DITTO – MUCH OF THE SAME !!

DITTO – MUCH OF THE SAME !!

Never before has the entire property industry been under as much scrutiny. So many now have a microscope and continually offer their opinions and ongoing property commentaries. Today we are reading much more consistent themes on analysis however, it would not be a balanced debate if all were in agreement. Today, the ‘Governor of Moolah’ explained in his ‘Opening Statement to the House of Representatives Standing Committee on Economics, Finance and Public Administration’ in Melbourne just how he is reading the economy. In a nutshell, not much has changed he said ” In fact, what I have to say is also similar to a speech I gave on 14 June”. Last week in VRN, we announced that interest rates would still be the same when you sit down for Christmas Day lunch. The Governor came out this week and hinted that they will remain the same well beyond the end of 2005 into 2006. He said today in his address “Over the past eighteen months, during which Australian house prices on average have not risen, this process seems to have stopped, and so consumption and borrowing have slowed noticeably.” Unlike those who predicted that we would see carnage with property prices this has certainly not been the case. Our markets peaked in 2003 and since then one could safely argue that the markets have actually been quite orderly. It is obvious that should the markets get over excited (which can’t be ruled out) the ‘Governor of Moolah’ will issue another speeding fine in the form of a rate increase. One only has to pick up a newspaper this week to see that many companies continue on the path of record profits. With so little happening in the property market the reports are getting shorter.

One week in, since that nasty exit tax was abolished and we can report that yet again nothing has changed. We have not seen an increase in investors joining the market, although we can report that we have experienced an interesting surge in apartment enquiry. Many are of the opinion that apartment prices have bottomed, although this week Marize had offer and acceptance on five apartments. None of the sales were to investors, all were to owner occupiers, which means that this niche market is jumping ahead of the perception that the investors return is not that far away. Investors generally only jump into markets when they see the traction resulting in positive market action. It will be interesting to see if the increased interest in apartments continues, as this will all but certainly see the investors back in the market place. We did place a ‘buy’ recommendation on apartments some weeks back.

The holding pattern on the property market was further evidenced this week when the Australian Bureau of Statistics announced that 54,436 housing loans were issued in June 2005, just down a bit from the previous month. Loans for the construction of new homes fell by just 1.5 per cent , loans for a newly built home again just down to 2,222 while loans for established homes fell by 0.9 per cent to 47,669. Again, the holding pattern is consistent across the entire property landscape. Any noticeable increase in these market indicators would be entirely due to greater investor participation in the market place.

There is more action at Old Trafford than in the current property market, and the only thing falling there are Aussie expectations of holding a catch and the Ashes for that matter. We won’t get a true market indication of where the housing market lies for another month yet, but don’t be surprised if you hear those words, ‘same, same’. We can predict that we won’t see an over supply of property which has been the case in recent times, we can however expect much of the same !! Cheers ^__^

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