NEWS:
July – September 2010
1. Interest rates:
(Will the cost of living increases put a hold on rates)
2. Urban sprawl:
(When will Sydney embrace it or be forced to)
RBA Interest rate: 4.5% (2nd of July 2010)
RBA Inflation rate: 2.9% (2nd of July 2010)
ABS CPI: 2.9% March 09 – March 10 / Last Quarter 0.9%
All ORDS: 4262.700 (2nd July 2010)
All ORDS End June 10: 4324.80 + 8.8% (approx)
All ORDS End June 09: 3947.80 – 26% (approx)
All ORDS End June 08: 5332.90 – 15.5% (approx)
All ORDS End June 07: 6310.60 + 25.3% (approx)
All ORDS End June 06: 5034.00 + 19% (approx)
All ORDS End June 05: 4229.90
1. Interest rates
(Will the cost of living put a hold on rates)
The reserve bank currently has its cash rate at 4.5% and will be looking closely at CPI/Inflation, which impacts on the general cost of living.
The announcements that Council rates will rise with Water, Electricity, Gas and other CPI indicators all increasing significantly should have enough of an impact on consumer spending to slow if not stop future rate rises by the RBA.
The question now is how long will it take for this to register and impact statistically and then intern be further acted upon by consumers slowing spending and cutting back household budgets.
We would estimate the effects have already begun, with further effects to be seen over the next financial year.
Over the last financial year we have seen a slow in property transactions, possibly due to the pulling back of the financial stimulus and Government Grants specifically the first home buyers Grant.
We are yet to see if the lack of transacations/supply forced the growth in some areas in late 2009 and early 2010, and the sustainability of growth.
The Council rate rises may be passed on to the rental market, and should affect some areas more than others where supply is greater. In general it all should slow growth in the property market over the next twelve months.
2. Urban sprawl:
(When will Sydney embrace it or be forced to)
With no major infrastructure and roadways planned to service the outer areas of Sydney’s south, west and northern regions, traffic congestion, travel time and fees associated with living and commuting in these areas may see little growth.
The most growth seen is Sydney after the initial GFC falls has come from the central coastline suburbs with easy access to the CBD, due to limited supply and our desire or need to live in central Sydney and coastal areas.
The main central suburbs to the CBD consist of terrace and semi detached style housing and unit living. These small blocks of land around 100 – 400 square metres were originally built around 100 years ago around the former turn of the century 1900’s.
The natural sprawl approximately 20 to 40 kilometres from the Sydney CBD in the 1950’s saw blocks in further outer suburbs around 1000 square metres, commonly known until more recent times as the ‘Great Australian Dream’, a quarter acre block of land and house.
Leading up to the last turn of the century the year 2000, we saw a change or slow in urban sprawl, with land being further subdivided in the 20 to 40 kilometres areas from the CBD changing to 500 square metre blocks and becoming the norm.
With no immediate signs of easing access to the Sydney CBD, the cost of commuting should see two (2) main outcomes both with significant impacts on property growth in Sydney.
1. Terrace, semi and unit style living development
2. Forced urban sprawl or relocation
Sydney has now become a majority professional style HUB in business unlike the past where production and manufacturing was far more predominant than today.
With the cost of manufacturing and producing tangible goods in Sydney being far outweighed by imported goods, the majority of the commercial population in Sydney has now become, the legal profession, accounting, marketing, sales, financial, importing and administration etc and are all reluctant to sprawl given the connection to each other and fear of change or relocation in cautious times.
