Craig Pontey’s Blog – Some key property indicators worth keeping an eye on

October 31, 2013 by Craig Pontey

As we continue to see record activity across Sydney’s residential market, I wanted to highlight some of the key factors that drive our local market. Even if some of the trends are ‘big-ticket’ they do most definitely touch our market so lets just tick off some of the key components that do tend to remain fairly constant.

Population growth is a key either from migration or natural growth and Australia scores a positive result in this key area, and you may be interested to know that currently our population increases by one million every 2.5 years.

Partly reflecting the growth we are also seeing increased interest from off-shore buyers, not only for the harbourside trophy homes of the Eastern Suburbs, but for the area generally driven by easy access to the CBD and the many lifestyle attractions of the area. In the last census Woollahra Council area alone saw 9.6% of its local population or some 5,012 residents move from another country.

We also know that interest rates always make headline news, not matter if rates are going up or down. Currently the main interest rate question is, are we at the bottom of a cycle of cuts? There is little doubt that historically low rates have been driving the pulse of much of the energy of improved sales over the last six months. However the interest rate equation also has to be considered against a new aversion for debt, but none the less personal and household debt is still of concern, and even more so if rates move up.

Demographics are also changing the face of the local market as baby boomers consider their options, and in a mature market like Sydney’s East this will be an indicator we need to keep a close eye upon. It’s a topic I think merits more comments and I will keep a keen eye on this area.

Low supply levels, planning delays always impact the market, and while our area might have well established infrastructure shifts in demographics can rapidly impact the demand for different services, and so like most other areas we are not immune from the need for quality infrastructure.

A prime example of the importance of infrastructure is the extension of the CBD Eastern light rail network, which is bound to be very big plus for areas such as Surry Hills, Randwick, Kensington and Kingsford. While the big private investments that are now being made in Double Bay’s commercial heart are set to change the areas fortunes.

I also think that there is a very interesting link between the commercial real estate market, the health of the stockmarket and the upper-end of the residential market, which we will take a brief look at next week as both the ASX and New York Stock markets head into record territory. It all makes for interesting conversation as we look at the health of real estate in our own backyard.

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