will see a drop in activity as we all get to line up at our local school/scout hall/town hall and celebrate our democracy with an Election Day Sausage Sizzle.
Brexit and us
In a week where everyone is talking about Brexit and absolutely no one understands what it means, Brits were deciding if they would stay calm and carry on, or freak out and panic.
What Britain’s exit from the EU will mean for the Australian market is still unclear, but there is no need for us to panic. In fact, the Australian market could benefit in the long term.
Certainly there will be a short-term negative influence on global shares but our share market could actually benefit as money moves into safe havens like Aussie gold mining stocks.
And the uncertainty may lead to growth targets being revised down again. This could lead to more rate cuts ahead.
Also, all the uncertainty in Europe will make our property market even more appealing to foreign investors looking to invest in a stable market.
What exactly will happen is anyone’s guess, but Australia is in a great position to weather any storms.
Housing affordability
In the final week of the campaign, both parties made moves to reassure voters that housing affordability will be a key focus in near future.
Labor announced it would re-establish a National Housing Supply Council and develop a National Affordable Housing Strategy. They have also committed to appointing a minister for housing and homelessness. What policies will become of this are unclear but it would ensure that housing issues would get greater visibility and publicity. The Housing Industry Association (HIA) welcomed the announcement. The Liberals have yet to release their strategy for housing affordability but it is clear that this challenge will be a key one for whichever party forms government next weekend.
Apartments – great views for the long term
The media loves to talk about property bubbles, especially when it comes to apartment oversupply. Recent moves by several state governments to tighten laws for foreign buyers, lead to some talk of a drop in demand and a rise in settlement failure for new apartments.
However, as the Reserve Bank states, land supply issues, housing affordability and the urbanisation of the job market should continue to drive demand for apartments in our cities well into the future.
Apartments still represent good opportunities for investors, but as always it pays to be cautious. Key drivers of demand are proximity to cities, access to public transport and affordability.
So in a week that seemed to turn a lot of things on their head, it is good to remember that short-term chaos may bring long-term opportunity.
Enjoy your Election Day democracy snag or liberty lamington.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!