I was recently privileged to see a presentation by Dr Andrew Wilson, Australian Property Monitors Senior Economist. Any of you who have listened to an economist before may well be thinking, “I’d rather be at the dentist getting my teeth pulled’ but Dr Wilson has the ability to explain the various nuances of the market in plain English.
In short the news is good for both home owners, home buyers and landlords on the Coffs Coast.
Dr Wilson believes in a house price cycle model that works through various peaks and troughs, this is not a new model, and it has been proven time and time again since the Australian property market has been studied. The interesting part however, is what happens between these peaks and troughs. He describes these as a ‘correction’ which is when the market dips after a rise, a ‘consolidation’ which in short is when the market finds its own balance, a ‘recovery’ which is in short a revival, and finally ‘expansion’ which is basically growth.
So what causes these phases of the market; a correction is brought about when affordability collapses, this can be brought about by high interest rates, higher home prices and generally a down economy that simply can’t support a high housing market. This leads to a contraction in the market, which in turn causes housing prices to dip, and find their own level. The next phase is that of recovery, when affordability improves, interest rates fall and the economy in general has revived. The final phase is of course expansion, when confidence has been restored, interest rates are at historical lows and we have a solid economy.
At present there are a lot of key drivers affecting the market nationally, which indeed feed into the Coffs market. Low unemployment rates, rising wages, low interest rates a rising stock market, and above all consumer confidence, are all key drivers in the property market.
We are currently experiencing a time where optimism is starting to outweigh pessimism, and the Reserve Bank, whilst keeping rates steady for so long are showing confidence. Internationally growth in China remains strong, the US economy continues to revive, the Australian Dollar falling against the US Dollar also greatly assists our national export industry.
Of all of the states, NSW is the most resilient with a steady upward trend because of its mixed economy. WA and Queensland continue to strengthen on the back of mining and tourism, whilst the Victorian economy is taking a bit of a hit due to its declining manufacturing industry.
So that’s a thumbnail shot of the international and national situation, but how are we looking on the Coffs Coast?
The good news, the market is reviving with prices and sales on the Coffs Coast beginning to rise. Why? Because we have a solid affordable lifestyle, retiree and holiday market. We are also becoming a great choice for the ‘fly in, fly out’ market. We have great infrastructure with a jet airport, quality healthcare and education and a great climate.
Couple this with not only a falling unemployment rate and the fact that a more competitive Australian dollar assists not only our manufacturing and export industry, but also our tourism industry and we seem well set up.
For our local property market this means it’s a great time to buy or sell. It’s a strong balanced market where there are some great prices being achieved, but still great value for money for purchasers. For investors the news is great as well with returns up and vacancy rates around only 1%.