Albert Sy
Let us start with the European Crisis which has created great uncertainties worldwide affecting our stock market, wiping off billions of dollars off the value of stocks. Further, the Reserve Bank of Australia is managing our country’s economy by extreme control of interest rates by screaming either up or down depending on the economic crisis of an upward booming or downward spiraling economy giving rise to a two speed economy.
For almost a year on end we have been bombarded every day by commentators that the property bubble bursting with prices spiraling down. Did it happen? “NO.” MBIC has carried out considerable research for this article and is very pleased to say that since 2011 our residential property market has moved into a new era. We have moved from a property boom condition to a phase of slower growth. The market has been slower due to multiple rises in interest rates thereby increasing unaffordability and falling consumer confidence.
Apart from all of this, Australia has been voted “the Happiest Country in the World” in accordance with a survey of the OECD countries, based on its employment opportunities, lifestyle, and standard of living. This is also based on the opportunities it offers the Australian working person during his/her working lifespan which also makes him/her able for an investment portfolio to become a self funded retiree.
Australia’s future with:
- Long-term visitor arrivals in Australia, which includes skilled migrants, international students, and working holidaymakers are recovering from the 2010 lows, when overseas student numbers plunged after the occupations that qualify for skilled migration program was halved. Population statistics ABS figures show that in the year to November 2011 the net number of long term arrivals reached more than 243,000 people and the number of 457 visas lodged between July and November last year was up 40% from the same period last year.
- The facts are that we have moved into the next phase of the property cycle with steady weekly auction clearance rates of 61 to 63% for the last 3 months; this is and always was the clearance rate in a normal residential market place for the previous 30-40 years prior to the booming conditions of the past decade. This clearance rate is up from the average weekly clearance rates of 55% for the best part of 2011, and
- I can see history repeat itself and we can expect a recurrence of market conditions that prevailed during the booming conditions of 2008-09 to mid 2010.
Australia’s economy for 2012 is on the road to recovery and will go from strength to strength. I say that on the basis of our past economic growth, performance and on the basis of the OECD report that Australia’s economy will be the fastest growing economy in the world.
And, the facts are as history proves that as interest rates are reduced and the public’s confidence is restored in our economy, it will perform strongly over the next number of years driven by increasing demand and most importantly rising cost of construction.
What does this mean to you and to me is that to be a successful property investor, take advantage of the opportunities this changing market is presenting over the next 12-18 months as it is very likely that we need to take a different approach to the one over the last few years.
