Political BS to Juice Property Cycle Even More — Property Market
Well, well. The upswing in the property market is becoming blindingly obvious now.
The Australian Financial Review reports that national house rents have risen 4% above the late 2019 high.
This is part of what’s driving up prices across the capital cities. But it’s not the whole story.
We can’t forget what the banks are up to: that’s creating more housing credit!
What’s the data telling us?
New housing finance was up almost 70% on a year earlier, according to the Australian Bureau of Statistics.
It’s also up 55% above the average before the pandemic.
Not only are the aggregate figures rising but so is the size of the average mortgage, at $563,500.
What’s interesting is that investors are beginning to come back into the market now.
All this is perfectly in accord with what Catherine Cashmore and I have told our subscribers since last year. The difference is that hardly a soul believed us back then.
Too late if you want to grab, say, bank shares now. They’ve well and truly priced this recovery and upswing in now.
But that doesn’t mean there isn’t opportunity in the share market from this. Property cycles run for years.
I’m beginning to see a lot of the property trusts really start to rumble. And no wonder.
The yields in some of these are juicy and they have the bright prospect of property revaluations up ahead after the previous markdowns of 2020.
I was buying when the market sold down the other week. What were you doing?
Here’s a little more proof for the sceptical on the opportunities on offer.
From the Sydney Morning Herald…
‘Self-storage is emerging as one of the fastest growing pockets of Australia’s industrial and logistics market, fuelled by a culture of consumerism, e-commerce growth and shrinking living spaces.’
And here’s an important bit (for me, anyway):
‘CBRE’s William Gathercole said the self-storage market also presented a compelling investment opportunity on a larger scale.
‘“Many self-storage properties in Australia are well-located in inner city areas, which provides secure underlying value due to their potential to be converted into alternative uses such as residential, should self-storage demand ever fade,” Mr Gathercole said.’
If you’re keen for a laugh too, check out what Treasurer Frydenberg is quoted as saying in The Age on the weekend in response to the housing price pressure…
‘Obviously there is both a supply and demand side to this equation. We don’t have the levers…around supply as much of [sic] the states do, in terms of land release.’
Blah blah. I’ve heard this utterly stupid notion for so long now I can’t even be bothered debunking it. If you’re keen to know more, check out the ‘Speculative Vacancies’ report from Prosper.org here for Melbourne as a great example.
Do you think they need more land in the Docklands area of Melbourne or the fact that no one wants to live in the shitboxes they built there?
A bunch of investors who bought the ‘downsizing’ narrative and ‘tight supply’ now find themselves with prices falling backwards…and rents too.
From the same article above…
‘Apartment owners in Melbourne, Sydney and Brisbane have been hardest hit.
‘Melbourne’s apartment rents have steadily declined in the past 18 months, falling 17 per cent from an average of $493 pre-COVID-19 to $412 in early June.’
There is plenty of available land already.
Indeed, some of the big developers own huge tracts and slowly drip-feed it into the market to hold up the price of the estate they are already selling. Makes sense from their end.
All in all, it’s Australia’s idiotic tax and governance system that inflates the market.
But hey, don’t believe me straight off the bat, join CTF and we show you how the whole sorry system works. Then you can start putting yourself on the side of the winners, instead of the losers.
And there will be plenty on the wrong side of this dynamic.
See here from The Australian back in Feb…
‘More than 135,000 private renters older than 65 are set to be in rent stress by 2031, a leading housing and homelessness advocate says.’
Make sure you are a rentier, not a renter.
Editor, The Daily Reckoning Australia
PS: Australian real estate expert, Catherine Cashmore, reveals why she thinks we could see the biggest property boom of our lifetimes — over the next five years. Click here to learn more.