Europe Kick's the can on down the road!

 

Well it looks like Euro mayhem has been averted, at least for the time being.

Greece has its bail out which is looking more like a band aid and not a very good one at that. It appears the bailout that was agreed by all parties (some will say one was forced upon Greece) will prevent the questions of debt sustainability coming to the fore and not only for Greece, but more notably Italy, Spain and Portugal. In fact Italy was almost begging Germany and France to make a deal, just to keep the world financial sharks from looking towards its own debt to GDP ratio.

With this issue temporarily averted for another day, it looks more reasonable to conclude that the Australian economy will dodge a small bullet of the economic shock wave had Greece dropped out of the Euro.

Well it looks like Euro mayhem has been averted, at least for the time being.

Greece has its bail out which is looking more like a band aid and not a very good one at that. It appears the bailout that was agreed by all parties (some will say it was forced upon Greece),will prevent the questions of debt sustainability coming to the fore and not only for Greece, but more notably Italy, Spain and Portugal. In fact Italy was almost begging Germany and France to make a deal, just to keep the world financial sharks from looking towards its own debt to GDP ratio.

With this issue temporarily averted for another day, it looks more reasonable to conclude the Australian economy will dodge a small bullet of an economic shock wave had Greece dropped out of the Euro.

What will this mean for the property market here in South East Queensland?

Well the Corelogic Housing and Economic Market update (July 2015) has been released and paints a mixed picture for the last 12 months. (Available on our Fox & Co website blog )

House sales volumes nationally have remained broadly level with last year with an increase in house sales being offset with a fall in unit sales.

Rental rates (letting per week values) continue to slow and are increasing at their slowest pace on record. In Brisbane house rents have increased by only 1.4% well below inflation. Gross yields though are still higher than those of Sydney, Melbourne, Perth or Canberra at 4.5%.

Total listings remain lower than a year ago with new listings only higher just recently within the last few months. This would generally indicate a cautious market here in Queensland.

When we look a investor to home owner mortgage loans investor loans are still higher, with a 10.4% increase over the last year. Overall Mortgage lending has eased in May which is having the effect of lower sales volumes.
The growth in house prices over the last 12 months here in South East Queensland is 3.7% which is only just above inflation. The five year growth is -0.1% and the ten year growth is 3.7%. What does this show? Well in real terms house prices have fallen over the last ten years when factoring in inflation.

The slowing of overseas migration to Australia and with housing approvals at near record highs has led to a narrowing of the gap between supply and demand. If this continues then this will put downward pressure on house and unit prices. The last time this occurred was just after the 1990 recession in Australia. So we may be seeing indicators of what might be coming?

In Samford and Dayboro Fox & Co have had near record sales levels and demand for land is very high. We see steady growth going forward making Fox & Co arguably the fastest growing agency in the Samford and Dayboro region.

By Craig Corner

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