What has Mitchell Johnson got to do with the property market?

Graeme Salt

Sydney property buyers have been like the pommy cricket team over the past few years. They have been able to take their time and take a position without much competition.


Suddenly though, just like Mitchell Johnson, the Sydney property market has roared back to life. Lately vendors have had the upper hand just as Messrs Cook, Pietersen and Broad have been on their back foot.


Just as with Mitch, there is no one reason why Sydney has roared back to life. After three tough years where prices went backwards a number of factors combined to create fierce buyer competition. The competition was most noticeable on inner city houses under $1.5 million and apartments under $700,000.


Fundamentals – Sydney remains our largest and most internationally-recognised city. As a result, most immigrants want to buy here. And because we are not building much property here, it was always a question of time before the laws of supply and demand kicked in. In addition, many Chinese want to invest in Australia and rule out unknown property markets like Kickacanalong.


The same applies for Mitchell. We always knew he had the goods. We were just never sure when we were going to see them.


Interest rates hit an all time low during 2013 as the RBA cut the cash rate to 2.5% in August. This cycle of rate cuts has seen the cash rate go from 4.75% in November 2010 down to 2.5% within three years. This turbo charged economy has put some real zip into property.


Johnson is probably Australia’s most turbo charged bowler. A few fast deliveries from him soon get the adrenaline pumping.


Unemployment held at reasonable levels throughout the year, peaking at 5.7%. This was lower than predicted and was a determining factor in supporting the property market. The real beauty of the Sydney economy is that it is not beholden to one industry; it tends to fire on all cylinders.


The thing about Mitch is that he is pretty employable in a few departments. With his highest test batting score of 123 not out, he is clearly handy to have around and can support the team in so many ways.


There is no alternative. Since November the All Ordinaries has dropped off quite a bit; as a result many investors are piling into property. The same applies for Mitch – who else can turn the game around? Harris and Siddle are good, but not match winners. And in other international sports who else has Australia got? If the Wallabies produce a match-winner, he is invariably a drunk who loses his contract. Rugby League is not an international game.


Many were surprised to see Mitch and the property market perform so well in 2013. But the question is what will happen in 2014? New Years Day is the Sydney test. Who will be in the ascendancy, Mitch and property vendors or the Poms and buyers?


I have a couple of clients going to auction this week and then we fly out to the UK for Christmas. Good luck to my clients.


Graeme Salt is a Sydney-based mortgage broker.  He can be contacted on 02 9922 5055


Have a happy Christmas and prosperous New Year. I will be thinking of you, Mitch and the property market on New Year’s Day.