Projects Newsletter – August 2013

Spring has definitely come early for 2013. We have just experienced the warmest winter in 150 years; flowers are blooming early and against the run of the normal predictable tell tale signs the residential property market is off and running. On a year on year comparison the level of activity in residential sales has increased dramatically. However this runs against expectations when we consider the following factors;

– The RBA recently reduced interest rates by 25 basis points providing the lowest bank bill swap rate in Australia’s recent history. This movement by the RBA was a reaction to poor retail and manufacturing results which is an indication of a weaker than hoped for underlying econonmy.

– The federal election is set for 7th September Typically we would expect the period leading up to a federal election, particularly in combination with the uncertainty of a soft economy, to lead to a reduction in residential real estate activity. However this has been anything but the case during the last four weeks. Record auction clearance rates have been achieved with many sales being reported above reserves which is a phenomenon not seen for a while.

It is difficult to pinpoint the reason for this new lift in activity and what has caused the market sentiment to change so rapidly. Could it be that buyers are worried about missing out on properties as a result of a lack of supply of quality offerings? There is no doubt that many sellers have been holding off from listing their properties until Spring has officially arrived. There remains a short window prior to the Christmas period to launch projects and take advantage of this current surge in demand however its important that any launch in well managed and targets the appropriate market.

The Sydney market is also experiencing more activity from Asian based investors which is simply providing an additional layer of interested parties in the market place and hence increasing overall demand. Ray White Projects continues to deepen its links with these markets with Ray White’s Mark Williams now being based in the Hong Kong office full time and several roadshows already booked for September in Beijing and Shanghai.