June Director's Desk - We haven’t forgotten
Monday 15 Jun 2015
This time it’s different. Sure the property market has been hot for a while, but not so long that we have forgotten what can happen if prices get too far out of control. And that’s important. Right now the market is being fuelled by buyers proceeding based on calculated decisions rather than naïve desperation. What does that mean?
It means I think this time it’s different. We’ve already seen evidence of the difference in the fact that, contrary to the expectations of some, the acknowledgment of a ‘bubble’ hasn’t immediately caused it to burst.
All the talk about property buyers today being at risk of a bursting bubble tomorrow gives no credit to the possibility buyers have made their decision to purchase knowing exactly how they will manage if demand eases.
Our agents are saying the buyers they’re seeing are very conscious that record interest rates won’t hold forever. They’re buying today to take advantage of those record low rates but mindful they will need to manage their finances as rates rise.
I don’t dispute the market is incredibly strong. Our team is still managing fantastic demand for CBD and city fringe properties. We still need more listings to help meet that demand and it is driving continuing strong prices.
And its demand based on careful calculations rather than desperate desire. It’s considered rather than carefree. The prices being paid in the market today are being achieved based on evaluation of the short and long term opportunity to sustain value.
So we may have a bubble but it isn’t the same as last time because it’s not based on an insane assumption that prices will always rise. The current market is inflated by demand from buyers seeking opportunity but conscious of risk.
So definitely do the numbers but don’t automatically be afraid or put off. This time it is different because we haven’t forgotten.