2020+ Melb/Syd to outperform Brisbane again?

Discussion in 'Property Market Economics' started by aussie1, 11th Dec, 2019.

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  1. Sackie

    Sackie Well-Known Member

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    Which ones do you look at?

    The main ones I look at are SOM change, DOM change, ACR changes, discounting rate changes, vacancy rate changes, growth changes in 6-12 months and supply and demand .


    And agree, my main reason for these is to try and get insight into changing market sentiment. I like to use these metrics combined with feedback from players on the ground. The more corroborating the consensus is the better.
     
    Last edited: 15th Jan, 2020
  2. See Change

    See Change Well-Known Member

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    add in 10 year growth rates .

    Cliff
     
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  3. croseks

    croseks Well-Known Member

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    For me, one of the best leading market indicators comes from the RBA minutes :), market sentiment and all the rest doesn't really matter if the money supply is squeezed (as just happened in 2017-2019).

    https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-12-03.html
    03/12/2019
    • "Growth in credit extended to owner-occupiers had also increased a little in recent months, while lending to investors had still been declining."
    • "The recent recovery in the established housing market was expected to be positive for consumption growth in the period ahead."
    • "By contrast, conditions in the new housing construction market had remained subdued. Residential construction activity was expected to continue to contract for several quarters, despite conditions in established housing markets having strengthened."
    • "The outlook for growth in output continued to be supported by lower interest rates, the recent tax cuts, high levels of spending on infrastructure, a pick-up in the housing market and the improved outlook in the resources sector. However, members noted that weak growth in household income continued to present a downside risk to consumer spending, and that a low appetite for risk could be constraining businesses' willingness to invest."

    • "The upturn in the housing market was a positive development for the economy in the near term, but could become a source of concern if borrowing were to run too quickly ahead of income growth."

    • "While members recognised the negative confidence effects for some parts of the community arising from lower interest rates, they judged that the impact of these effects was unlikely to outweigh the stimulus to the economy from lower interest rates."
    And this last paragraph is the real gem:
    • "The Board concluded that the most appropriate approach would be to maintain the current stance of monetary policy and to continue to assess the evidence of how the easing in monetary policy was affecting the economy. Members agreed that it would be important to reassess the economic outlook in February 2020, when the Bank would prepare updated forecasts. As part of their deliberations, members noted that the Board had the ability to provide further stimulus to the economy, if required. Members also agreed that it was reasonable to expect that an extended period of low interest rates would be required in Australia to reach full employment and achieve the inflation target. The Board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time."

    For those who read through all that, well done. All it says is that money will get cheaper, and stay cheaper for longer, cheap money = higher asset prices.
    This pretty much tells you that for the next 12 months (at least), Sydney & Melbourne will be the main beneficiaries of this cheap money.
     
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  4. Omnidragon

    Omnidragon Well-Known Member

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    Absolutely. Brisbane can never catch up at this rate
     
  5. Samoz

    Samoz Active Member

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    I think interest rates in Australia have been quite high in the past and the current level are still high compare to other markets around the world. It has to sit somewhere at the level of 2 percent. This will obviously give enough stimulus to the property market and will bring the prices up because any impact caused by high interest rates will be offset and appreciation will be no longer felt by people looking to buy their first or second property.
     
  6. Redom

    Redom Mortgage Broker Business Plus Member

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    Looking at the jobs data that's come out - I suspect Brissy will do well (haven't drilled down the Qld impact, but its looking good assuming Bris is driving it). Perth looks solid too, especially given its valuations.

    Not sure what'll outperform what (probably Syd/Vic for a while given their rate sensitivities), but I suspect a lot of markets across the country will perform well (assets in general given rate cuts are rising).
     
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  7. Realist35

    Realist35 Well-Known Member

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    Redom, thanks for your thoughts on this.

    Considering interest rates are so low, I assume RE can only go up for a short period of time (say a couple of years). This is because once IR hit rock bottom, there is no more ammunition to stimulate housing market. After this period I imagine there would be a long period of stagnation in RE. What are your thoughts on the mate?
     
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  8. Jana

    Jana Well-Known Member

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    Sackie, The demand you talk to these cities is due to changes on interest rate? Then this is artificial??

    If natural demand was there for Sydney why Sydney market was dead from 2001-2009?? The sentiment will eventually change and we will see a dead mkt for a while... May be in 2021-22.
     
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  9. Sackie

    Sackie Well-Known Member

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    Heaps of places around oz not doing much, despite the lowering of IR etc etc. Its because the demand just isn't there yet. Sydney and Melb have responded because the underlying long term demand is there. Its always there. It's just market sentiment is a weird beast. Once it changes, prices will quickly meet demand. In places with less demand or no demand, regardless of what happens to IR, unemployment numbers, etc, prices will be slow to rise. As is the case in many markets around Australia. When people start to see value in those markets again, sentiment will change and then prices will rise as demand increases.

    I got no BA in Economics, just real life experience and instincts which have worked out fine for me over the last 2 decades almost.
     
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  10. God_of_money

    God_of_money Well-Known Member

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    Australia's unemployment rate edged down for the second consecutive month to end 2019 at 5.1 per cent, its lowest level since March last year.

    Recession :p ??? Good news for property.. low IR.. low unemployment rate
     
  11. Patrick Bateman

    Patrick Bateman Well-Known Member

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    Brisbane house prices to rise over 2020-21: Forecast to soar by up to 17 per cent
     
  12. mickyyyy

    mickyyyy Well-Known Member

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    Have a look at what's going on in Auckland... Property there is more overpriced than Sydney it seems to me but the high yield balances it out
     
  13. Patrick Bateman

    Patrick Bateman Well-Known Member

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    Yep Auckland also appears to be massively overpriced , I hate to say bubble but if the shoe fits ...
     
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  14. mickyyyy

    mickyyyy Well-Known Member

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    Are we at the end of it thou? Phill has changed his mind a few times about it...
     
  15. Codie

    Codie Well-Known Member

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  16. mickyyyy

    mickyyyy Well-Known Member

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    I know the clock! What point you making?
     
  17. Codie

    Codie Well-Known Member

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    none at all just posting for the group :)

    what stage of the clock do you think we are at? I’m guessing phill thinks we are at around 12-13?
     
  18. mickyyyy

    mickyyyy Well-Known Member

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    Not exactly sure! What I do know is the cycle can go 20yrs and looking at my situation and what I want to achieve. The next phase is credit and emotional which is dangerous holding onto the wrong product. I personally rather listen to people who have seen a few cycles and understand the world we live in today as things have changed, and will be changing in the future at a more rapid rate.
     
  19. Blueshoes99

    Blueshoes99 Well-Known Member

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    Search for houses in the 0-$2,000,000 market around all of sydney and you won’t find heaps - not overwhelming - no stock. Supply vs demand. People r trying to buy homes for their families and this frustration will end up making them pay more.
     
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  20. mickyyyy

    mickyyyy Well-Known Member

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    Yep! 24.8% down according to SQM and could go higher as ppl see there assets gaining value and some sell for whatever reason.