In brief - The positives for real estate far outweigh the
Negativity might sell newspapers, but it's not an accurate
reflection of the present state or the future of the NSW
residential property market.
Property market is driven by sentiment
First let me say that I am not an economist. When I did the HSC
in 1969 I did not even study Commerce (as it was then called).
Secondly these are purely my personal views, formed over the 40
years I have spent as a property lawyer.
I believe that the New South Wales residential property market
is on the cusp of a significant recovery.
Certainly there is much doom and gloom in the media. Pick up any
newspaper and almost invariably, the negatives abound. Typically we
hear about the European economic crisis, the strength of the
Australian dollar, the cost of land, the slow delivery of consents,
the lack of infrastructure and Australia's two-speed
Like most markets, the property market is sentiment driven. One
only has to look at the performance of the stock market in
Australia over the last few years. Even companies that consistently
make healthy profits can experience wild fluctuations in their
Because sentiment plays such a significant role in the property
market, it is time that we considered some of the positives in New
South Wales for the residential real estate market and talked about
these more, as an antidote to the negativity that abounds.
Not only will this be good for our industry: it will be good for
our state and our country.
Positive factors pointing to a recovery in residential real
estate in NSW
There are many positives which should not be ignored:
Housing affordability has increased, because while there has
been a continual increase in wages, the cost of housing has fallen
due to the GFC.
Interest rates are lower than they were a year ago.
We have a new state government that is actually doing something
about infrastructure and planning in this state. While many would
be disappointed with the slow rate of progress of the O'Farrell
government, there is no doubting that things are starting to
happen. The state government has committed to significant PPP and
social housing initiatives, as well as accelerating land release
There are still significant government inducements being
offered at both state and federal level to various groups like
first home buyers and investors. Neither the federal nor the state
government have taken the easy option of saving money by abandoning
Councils are beginning to realise that the procrastination in
the development approval process is costing them investment and
jobs in their local area. There are some signs that this is having
an impact on the decision making processes within councils.
The underlying demand for housing exceeds the current rate of
We have an expanding population from a combination of births
and migration and we need to produce more housing to cater for
More dwelling units are needed as the size of families
Rents are increasing while at the same time prices have fallen.
This is the ideal scenario to encourage investors.
When compared to the stock market, the property market is
extremely resilient. The modest fall in housing values over the
past few years is dwarfed by the massive fall in the value of
Business sentiment is at its highest level for some time and
this flows through to jobs and investment. According to figures
released last week by the Australian Bureau of Statistics,
unemployment has dropped to its lowest level in six months,
bringing the rate down to 5.1 per cent.
Housing has become more efficient in energy and water usage.
This means households save money which can be put towards improving
the property or paying off a higher mortgage.
"Housing bubble" about to burst?
Now I hear you say that you have read many articles by
commentators who preach that there is a housing bubble in Australia
which is about to burst. This will only happen if negative
Our mortgage lenders are the most prudential in the world.
Notwithstanding the GFC, our rates of default are extremely
Sentiment drives the market! I believe that the positive factors
which point to a resurgence in the residential property sector far
outweigh the negatives, but we have to start preaching this loud
and clear, particularly to the peddlers of gloom in the mass media.
The message needs to get out there to the general community.
I certainly intend to seize any available opportunity to preach
a message of positivism about the residential property market
throughout New South Wales. Anyone care to join me?
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
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