John-market-update-650x400

All roads lead to SEQ

Big numbers - homebuilder, Hong Kong, Victoria and South east Queensland

Homebuilder and Hong Kong are gamechangers for us. Victoria’s outbreak means more stimulus. All roads lead to South East Queensland. CBA saw a large rise in mortgage applications in June.

 

Some numbers that will really surprise you…

 

Homebuilder is red hot.

The government estimated 27,000 Australians would take up the homebuilder $25,000 cash incentive to build now within 6 months. Just one month in and applications are already close to 40,000 and growing every day. Land sales are off the charts and registered land stock in all main capitals will run out by end of August even though most developers have put prices up $10,000-$40,000 per lot.

 

Victoria’s outbreak means more stimulus and I expect big state government grants will be introduced and announced soon. The government has said they will follow RBA guidance and phase out Jobkeeper and other stimulus to avoid any cliff.

 

ScoMo announced the extension of Jobkeeper and Jobseeker through to March 2021 on Tuesday, and there’s every chance it may extend beyond that. Even with these extensions, the stimulus is still 30% under the $130 billion they budgeted initially!

 

Melbourne land prices will continue to rise sharply from expats coming home and people moving out of apartments.

 

Whatever it takes…

 

Hong Kong

As forecast on our weekly webinar the government has quietly extended a visa pathway for certain Hong Kong residents to obtain residency in Australia. This is massive for us as it could extend to 3.5 million Hong Kong residents looking to move due to new security rules enforced by China.

 

I would expect international bubbles to open this year with countries with low infection rates and that will help our economy i.e. Japan, Hong Kong, etc.

 

Australia will see a boom like never before following COVID-19 and the Hong Kong visa alone will drive land prices to record highs. Already in Sydney and other capitals Hong Kong buyers are buying houses online site unseen.

 

There are also 100,000 Aussie expats living in Hong Kong that will be planning their imminent return.

 

It’s hard to get the real numbers but rough calculation is that 1,375 people are flying into Sydney, Brisbane and Perth international airports every week. I would guess with other airports it would round off at 2,000 per week flying in. This is restricted at present as hotels can’t cope with quarantine requirements and Melbourne is a no-go zone.

 

South East Queensland

It’s SEQ’s day in the sun. The border opened on July 10 and 314,000 people downloaded border passes for the first 7 days. The AFL has relocated here for 10 weeks, with the Grand Final likely to be played here too.

 

SEQ population growth mostly comes from people leaving Sydney and that wave has been overdue. It’s happening now. Fasten your seat belts and enjoy the price growth. 

 

Housing Industry Association (HIA) reported best affordability in 20 years with current interest rates.

 

The Gold Coast has seen record prices achieved and agents reporting the best rental demand in 20 years. In fact the vacancy rate has dropped in SEQ to 0.9%, which is less than half the national average! Unemployment also dropped in SEQ and large infrastructure projects there means more job growth.

 

Agents are telling me that NSW residents are coming across the border with no plans to go back and buying whatever they can. BTW this is a normal boom for SEQ as it’s always driven by migration coming north particularly from Sydney.

 

Back to Homebuilder

All residential lot prices went up $25,000-$50,000 overnight.

 

When we started our COVID-19 by the numbers webinar series, the mantra was: ‘logistics, timing, liquidity’.

 

·        Logistics: how our health system would cope,

·        Timing: how long we would need to adjust; and more importantly

·        Liquidity: how and when Government stimulus would kick in.

 

Now it’s just about stimulus. And if you read the notes from the RBA last 2 board meetings and interim budget today you will feel confident that property prices are certainly insulated.

 

nationwide economic recovery, which has so far had a strong bounce in consumer spending as well as early signs of a jobs recovery with 124,000 jobs added in May.

 

The Commonwealth Bank's latest household spending intentions index showed a 6 per cent rise in home-buying intentions over the month after collapsing in the early part of COVID-19 restrictions.

 

CBA's chief economist, Stephen Halmarick, said the recovery in June was fuelled by record low interest rates and the partial reopening of the Australian economy.

"We saw a large rise in new mortgage applications at CBA as people look to take advantage of the record low interest rates," Mr Halmarick said.

 

This tells me that low rates have the desired effect of getting people to borrow money and into the housing market, which is a good thing.

 

Vaccine

I’m convinced we will have a vaccine by year end and on market and available early to mid-2021. Keep your eye on UQ and Moderna trials, as well as Oxford University.  All very promising, the race is on and with a US election in November my money is on a working Vaccine before then. 

 

Make the most of every Crisis.