Post Easter Update

Firstly, an update on the spectacular “Gala Auction” failure in Noosa over Easter i.e. one sale from 28 Lots (see previous Noosa blog): a vacant lot in Wesley Court did actually sell just before my return to Brisbane, which is some good news, at least. The Agent appeared, in his literature, to be guiding toward the $3m-$3.5m mark, so it’ll be interesting to see what it went for in the end. Away from the Noosa Heads & Sound area, Sunshine Beach property continues to languish on the market, with the same old stuff for sale that was on the market 3, 6 and 9 months ago. When the vendors will wake up to reality, God only knows, but you get the feeling there has been plenty of over-capitalisation in recent years and vendors are simply refusing to sell below the all-in cost - for the moment, at least.

A cursory check on the ‘Burbs property inventory suggests the picture hasn’t changed that much:- one or two things have gone under contract but there’s a lot more that has come onto the market. However, my $850k+ search on realestate.com.au has remained mysteriously constant in terms of the number of properties that come up in that search. On further investigation it appears to be a case of several vendors dropping prices (generally in the order of 5 to 7.5%), thus causing those homes to drop into a lower bracket. A handful have been withdrawn altogether but price revisions seem to be the dominant theme, which suggests that most sellers are serious and not speculative. Is this the beginning of the proverbial “race to the bottom”? Time will tell, but it’s not looking good for the property bulls.

Speaking of which, Michael Matusik, was lending his support to various vested interests on the Sunshine Coast in recent weeks. Again he opined that there was definitely no bubble and that a major correction was simply not on the cards – in fact, Mr Matusik is confident that we can look forward to 15% growth in prices over the next 5 years! Not sure whether to laugh or cry at that claim. Evidence to support these assertions becomes more ridiculous every time he goes to print – as I’ve noted before, he clearly has no clue what ultimately drives property markets (or indeed any markets, for that matter) and is no more than a paid-up cheerleader, rather than the “expert” he styles himself as. Erle Levey, the editor of the Sunshine Coast Daily, quotes Matusik as if his word were gospel – one wonders if Erle is up to the eyeballs in "investment property" or whether he simply likes to buff that special rose tint in his readership's metaphorical spectacles.

In short then, consumers are expecting rates to continue their upward trajectory; inflation is higher than the RBA would like, with most non-discretionary spend affected (i.e. fuel, utilities and food); interest rates are already at a level that is causing a substantial number of households financial stress; house-prices are quite clearly under pressure here in South East Queensland (unless you live in a parallel universe with Mike Matusik and Erle Levey); property is likely to continue to flood onto the market as stressed (and 'committed elsewhere') homeowners pull the ripcord, carefully prepared retirement plans involving the sale of property face potential jeopardy and investors dump their negatively geared, depreciating assets.

P.S. I did a search on realestate.com.au on Wednesday evening (May 4th) for all properties in the $500k+ bracket, encompassing the Burbs and Surrounds and counted 568 properties. A similar search on Thursday around lunchtime showed 593 properties! It may be obvious to most, but unless someone starts buying these properties, there's going to be a spectacular bust here in South East Queensland. It truly is time to forget what the "experts" are saying and to start looking at the hard evidence.