The early bird catches the worm

On the back of recent gradual increases in consumer confidence the current 'wait and see' approach towards the property market may actually mean that some may miss the boat.

We just need to open the daily newspapers to see the current media focus - politics, politics and more politics. This is, of course, not surprising with Federal Elections less than 100 days away. However it does definitely affect the coverage and the media slant of what is happening in the Australian economy and property market now and - politics by side - what we can
realistically expect to happen in the near future.

Property analyst, Michael Matusik highlighted a few interesting areas in his Market Update last weekend - noting that "The early bird catches the worm" - and I'd like to share just a few points that I feel are very relevant to the 'feeling on the streets' at present.

What current Home Loans show about the market ...

A realistic look at current home loan trends, Matusik summarizes that:

  • "Investors are starting to get into the market – being those who like to eat their worms early – with over $8 billion in investment loans last month (April). This is the highest level in five years.
  • "Other owner-resident buyers are also starting to get active, showing the strongest gain in four years.
  • "First home buyers remain subdued, renting now instead of buying. They were brought forward in droves during 2009 & 2010, so seeing them 'rest' isn't really all that surprising."

What we see here is a 'classic' start to a gradual recovery within the property market. Investors start first, followed by either first homebuyers or other home-buyers. It's when all three of these groups are active at the same time that the property market gets in proper upswing mode.

Consumer confidence is gradually improving but it's only slowly turning into tangible increases in the property market overall.

Analysing the latest RPData figures with the Westpac/Melbourne Institute's Consumer Confidence Index, specifically their 'good time to buy a dwelling' index, Matusik concludes that "most buyers will sit on their hands until early next year & then rush in as it becomes obvious that residential property is on the improve."

We've seen some strong buyer interest in the Brisbane CBD this year despite an innate hesitancy that seems to be evident. Currently, we're not yet back to the price growth levels we were a few years ago but there is movement in the market. In fact we're finding a real lack of some types of properties – particularly investor stock with 5% or better rental return – the buyers are there but the properties aren't.

(Source: 'Market Update', Michael Matusik, 15/06/2013)

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