The Property Clock

April 20, 2018

In recent times in breaking news for COMPASS lending & finance, I have been discussing the tightening of access to consumer credit which has been occurring for several years now as a result of the Australian Government introducing additional prudential guidelines, which placed increased liquidity & capital adequacy ratios on lending institutions.

 

On top of that, there is increasing pressure on Australian banks in regard to their cost of borrowing money from offshore sources, particularly the USA as that country reduces money flows. This increased cost inevitably gets passed on to the consumer through higher loan interest rates.  

 

Another impact of rising interest rates & tighter credit is on residential property prices . If loan demand slows because of interest rate pressures or tighter lending guidelines, then that tends to place downward pressures on property prices.

 

On the 5th April I received a residential property market update from an industry specialist. In that market update they showed the current ‘Property Clock’. The ‘Property Clock’ reflects where certain regions are in respect to the price cycle . At noon the prices have peaked. At 3 o’clock they are in decline. At 6 o’clock they are at the declined stage & at 9 o’clock they are in growth/rising position.

 

In that April 2018 issue of the property report these were the regions that they noted as reflecting a current ‘peak’ price position:-

 

Central Coast

Coffs Harbour

Mid North Coast

Newcastle

Gold Coast

Melbourne

 

These are the regions that reflected a bottom or ‘declined’ position :-

 

Adelaide

Adelaide Hills

Albury

Alice Springs

Barossa Valley

Bundaberg

Cairns

Darwin

Gladstone

Iron Triangle

Mackay

Rockhampton

Toowoomba

 

 

Now of course there are a number of other factors that can impact on property prices in certain locations, that also relate to supply & demand conditions & they can be as an example, the undertaking of major infrastructure works relating to transport or communication/services etc. Regardless the takeaway from this is that like any product or service, property has a cycle & we need to be mindful of that.

 

Please contact Michael on 02 6583 2211 if you have any questions.

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