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A lot can happen in one week in our property markets, can’t it?
So here’s a look back at some of the things I read or learned this week, that I believe you should also know.
1. The RBA will hike rates in November according to NAB
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The economy has continued to surprise to the upside, with the labour market now 6-12 months ahead of our prior forecasts – and significantly ahead of the RBA’s – alongside two consecutive inflation surprises.
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From here we see underlying inflation tracking at least in the upper half of the target band with the possibility it will be above the band in Q1 and Q2. As a result, there is the risk the RBA hikes earlier and we think every meeting should be considered ‘live’ from August 2022.
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For the RBA’s timing, a pickup wage growth will remain an important factor. While it will be difficult to have assessed the breadth and passthrough of wage growth completely by November, the RBA will have two additional reads on the WPI
2. Property markets break new records
House Prices
3. We bought more expensive homes last year.
4. The property side effects of Covid
- We are spending more time at home and less time in the office
- 40% of us now work from home regularly.
- We are spending records of money on home renovations – which makes sense if we’re spending more time there.
5. Record number of new homes under construction.
Australian Bureau of Statistics data shows residential construction activity continued to boom from July to September last year, even though Sydney, Melbourne and Canberra spent most of that quarter in lockdown.
Commencements of new detached houses remained extremely high in the September quarter.
Many of these projects will be supported by the Federal Government’s HomeBuilder program.
This scheme, rolled out as part of COVID-19 economic assistance, began in June 2020 and provided a grant of $25,000 to build a new home.
HomeBuilder ended in April 2021. Under the original design of the scheme, projects had to commence within six months – i.e. by the September quarter.
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'5 things I learned this week that you should also know' have 10 comments
December 26, 2021 Anton Ady
I look back to the first half of the 1990’s when property markets came off up to 18% then recovering from around 1997. Since then our property markets have risen almost exponentially with intermittent “minor” pull backs yet there have always been doomsayers along the way without a return to the early 1990’s. A lot has happened since then with multiple wars, high immigration until Covid, the introduction of GST, the wage to house price multiple increasing, and so on but the same could be said in the lead up to the early 90’s house price collapse with the introduction of a flexible exchange rate, inflation, “a recession we had to have”, a stock market collpase and so on. I believe in “never say never”, so the question from this background is what could precipitate such a similar decline to the 1990’s?
December 26, 2021 Michael Yardney
Anton – we had a major recession in the 90s, I remember it well, and if the same happens again it is very likely our property markets will suffer badly again
December 7, 2021 Sunsal
Hi Michael
What is your suggestion in investing in Boxhill North, Vic? (median – 1.3 to 1.4Mil)
I have checked Boxhill South, Boxhill North, Blackburn South, Blackburn North etc but my thinking is Boxhill North is better. Please advice
December 7, 2021 Michael Yardney
I really can’t answer this without knowing a lot more about you because what makes a great investment for one person is not the right property for someone with a different set of needs becuase they are at a different stage of their investment journey – start with a plan a strategy – not a location
October 31, 2021 Ansari
Hi Michael , Do you see any price growth in Mount Druitt, Sydney for both houses and townhouses close to station with approval of a $1.49 billion revamp of the Mt Druitt CBD ?
October 31, 2021 Michael Yardney
There is still substantial price growth likely in most Sydney suburbs, but moving forward it is likely that areas like Mount Druitt will lag behind the more affluent areas.
Those living in the Mount Druitt region are people who are not experiencing higher wages growth at the time when property values are increasing. This suburb is not on my radar
July 26, 2021 Eleanor Joan
Hi Michael,
Point number 3- how does this take into account foreign property owners in Australia?
July 26, 2021 Michael Yardney
That’s a great point Eleanor. Over the last couple of years foreign investors have become a smaller part of our property market, as banks both locally and overseas have been reluctant to lend to them, meaning more overseas investors are buying their properties with cash. However these statistics do not take into account overseas loans held against local properties
June 12, 2021 Rasanjali
Will the middle ring suburbs like Rowville, Vic increase in price as well ?
June 12, 2021 Michael Yardney
Rowville is not a middle ring suburb- it’s an outer suburb being around 31 km form the CBD, but it will keep growing in value, but not a s strongly as the more affluent “older money” suburbs