How Well Placed Is the Housing Sector?

In the view of Peter Kouilzos, 2014 is beautifully interspersed with buying opportunities. In an article for the website realestate.com.au he asserts that the investors would love how 2014 shapes up and least because of a super growth in prices. It is just that so many factors are expected to combine well to make it a happy-hunting time for property investors.

Low interest rates

Kouilzos argues that the interest rates are already near their lowest level and if there is a remote chance of their going down even lower it is now. Quite natural, Kouilzos believes, because once the government takes corrective measures and the rates go up, they will not bottom out any time soon.

Medium term fixed rates

The medium term fixed rates are at really inviting levels; hovering below the 5.5% mark. At such rates, imagine the kind of concessions you are likely to get with your mortgage commitments.

You can read the original article here.

First home buyers

In my opinion, the interest rates have levelled out the playing field for the first home buyers; those who were feeling elbowed out by the cavalry charge of the investors. This said, while things are looking all silvery from the perspective of investors, how good is the housing sector itself looking?

The government’s move to revive real estate by reducing cash rate seems to have provided a real kick so far and after two years of near-boom growth, Sydney may well mellow down towards a richly deserved sustainable growth. So is everything good and tidy?

Population growth

I fear our rampant population growth (in excess of 60,000 per year) through net migration and “birth-death” additions may make housing unaffordable in certain ways.

Oversupply

Oversupply in areas which are clearly inhabitable won’t help us any and somehow the development-ready land and council’s take on them needs to change drastically from here on. Government needs to be pretty decisive about new residential constructions, too and stop short of finding scapegoat in “foreign investment”.

Foreign investment in property

The noise is that China is hurting our property market. Chinese are never likely to hurt our property scene, their investments though apparently gigantic, make for less than 2% of total investments in the property market. Let us make the foreign foray into our property market even more meaningful and in time they will support the Australian dollar like no one else can.

Do you think Sydney’s near-boom value growth will mellow down in 2014?