Projects Newsletter – September 2013
What a fascinating period of activity in the Australian Property market. Just two months ago we were discussing the signs of green shoots and improving sentiment in the property market. As of today the press is now focused on whether or not we are in the middle of a property bubble. This talk of a potential bubble has been fuelled by above trend auction clearance rates as purchasers shrug off winter and look to get established in a market where a lack of supply is assisting in pushing activity.
Many commentators that caution about being overly concerned about a bubble forming harp back to the fact that there remains an under supply of housing in the main metropolitan markets in Australia. This is in contrast to the US housing bubble which burst during the GFC where the supply of housing grossly outstripped those looking for residential accommodation.
The Sydney market has continued to prove the surprising beneficiary of all this renewed buyer activity and new projects are scrambling to obtain approval and meet the market. This eagerness of developers to bring product to the market is proving positive for buyers as they are prepared to meet the market to obtain the still stringent banking pre-sale conditions and not “miss the market”. The other fact to remember is that although we have seen some recent price growth in reality the prices have just caught up to where they were three years ago.
Looking further abroad last week saw Beijing host its semi annual property expo. Over three hundred groups from around the world set up expensive show booths to lure the Chinese market to their product. The European markets are particularly aggressive at present in looking to attract this market with numerous countries offering low cost entry with permanent visas. The US with its comparatively affordable house and land packages which remain a hang over from the defaults during the GFC are also proving attractive to the Chinese market, Interestingly the Chinese are restricted to only being able to acquire one investment property within China hence they are looking overseas to satisfy their investment demands. On a domestic level the Australian market is experiencing strong demand from Asian buyers and it was interesting to note that this is obviously a cultural phenomena and not one particular to those that have already achieved residency. Also worth noting was the keen interest shown by the Chinese buyers in the New Zealand market. These buyers noted New Zealand as an attractive location due to its relatively low price barrier to gain a visa/residency as well as for its environmental credentials. What is also interesting here is that at the same time the New Zealand Government is now looking to impose limitations to borrowing levels to discourage speculative investment in an effort to reduce demand.
All in all there is significant activity in the property market at present and with activity is opportunity.