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There is no bust!
In the past 12 months in southern markets median house prices have dropped about 4%. After the surge in house prices over recent years that's really just an the orderly retreat.
Taking Palm Beach and Elanora as examples local housing prices have done nothing more than level out this year, they have not fallen. For the people who expect their property to be worth more every month that in itself is probably a bit disappointing but there is no real concern.
However a malaise has descended on the housing market with many people claiming the “housing bubble” is about to become a housing crash. I had an I.T. professional that I know quite well put that very proposition to me on the weekend, in fact he inspired me to write this particular article.
I've mentioned a few times that most of what is happening to the market is being shaped by politicians, public servants such as APRA and the Royal Commission into banking. Click HERE to read my article from last month.
As far as the politicians are concerned they set about making housing cheaper for first home buyers by pushing investors out of the established home market and into new homes. In areas like Coomera the new depreciation rules have already made selling a second hand house a bit like selling a second hand car, it drops in value as soon as you buy it. Investors here are not so much worried about there being few less tax breaks, thy are concerned about rental returns and capital appreciation.
Depending on how it all plays out, if lending criteria and LVRs continues to be restricted there may be a gradual fall in property values locally but that really depends on local conditions.
We have seen no sign of negative equity emerging as a problem except where people have clearly over extended themselves.
You have to keep an open mind about what you read or see in the news.
Every bit of information about the housing market that comes out, including weekly auction clearance figures will be dissected to see what sensational news it offers. Nobody seems to want to report good stories if they can report bad ones.
I have seen three serious slumps in my time, all of them were accompanied by rising interest rates, rising unemployment and rising stock levels. The causes of what seems to be going on at the moment are the effect of policies introduced as part of monetary policy, responsible lending laws, additional regulation of banks likely to flow from the Royal commission and Labor's commitment to abolish negative gearing on future investments in housing except new dwellings and to increase by half the capital gains tax payable when investment property is sold.
If you want to find out more about what's happening in all of our markets on the Gold Coast we have just updated all of our Suburb Reports and you can find everything you want to know HERE.
There is no bust! palmbeachfn.com.au October 2018 First National Palm Beach
by David Hamilton
Cnr of 6th Ave & Cypress Terrace, Palm Beach, QLD 4221 Ph: 07 5559 9600