Is it Just a Beat-up?

Graeme Salt


 


Many of you know that in a previous life I worked in politics as a spin doctor. So I have a pretty-good understanding of what makes news.


 


I have great respect for journalism and the Fourth Estate. But, I am concerned that the current property bubble mania is a hackneyed generalisation of what is actually going on.


SURE Sydney prices are going through a growth spurt


BUT it is not across the city – and is CERTAINLY not nationwide


SURE there are some crazy prices being paid in some suburbs


BUT it’s not city-wide SURE investors are driving certain segments of the market


BUT they will move on when they can get a better return from other asset classes


 


The graph above shows that, for many states, there is not a lot happening – take away Sydney and things are pretty flat.


 


Take a look at the Australian Property Monitors’ auction results for last weekend and you will see very different results: Adelaide had a 58 per cent clearance rate, while for Sydney it was 81.2 per cent.


 


But even within growth cities, it is not all gold. Real estate agent, Ewan Morton of Morton & Morton said this week “after weeks of going gangbusters we are now starting to see a little bit of pull-back.” Ewan operates in Sydney’s higher-end suburbs.


 


His views were echoed by clients I recently met who mentioned properties in the Castlecrag area of Sydney, worth a few million, were just not selling.  Some recent research came out that showed we were feeling more confident about the economy, but we were still not spending.


 


And when we stop spending, markets go flat. I came across another Property Observer quote this week. Focussing on the Waverley area in Victoria it said “The Waverley area is nearly back to where it was in 2010 when the market was at its peak.” This means that for the past three years you could have bought property for a price cheaper than in 2010.


 


I will repeat that - FOR THE PAST THREE YEARS YOU COULD HAVE BOUGHT PROPERTY FOR A PRICE CHEAPER THAN IN 2010.


 


If investors are driving our growth markets, in time, they will move on and markets will calm down. Unfortunately, that’s sensible and does not make headlines.


 


Graeme Salt can be contacted on 02 9922 5055