Breaking Square | 18th April 2024

As somewhat predicted, given the persistent inflationary conditions in the economy and the strong numbers in the US, most, if not all economists have dialled back their predictions of a rate cut in May, let alone September, which many had claimed would be the likely timing.

There are so many factors in play around the world that makes it almost impossible for Central Banks across the globe to even start considering cutting rates, so the bad news may be, that we will have no cuts until next year. This will continue to make it tough on some mortgage holders and make it harder for first home buyers to get into the market, as prices continue to climb, with lending capacities shrinking.

Currently we are appraising a lot of properties, with many owners making the decision to reduce debt, compromise on the next property purchase and gain some lifestyle back; it seems to be a common thread at the moment. Since Covid, our expectations have grown in terms of what type of lifestyle we want and as a result, the prospect of just working hard to keep the wheels greased, is no longer appealing or wanted – we simply are choosing alternatives.

On the flip side to this are those in the empty nest cycle of life or have cash to burn. The Gold Coast is still powering along and the prestige market in Brisbane is being fuelled by cash buyers and not Sydney or Melbourne blown-ins. Once upon a time, we had to rely on the money from down south to purchase our high-end properties, but this is no longer the case. A recent record-breaking off-the-plan sale in Kangaroo Point was purchased by a local; it seems Brisbanites have woken up to what the city offers and recognise that the prices are what they are for good reason.

There may be some tough times ahead with the issues in the Middle East, which will spook markets and the on-going war in Europe, supply chains are still under some stress and the lack of local residential building all contributing to the pain. However, when it comes to property, we should always take the long view and not just base decisions on the here and now. If it’s right to do something now, then do it, but if the decision is to do it because of what is going on, take the time to think things through – remember that little thing called Covid, when we thought the world was going to implode, and look what happened.

I follow a real estate consultant in LinkedIn, who used to work with REA some years ago. He shared some data that was presented by Tim Lawless from Corelogic, here is the snap shot:

Astounded by the staggering numbers shaping Australia’s real estate and financial landscape. Here are some highlights that grabbed my attention:

 $10.4 trillion – The astronomical value of residential real estate in Australia, reflecting the nation’s robust property market.
 $3.6 trillion – Australia’s superannuation saving pool, a testament to the nation’s commitment to securing financial futures.
 10.9 million private dwellings – Illustrating the vast scale of residential property ownership across the country.
 3.4 million rental households – Underscoring the importance of rental accommodation in Australia’s housing ecosystem.
 518k overseas migrants added to Australia’s population last year – Reflecting Australia’s global appeal and diverse multicultural fabric.
 35.9 million living in Australia by 2050 – A glimpse into the future population growth trajectory, shaping various aspects of our society.
 85% of the Australian population live within 50kms of the sea – Highlight ing our deep connection to Australia’s stunning coastal environments.
 $224 billion estimated inheritance being passed down each year from baby boomers by 2050 – Signifying a significant intergenerational wealth transfer that will influence our economy and society.

These numbers not only showcase the sheer scale of Australia’s real estate and financial sectors but also hint at the profound societal shifts and opportunities on the horizon. Truly an eye-opening discussion that reinforces the importance of staying informed and proactive in navigating our dynamic landscape.

Interesting and impressive facts.

In my last communique I mentioned that we were travelling to “The Shed”, which was where Ray White started the business over 100 years ago. It was truly worth the effort of the long bus ride to go up there and be with other colleagues, many who had never been prior to hear the history and share the moment. From my perspective Ray White is truly a great Australian story. From very humble beginnings it has grown into a national and International company.

As the story goes, Ray White decided to move his young family to Brisbane to relocate the business, a big move in those days. It was in Brisbane he set about the business of real estate. When his son Alan was old enough, he became involved and upon Ray’s death, took over the business. At the time of Brian taking over from his father Alan, Ray White had 3 offices in Brisbane. Under Brian’s leadership, the group grew to over 1000 offices. Like Ray, Brian took a big gamble on expansion. At one point, LJ Hooker had offered to buy Ray White, but Brian said no and LJ Hooker stated that they would then simply run them out of business. Brian then decided he had to grow beyond Queensland and set about expanding interstate.

As history has shown, they neither ran them out and today Ray White is the largest real group in Australia, in fact 16% of all real estate transactions are done by a Ray White office, the next closest competitor is in single digits. Ray White doesn’t necessarily say this to boast, well maybe a little, but it demonstrates the commit from the White Family to the business. They have a saying, “no finish line”, meaning the job is never done.

I have attached a couple of photos of the shed, just in case you were interested.

To finish off, things have been a little quiet over the past couple of weeks with school holidays, rentals have been tough to get rented, with low or no attendees at inspections. I am hopeful that will change this weekend and we start to see numbers come back. The over $2,000pw market is very slow and some recent lettings in the area have shown this to be true, as they started being advertised for over $2,000pw, but eventually rented at around $1,800pw – these were not our properties, just keeping an eye on things.

Sales have not slowed and many of our properties are selling quickly. Properties that are not quite A grade and with high expectations are taking longer to sell, so patience is the game.

Next week we get CPI numbers ahead of the RBA meeting on May 7, so it will be interesting to hear what they have to say. I expect rates to be held and the concerns of global issues and sticky high prices should dominate the commentary.

Until next week, stay safe and be kind.