Michael Quinn 01 June 2015 News

What the Economist’s are saying

Everybody is an expert… especially with Property Investment. It is amazing that so many have an opinion (just bring up Property at a dinner party) – yet so few have property investment portfolios (According to the ATO, only 8% of Australians own an investment property and only 5% of all income tax paying Australians own 2 or more investment properties).

So, let’s get an update from some of Australia’s leading Economists:

Tim Lawless (the head of RP Data research and analytics) reports:
The CoreLogic RP Data hedonic Home Value Index showed dwelling values moved 0.8% higher in April across the combined capital cities with values rising across all capital cities except Canberra. The April Home Value Index results have confirmed that values across Australia’s combined capital cities increased by 0.8 per cent in April 2015, down from… and:
As Australia’s $1.4 trillion mortgage market continues to grow and evolve, underpinning Australia’s $5.7 trillion dollar residential property market, regulators, policymakers, analysts and investors are becoming increasingly sophisticated in analysing and understanding the component parts of each respective market.

I asked MacroPlan’s senior economist Jason Anderson to rate out of 10 key drivers for the Australian property market now (2015) and to then rate out of 10 the same indicators for 2017, his comments and the score chart make for interesting reading:

Key drivers for residential – 2015 state of play

Rating out of 10, most positive influence

2015

SYD

MEL

BRI

ADE

PER

Unemployment 7 7 4 4 8
Infrastructure spending 6 5 4 4 5
Overseas Migration 8 8 7 3 6
Interstate Migration 7 7 4 4 6
Capital Growth 9 7 2 4 6
Rental growth 7 5 8 3 5
Total affordability 6 5 8 6 4
SUM 50 44 34 28 40

Data Source: MacroPlanDimasi 2015

Key drivers for residential – projection for 2017

Rating out of 10, most positive influence

2015

SYD

MEL

BRI

ADE

PER

Unemployment 9 6 7 4 5
Infrastructure spending 7 5 5 4 5
Overseas Migration 8 8 6 3 3
Interstate Migration 6 6 7 4 4
Capital Growth 6 5 7 4 4
Rental growth 6 5 5 3 4
Total affordability 4 5 7 6 4
SUM 46 40 44 28 29

Data Source: MacroPlanDimasi 2015

Key Propositions

House prices tend to spike – not rise evenly.

  • Ripples still for western Sydney & Illawarra.
  • Brisbane appears to be next location. Need to anticipate and act ahead of a spike.
  • Low fixed interest rates are compelling.
  • Manufacture growth through subdivision & small lots.

Planning and patience.

Data Source: MacroPlanDimasi 2015

Property is a long-term play, researching what the economists are reporting and combining this with current data and your own homework will work to your favour and minimise risk. Of course, reviewing this with your “A” Team (Wealth Coach, Accountant, Financial Planner, Finance Broker) is strongly advised.

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