Decoding Housing Trends Of Future

Pete Wargent, in his inimitable style, produces another thought-provoking piece for the website Property Update. In this article he talks about 4 housing trends which may establish themselves till 2020; few of them easy to soak in while a couple more peculiar than others.

1st trend# Decline in fortunes of rental yield anticipated

Poor rental yield is becoming a norm and investors have to live with the idea of capital growth supporting their investment aspirations. To get a good deal, investors will have to focus hard on the locations real estate money is expected to flow. Wargent feels that the capital cities’ inner and middle ring suburbs may give an answer to this question.

2nd trend# Brisbane might just be the new star entry

While Sydney has been the outstanding performer and its rise has not been a fluke but a well-sustained endeavour, the growth in the harbour city is expected to mellow down from here on. Demand-supply imbalances may make matters worse and it is time to introduce, in hushed up voices, a new star rising on the horizon. Yes, it just might be Brisbane. If the owner-occupier commitments and the mortgage finance data are anything to go by, Brisbane is likely to “have its day in the Sun” at long last.

3rd trend# Scarcity should be emphasised upon

Selecting the right stock is going to be the key. Asset diversification strategy will piggyback on right choices made in the property market. For instance, “apartment” oversupply regions and off-the-plan stocks will have to avoided, at least for some years. Scarcity value may just be the thing we should be looking at.

4th trend# Cash rate is crucial to the overall enquiry

While government’s attempts to sabotage cash rates to guide economic growth away from the mining sector to the construction sector has had its share of pitfalls, things are now coming nicely along the way. Low credit growth, high land prices and price corrections in the property market has stunted government motives in the past but high dwelling approvals and smart construction activity of late might just undo the damage in a short time from now.

You can read the original article here.

Government was quick to fathom the pitfalls of a mining-centric economy. Those who  had invested largely in such pockets of single-economies have suffered a great deal now that mining bust has well and truly happened. Government’s move to add impetus to the construction industry through a low interest rate regime seems to have worked and high dwelling approvals is a proof of this. Let us however not be complacent because low credit growth and high land prices witnessed in the recent past can still make a complete shift from mining sector economy to construction sector economy difficult.