Oops. We referred in last week’s edition to the Australian stock market being off to a swashbuckling start when it broke the psychological 5000 barrier – what a difference a week makes. Last Thursday, the 'shock market' wiped $30 billion although I am at a loss to understand why this would be termed ‘Super Thursday’? I would think a more appropriate name would be ‘Hedge Thursday’, given it was the hedge funds who were cashing in. Investors who have ventured back into the 'shock market' are only in pursuit of fully franked yields – which are a long-term hold. The benchmark S&P/ASX200 index fell 2.03% to 4995 points. Alas, no fear – by the time you're reading this those ‘psychological’ 5 points will have been found. Problem solved!
That’s enough of the 'shock market' for us, given our property markets are identifying a completely different market response. In years gone by, the share market would boom then the profits were realised and then transferred into the property markets. We have not seen this trend for quite some considerable time, so we very much doubt this will happen in 2013, nor anytime over the next five years. Baby Boomers are focused on their super funds, hence chasing fully franked yields. The entry markets (otherwise known as First Home Buyers) have left property markets – rate cuts, incentives fail to lure first home buyers. RP Data reported figures showed an annual average of 117,686 housing commitments to first home buyers between 2000 and 2012. Housing finance activity by first home buyers (in 2012) was 17% below the average.
So where have they gone? Rental market tightens in January to national vacancy rate of 1.9% mainly due to seasonality: SQM. The national vacancy rate tightened by 0.4 percentage points from 2.3% to 1.9% over January, with just over 54,000 properties available for rent across the eight capital city markets, compared with 63,000 in December. It should be noted that our total markets are approximately divided into thirds – one third rent, one third own a home without a mortgage and the final third own with a mortgage.
Last week, APM Research released their Housing Market Report – Australian capital cities and Gold Coast property market. In a nutshell, “positive signs continue to emerge in 2013 – Australia’s housing markets will build on the improved performances recorded in 2012”. Let me preface that with when the housing market booms it historically takes approximately a decade before we see over – heated markets again. This would then suggest that we won’t see a bull property market in Sydney until 2017.
- The Sydney market continues to provide positive indications of increasing buyer activity although the prestige markets remain dormant.
- Latest ABS data for November 2012 revealed the highest monthly loans approved for non – first home buyers in New South Wales for five years.
- By contrast first home buyers in New South Wales have gone missing with the latest ABS loan numbers at the lowest level for 20 years. This result is however no surprise given the surge in demand from first home buyers at the end of 2011 and into 2012 motivated by changes to state government buyer incentive programs.
Hallelujah – Mosman houses finally score a century, albeit a month behind 2012 data.
Robert Simeon is a director of Richardson Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog Virtual Realty News since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.