Inside Property
Is Your Sub Prime Rare
After a remarkable couple of weeks as somewhat hapless passengers on an
international financial rollercoaster of unprecedented unpredictability and
scale, the questions everyone is asking are the same – how will this affect my
super, how will this affect my employment, plus how will this affect my
property values? The crisis is as much about sentiment and confidence as it is
about facts – a form of intellectual property in a cryptic way. The federal government
and RBA have handled the situation superbly, with precise timing,
implementation and measure on how to best protect our national economy.
Discussing the situation with popular local property writer Tim Kenway, I was
highly amused by his comments to the following effect, “Sub prime used to be
how you take your steak.” The sub prime debacle has painfully highlighted what the lack of good
regulation can do, yet our situation here in Australia is very different to the
set up overseas. It got me thinking, if the sub prime crisis was a steak, it
would be truly ‘Well done’.Therefore, if the local property situation was a steak, it would
currently be ‘rare’.Whilst some are reporting property values decreasing, latest data from
the ANZ as well as BIS Shrapnel indicate positive things happening for the
property sector into next year. The RBA foresaw a potential bubble which was
avoided by the interest rate hikes we have just experienced. We are not
oversupplied as in the U.S; in addition Qld is very well placed for a buffer
against a slowdown because of infrastructure, population growth and the
continued demand for our resources. We are seeing increased activity from the
very savvy buyers who are recognizing the rare combination of forecast rate
cuts and realistic sellers. So if you like your ‘property steak’ rare, its time
to move!‘When the greedy get scared, be greedy, when the scared get greedy, be
scared’ Warren BuffetHe who overcomes his fears will truly be free Aristotle
Till next week
Olivier