I’m not attending too many dinner parties these days but God when I did I was great company. The sort of specials I now see on the menu are Paw Patrol pasta and chicken nuggies.
Back in the day when I used to dine with adults there was always one character that I was afraid to sit next to and that was ‘the expert’. Whether it was a finance bro, a real estate bro or a politics bro it didn’t matter…overly opinionated people that think they are right give me the ick (and make me nervous).
The reality is that right now no one knows what’s going to happen in the market but what is certain is that it’s a complex situation and the risk levels are high. It’s a developing story as they say.
In this week’s newsletter, I concede I’m posing more questions than answers because let’s face it, at a time when even the biggest brains are scratching their heads the rest of us have a right to feel a little confused.
The argument that the property market has reached the bottom in the last two weeks is gathering some momentum. Why? Since the RBA held rates, there has been a relief rally of sorts. By that I mean there has been a lift in transaction volumes but easy tiger it’s only been a week.
The storm cloud that continues to threaten this argument is that we are in a time where there’s been an enormous structural shift in the Australian property market. The reality is that we have a Federal government committed to solving Australia’s affordability crisis. Another way to describe this is that they are going to try and actively suppress price growth at best and/or lower property values over time. That’s just a fact and they are in government for the foreseeable future so we just have to accept that (and respect the nobility of it).
What’s different now compared to say the GFC or Covid is that this time no one’s coming to the rescue. Rates are not coming down anytime soon and the government isn’t likely to bring in schemes to give the market a lift.
So perhaps a good way to describe it is instead of the government sending in a life raft to prop up the market, they will, if they have to, continue to torpedo the market to contain it. I’ll take the heat but folks you can’t argue that this time it’s not just a little different.
And yes, I know in the newspapers on the weekend there was a headline saying rents will rise by 30% and like inflation that genie won’t get back in the bottle, but consider this…if rents continue to rise won’t the government probably move to try and stop that? Surely they are now in too deep.
I know that’s a radical thought but I don’t know if you have noticed that in the last 18 months there has been some pretty radical thoughts that they have acted on. Just saying.
Overseas buyers down, overseas investors down, local investors almost down. Negative gearing scrapped, land tax up, let’s be real…this is pretty big.
So what happens now? All we can really do is see how it plays out and proceed with caution.
So would I sell at the moment?
Sure. If I had a good reason. If I needed to upsize or downsize then yes I would.
Would I buy at the moment?
Sure. If I had a good reason. If I needed to upsize or downsize then yes I would.
There is one thing that over two decades in real estate sitting with clients at major life junctions has taught me and that is that we are all running out of time. Don’t wait to live your life.
For months I have been trying to convince my team that the saying ‘time is the fire in which we burn’ could be used in a newsletter and today is that day (they thought that way too heavy).
So yes, this is a kind of open letter to the frozen, which is a lot of us at the moment. If you want to move to be closer to the kids then get on with it, if your children need more space then give it to them but there is a catch.
You need to be careful, buying before you sell in this climate is fraught with risk and all you need to do is bake that in…then you should be fine but you need off-ramps. Just in case.
Let’s be real we live in a time where we have more options and more food in the pantry than any generations before us, it’s actually pretty good. In my view a lot of the malaise and anxiety out there at the moment comes down to us just having too many options. I say make a plan and get on with it.
Until next week,
David Murphy