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TIP: SYD and MLB values creeping up but stocks low, more rate cuts coming, building crisis analysis

Agents banking on a busier spring

Faster population growth in Melbourne saw the city's apartment prices edge up in Q2. It was the only Australian city that didn't see apartment prices drop over the period according to Domain, which said the next quarter's figures are expected to show improvement.

Domain's numbers also showed that more than half of Sydney suburbs saw an increase in property values in June, which prompted more hallelujahs from strung-out home owners. Not that this translated into them hanging out their shingles.

CoreLogic figures show listings have shrunk in Sydney, Melbourne, Hobart and Adelaide as vendors hold out for better conditions. The prevailing wisdom is that they're waiting for spring to start spruiking, in the hope the traditionally stronger selling period will also bring a faster uptick in returns.

If Westpac is correct, that will coincide with another Reserve Bank rate cut. The bank is tipping the cash rate will be slashed down to .75 per cent in October and again to .5 per cent in February 2020 - citing the next ABS Labour Force report due on August 15 will be the clincher.

Check out Patrick Cummins's column in today's AFR explaining why lower rates are coming in the wake of stubborn inflation and job targets, and what the RBA would need to do to break the pattern.

Additional extra reading: building industry failure analysis

Building issues that wouldn't have made the local rags are now major news. Take this situation for example, of four apartments in a Meriton building in Parramatta that have been evacuated due to a plumbing issue.

Every builder and developer should well and truly be on notice now of the heightened sense of awareness the Australian public - and by extension, the media - is maintaining on construction and regulation issues in the building sector.

There are two pieces in today's AFR that should be mandatory reading for everyone in the Australian property sector.

The first is this long-form analysis by the paper's former property editor, Robert Harley. It's a detailed and expert assessment of the failures in regulation and standards that have led to this current situation of major defects, combustible cladding, inferior imported building materials and the insurance crisis.

For understanding what's going on and why, how it impacts all builders (not just apartment developers) and what needs to happen to successfully address the situation, this is an excellent read.

The second is by architectural consultant and academic, Geoff Hanmer. He's focused on regulatory failures which have, as he has put it, brought "the market for tall residential units (to a) near standstill" and created a situation that he estimates could cost north of $10 billion to fix. He lists the four factors that created this shitstorm and makes the case for urgent regulatory reform.

Messrs Harley and Hanmer are both long-term supporters of Australia's property sector, and appear genuinely upset by the situation it finds itself in. Both are hoping governments and builders share their concerns enough to change it.

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1 Comment

Jul 31, 2019

Its really a very nice article and want to see some more from you

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