Reflection for Forward Focus – MAY 2019

In the world of smartphones, smart TVs, smart notebooks, people and even smart homes, not only do we have multiple platforms sending us up to the minute information on the property and financial industries, the information can be quite contradictory between the opposing teams.

So, what do we need to take in and what do we need to take as opinion/brush off/ disregard (which is intended with respect to relevance to your goal, no disrespect to those with the opinion).

Facts and figures never lie, however an opinion can also be quite important if you can read between lines and connect the dots with the figures. This means a lot of reading, comparisons and double checking facts – If you can keep up with it all.

An opinion of someone specialising in the industry doubled with also being local, on the ground, in the trenches per-se, will be your gold nugget for your finer details. As for the Mainstream Media? Most likely will not be your source if you want to take your next purchase whether it be for Owner occupying or Investment seriously.

OPQ assist our clients by a breakdown of some key factors we feel are relevant in a holistic fashion as all elements will effect a sale, purchase or property investment one way or another.

AUS Market – OPQ’s Breakdown to MAY 2019

Summarizing/interpretation of the report released by Core Logic suggest the southern states, in this particular report, focusing on Melbourne and Sydney markets has suggested there has been some recovery since the low the property market experienced during DEC18.

What triggered the low?

The RBA Royal Commissions certainly takes a majority hit of blame. The reformed terms and conditions banks were required to take on for new loans and credits with all future clients saw fewer approvals, naturally resulting in less completed sales (established and new/off the plan) or, the need to sell at a lower price to meet buyer expectations had to be instilled into Vendors, whom of which that did, biting a bullet to move their properties on with the lower price than their own sentimental price expectations.

The looming election campaign, scare tactics and preschool frolics that seemed to go on forever, also has a part to blame for more of the stagnant market in most regions, mainly due to the blessedly dull idea of removing negative gearing from its current form.

National figures show the recovery in the form of easing declines, rather than an increase in its pure form. This means that values are still declining (0.5% last month), just not as fast as the rates we saw in DEC18 (-1.8% in Sydney, whilst Melbourne finished the year on -1.5%).

Amongst the major capital cities, all had their version of a decline other than Canberra, which was the only capital city to record a (small) gain during April. Regional areas mentioned such as Tasmania, regional Victoria and SA appeared to have been spared a decline.

QLD – What does this mean for you?

Brisbane had not been spared during the declining values over the last 12 months, seeing values 1.9% lower since this time last year. This is despite an increase in demand due to the population growth, affordable property prices (in comparison to our southern cities) and our stable economy. Taking the fundamentals into account, there does not appear to be an expectation of a further material decline in the dwellings throughout Brisbane.

What is prominent in agent’s opinion and experience currently over the last few weeks (predominantly SEQ, even post-Election) that it appears there are dampening effects felt through the tight credit conditions, meaning buyer activity has been delayed where they previously have experienced a high rate of buyers, seasonally.

As an Owner Occupier in the QLD market to buy your first or next home, QLD markets can be strategically played in your favour if you are able to arm yourself to approach sales with market insight and a clear mind on understanding the value of the real estate market (the brick and mortar) ahead of your emotional investment. If you can differentiate this with your purchase, it will return its due in market conditions to come in the future.

As for investors, Brisbane is experiencing overall generally stable yields even with the shift of decline toward the dwelling value. Recording 4.4% for houses and 5.4% for units, the yield within the Brisbane market sits amongst the highest of the major capital cities (Darwin leading the way, tracking at 6% on average). Your yield and its longevity to remain within its ideal % throughout the years you hold your investment is heavily reflected in your purchase price, location and economic growth. Just like any investment or major decision, the results of your investment will be reflective of that of your education to the region/suburb. Brisbane holds a great opportunity to the step into the investor to then also leverage on for next investment/home in other blue-chip regions for investment that may be just out of reach for your first purchase.

What now? It appears with the data collated, the ripple effect the recent disruptions are coming to an end. Our next move will predominately be waiting on the rumours/mentions/ leaks that the RBA may / will cut their rate and the general terms of a bank application being checked against a rate flat rate of 7% may well be adjusted to 2.5% increase on the offered rate. This could mean a single professional with no dependents on $80,000 per year (and clean history) may increase their serviceability of loans of up to 10%. This in addition to the new home owners grant, may see a number of buyers enter the market with a lot more confidence in the way of finance and choice of selection, if done so correctly. What geographical market they buy in, however, will be the determining factor in using any market in its current form to its best opportunity. That will be down to strategy, research and their understanding of value now compared to 10 years’ time.

In summary, our QLD Market has found itself in a more stable outlook in comparison to the southern state's stock with the fact our developments/construction are 2 to 3 years ahead of Sydney and Melbourne completions. (To read about the surplus stock on the market and its ripple effects, subscribe to our newsletter to receive our top ten considerations for buyers click here)

The bang for the buck when it comes to investing is prominently focused toward key areas being highlighted in QLD blue-chip locations. With the hyped promises of government first home buyer incentives, banking lending criteria easing and a not so leaked rumour of a possible RBA rate cut nearby, we expect to see Brisbane markets start to heat up and naturally extend outward into QLD as a flow on effect.

A lot can happen in a month - good, bad & curve ball - So, sit tight, OPQ will check in again within the first week of July with reflection and forward focus among a fresh FY just to put a scatter among the results.

With passion, strategy & transparency,

The OPQ Team.

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